Pakistan Wants $10 Billion US Aid to Stabilize Rupee

Pakistan has formally requested a US Exchange Stabilisation Support Facility in an effort to strengthen the rupee, stabilize foreign exchange, and reduce reliance on loan rollovers, according to Finance Minister Muhammad Aurangzeb. The minister stated that talks with the United States are ongoing, and Pakistan anticipates a response or feedback from the US Treasury or US Exim Bank by the end of September.

This request, reportedly for $10 billion, is primarily intended to signal confidence in Pakistan's currency and foreign exchange stability, rather than a traditional loan. The government has already appointed three arrangers to prepare for financing through longer-term market-based instruments, aiming to shift towards maturities of five, seven, and 10 years.

The minister also mentioned that discussions are underway to extend the maturity of existing bilateral loans up to 10 years. Pakistan is in dialogue with the US Exim Bank and other institutions as part of its financing strategy. While grateful for bilateral support, the government is transitioning its financing approach towards market-based borrowing.

Aurangzeb stated that the government is collaborating with international credit rating agencies to improve Pakistan's sovereign rating, aiming for a B+ rating. A higher rating would enhance the country's ability to raise financing from international markets with longer maturities. The proposed US facility would act as a confidence backstop for Pakistan's foreign exchange position rather than merely adding more debt.

If approved, it could bolster market confidence, support the rupee, and improve Pakistan's capability to access longer-term international financing. Currently, Pakistan is under an $7 billion International Monetary Fund program that mandates fiscal and structural reforms. The nation has largely depended on official financing, bilateral rollovers, and partner deposits to sustain its foreign exchange reserves in recent years.