Islamabad expects progress within months on a proposed US-backed facility aimed at supporting currency stability, market access and investor confidence.
ISLAMABAD: Pakistan expects to receive a response from Washington within the next couple of months on its request for a $10 billion bilateral stabilisation facility, as Islamabad seeks to strengthen currency stability and build investor confidence, according to media reports on Wednesday.
Adviser to the Finance Minister Khurram Schehzad told Bloomberg on Tuesday that discussions with the United States over the proposed facility had been “constructive”.
“The proposed US stabilisation facility would also serve as a potential backstop and confidence signal, supporting market access and helping crowd in private capital,” Schehzad said.
Pakistan approached US Treasury Secretary Scott Bessent last month, seeking a Bilateral Exchange Stabilisation Support Facility worth $10 billion, with a maturity of up to five years, according to Reuters.
Finance Minister Muhammad Aurangzeb confirmed the request last week, clarifying that the proposed arrangement was intended primarily to strengthen confidence in the currency and foreign exchange market rather than operate as a conventional loan or credit line.
“This is not about a credit line or a loan or whatever. This is a signal about our currency stability, a signal about exchange rate stability, and that in turn allows us to go to the markets to raise debt,” Aurangzeb said.
He said the proposal was under consideration by the US Treasury Department and that progress was expected by September.
If approved, the facility could provide Pakistan with an additional financial buffer as the cash-strapped economy continues efforts to strengthen its external position.
The proposed arrangement could also help bolster foreign exchange reserves, ease pressure on the rupee and support Pakistan’s access to international capital markets.
Pakistan seeks stronger economic ties with US
The request comes as Pakistan seeks to build on improving relations with the Trump administration.
Pakistan’s diplomatic role in facilitating talks linked to the Iran conflict has raised its international profile and fuelled expectations that closer ties with Washington could lead to greater economic cooperation.
The proposed stabilisation facility would come alongside Pakistan’s ongoing fiscal and monetary reforms under its International Monetary Fund (IMF) programme.
Pakistan remains under a $7 billion IMF programme, which has required the government to implement tax increases, spending restraint and structural reforms aimed at improving economic stability.
Moody’s upgrades Pakistan rating
The development also follows Moody’s decision to upgrade Pakistan’s sovereign credit rating to B3 from Caa1.
The ratings agency cited improvements in Pakistan’s external position, fiscal metrics and domestic financing conditions, while continuing to highlight weaknesses in rule of law, corruption control and government effectiveness.
Despite the upgrade, Pakistan’s B3 rating remains in the highly speculative category and is seven notches below investment grade.
For Islamabad, securing the proposed US facility would therefore represent more than additional financial support. It could serve as a confidence-building mechanism for the rupee, international lenders and private investors, while potentially improving Pakistan’s ability to access international capital markets.