Pakistan has formally sought a $10 billion Exchange Stabilisation Support Facility from the United States as part of its efforts to strengthen foreign exchange stability and improve access to international capital markets, Finance Minister Muhammad Aurangzeb has confirmed. The minister said negotiations with the US are currently ongoing and stressed that no final agreement has been reached so far.
Speaking to Business Recorder, Aurangzeb confirmed that Pakistan had made the request while explaining that the proposed facility should not be viewed as a conventional loan or credit line. Instead, he said the initiative is intended to provide a positive signal to financial markets about Pakistan’s currency and foreign exchange stability. According to the minister, such a signal could support the country’s ability to access international capital markets and secure financing at longer maturities.
Aurangzeb also discussed Pakistan’s broader financing strategy, saying the government is in discussions regarding its eventual exit from existing financing arrangements. He said Islamabad expects to receive a reaction or views from either the US Export-Import Bank or the US Treasury by the end of September. The government is seeking to reduce its reliance on repeated bilateral rollovers and gradually move towards market-based financing arrangements.
The finance minister said the government’s complete effort is directed towards securing market-based maturities, although he acknowledged that some initiatives could succeed while others may face difficulties. Despite these challenges, he said the government remains focused on reducing dependence on short-term bilateral rollover arrangements and moving towards longer-term market financing.
Pakistan has relied on bilateral partners for financial support over the past decade, particularly during the last three years, and Aurangzeb expressed appreciation for that assistance. However, he said the country’s financing strategy is now being recalibrated as economic conditions and Pakistan’s credit position improve.
A key part of this strategy is the government’s effort to improve Pakistan’s sovereign credit rating. Aurangzeb said Pakistan has now achieved a rating status that provides a foundation for further improvement and that the government wants to move towards at least a B+ rating. He added that the government is working closely with international credit rating agencies to improve the country’s sovereign rating, which he said had remained stuck since 2003-04.
According to Aurangzeb, an improved sovereign rating would create greater opportunities for Pakistan to raise financing from international capital markets with longer repayment periods. He said the country could potentially access five-year, seven-year and even 10-year maturities, reducing the frequency with which the government needs to seek bilateral rollovers.
The proposed $10 billion US facility is therefore being positioned as a market confidence measure rather than another source of conventional borrowing. Aurangzeb rejected the perception that the request represents another financing line, saying its primary purpose is to send a signal to markets regarding Pakistan’s currency and foreign exchange position.
The minister explained that the facility is intended to signal confidence in Pakistan’s currency stability and foreign exchange stability. In turn, this could help the country approach international debt markets with greater credibility and potentially secure longer-term financing.
Pakistan has already begun preparing for renewed access to international debt markets. Aurangzeb said the government has appointed three arrangers as part of this process, indicating that work is underway to structure future market-based financing.
He also pointed to Pakistan’s recent experience with various debt instruments as part of the country’s efforts to rebuild international market access. These instruments include a Eurobond, an Islamic Sukuk and a dollar-settled rupee-linked bond. The government intends to build on this experience while seeking financing with five-year, seven-year and 10-year tenors.
The proposed US support facility comes as Pakistan attempts to shift away from repeated short-term financing arrangements and establish a more sustainable approach to external borrowing. The government’s stated objective is to strengthen market access, improve the country’s sovereign rating and create room for longer-term financing.
While negotiations with the United States remain underway and there is no final agreement at this stage, the government views the proposed facility as part of a wider strategy to strengthen foreign exchange confidence and transition Pakistan towards greater reliance on international capital markets.
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