Banking News – Pakistan has formally requested the United States for a $10 billion Exchange Stabilization Fund (ESF) facility aimed at strengthening its foreign exchange reserves and easing mounting economic pressures.

According to Reuters, Pakistan submitted the request to U.S. Treasury Secretary Scott Bessent, seeking a five-year bilateral exchange stabilization facility. The proposal was put forward following a meeting between Pakistan’s Finance Minister Muhammad Aurangzeb and Bessent in Washington.

If approved, the facility is expected to bolster Pakistan’s foreign exchange reserves, reduce pressure on the Pakistani rupee, and lessen the country’s reliance on multilateral lenders, including the International Monetary Fund (IMF). Pakistan is currently implementing fiscal and monetary reforms under the IMF’s $7 billion Extended Fund Facility (EFF).

Pakistan’s Ministry of Finance said Aurangzeb briefed the U.S. side on the adverse impact of regional geopolitical tensions on the country’s economy. He also emphasized the need for U.S. support to expand Pakistan’s access to international capital markets, strengthen foreign exchange reserves, and improve its sovereign credit rating.

In a statement, the ministry said Pakistan is making progress toward macroeconomic stability and sustainable, export-led economic growth, adding that stronger U.S. support would help reinforce these efforts.

During the meeting, both sides also expressed their commitment to expanding bilateral economic cooperation, promoting U.S. investment in Pakistan, and increasing collaboration on strategic development projects.

Pakistan narrowly avoided a sovereign debt crisis in 2023 after securing a $3 billion IMF Stand-By Arrangement. It subsequently received a $7 billion Extended Fund Facility and an additional $1.3 billion in financing to address climate change and natural disaster challenges.

Despite these support packages, analysts say Pakistan’s foreign exchange reserves remain heavily dependent on IMF disbursements, bilateral assistance, and financial backing from partner countries, including China and Saudi Arabia. Any delay in external financing could place renewed pressure on the country’s economy.

According to Reuters, the U.S. Exchange Stabilization Fund is designed to strengthen foreign exchange reserves and support currency stability in partner countries. Before Argentina’s assistance package in 2025, the last major ESF support of a similar nature was extended to Uruguay in 2002.