Pakistan Seeks $10 Billion for Mediating Iran Talks
Pakistan has formally asked the United States to establish a $10 billion exchange stabilization facility, a move that could provide crucial financial support for the country’s struggling economy if Washington agrees to the request, according to a source familiar with the discussions.
The proposal comes after Pakistan played a role in facilitating talks related to the Iran conflict, a diplomatic effort that elevated Islamabad’s international standing and fueled expectations that it would seek economic benefits from the United States and other allies.
According to the source, Pakistani officials requested that U.S. Treasury Secretary Scott Bessent approve a five-year, $10 billion Bilateral Exchange Stabilization Support Facility between the two governments.
If approved, the arrangement would strengthen Pakistan’s foreign currency reserves, help stabilize the Pakistani rupee, and lessen the country’s dependence on international lending institutions as it continues implementing fiscal and monetary reforms required under its International Monetary Fund program.
The U.S. Treasury declined to comment on the reported request, while Pakistan’s Finance Ministry did not immediately respond to Reuters’ inquiries outside normal business hours in Asia.
Pakistan’s Finance Minister, Muhammad Aurangzeb, met with Bessent in Washington on Tuesday. According to a statement from the ministry, Aurangzeb discussed the vulnerability of Pakistan’s economy to regional geopolitical tensions, though the statement made no mention of the reported $10 billion request.
“Senator Aurangzeb sought greater U.S. support for Pakistan’s road to market, underpinned by improved access to international capital markets, higher foreign exchange reserves, and enhanced sovereign credit ratings,” it said, adding that both sides reaffirmed their commitment to deepening bilateral economic cooperation, promoting greater U.S. investment, and advancing strategic projects.
Pakistan remains subject to a $7 billion IMF program that has required politically difficult measures, including tax hikes, spending cuts, and broad economic reforms.
Exchange stabilization facilities are uncommon financing tools provided by the U.S. Treasury, typically through the Exchange Stabilization Fund. They can supply dollar liquidity, currency swaps, or guarantees designed to strengthen a country’s reserves and support its currency.
These facilities differ from the Federal Reserve’s permanent dollar swap arrangements with major central banks, instead serving as emergency sources of U.S. dollar funding intended to promote international financial stability.
The most recent example came in 2025, when Argentina received such assistance—the first new exchange stabilization facility extended to a foreign government since Uruguay in 2002, excluding Mexico’s longstanding swap agreement that dates back to the 1940s and is currently valued at $9 billion.
Pakistan narrowly avoided a sovereign default in 2023 after securing a $3 billion IMF standby package. It later obtained a $7 billion Extended Fund Facility along with a separate $1.3 billion loan aimed at improving the country’s resilience to climate-related disasters. Despite those agreements, Pakistan continues to rely heavily on official financing, loan rollovers, and financial support from China and Saudi Arabia.
That dependence has left Islamabad vulnerable to shifts in foreign assistance and delays in IMF funding. The risks became apparent in April, when Pakistan repaid roughly $3.5 billion—about one-fifth of its foreign reserves—to the United Arab Emirates, while Saudi Arabia stepped in with $3 billion in new support.
Pakistan’s central bank said in January that it expects foreign exchange reserves to climb to approximately $20 billion by the end of 2026, approaching the country’s record levels reached in 2021.
Analysts say a U.S.-backed exchange stabilization facility would not only provide an important liquidity cushion but also send a strong political signal, helping support Pakistan’s reserves, stabilize the rupee, and reduce the country’s reliance on periodic IMF disbursements and emergency financial rescues.
Although IMF-mandated reforms have helped stabilize Pakistan’s economy, they have also come at a steep political cost, requiring higher taxes, reduced government spending, and limiting resources available for development and social welfare programs.
In April, Fitch Ratings said Pakistan’s continued compliance with its IMF program had strengthened its ability to secure financing and rebuild foreign exchange reserves, giving the country greater protection against economic shocks stemming from instability in the Middle East.
At the same time, Fitch warned that rising energy prices and potential supply disruptions could quickly erode Pakistan’s foreign exchange reserves if regional tensions intensify.
Foreign investment has remained limited, hampered by repeated economic crises, policy uncertainty, security concerns, restrictions on profit repatriation in prior years, and a relatively narrow export base. Pakistan’s credit rating also remains well below investment grade, contributing to elevated borrowing costs and restricted access to international capital markets.
In recent months, Pakistan has sought to strengthen economic ties with the Trump administration through cooperation in areas including cryptocurrency, real estate, and mining.
Among those efforts, Pakistan signed a stablecoin agreement for cross-border payments with an affiliate of World Liberty Financial, the primary cryptocurrency business owned by President Donald Trump’s family. Islamabad has also pursued a memorandum of understanding with the U.S. government to redevelop the Roosevelt Hotel in New York, which is owned by Pakistan International Airlines, while also encouraging American investment in the Reko Diq mining project, where the U.S. Export-Import Bank has announced $1.25 billion in financing.
{Matzav.com}
