Pakistan has formally requested a $10 billion Exchange Stabilization Support Facility from the United States. Finance Minister Muhammad Aurangzeb confirmed the request while speaking to the media. Muhammad Aurangzeb said talks with the US are still underway, and no final decision has been reached. He stressed that the proposed facility is not a conventional loan or credit line.
Instead, the facility is meant to strengthen confidence in Pakistan’s foreign exchange stability. It would also send a positive signal to international investors and debt markets. The finance minister said Pakistan is also discussing its eventual exit from existing financing arrangements. The government expects feedback from Exim Bank or the US Treasury by the end of September.
Muhammad Aurangzeb said Islamabad wants to reduce its reliance on repeated bilateral rollovers. The government is instead working to secure longer-term financing through international capital markets.
“Some will succeed, while with others there might be issues,” Muhammad Aurangzeb said. However, he added that the government remains focused on market-based financing.
He also thanked Pakistan’s bilateral partners for their support over the past decade. However, he said the country’s financing strategy is now being recalibrated. Muhammad Aurangzeb said Pakistan has already achieved an improved credit rating and wants to move toward a B+ rating. The government is working with international rating agencies to improve its sovereign credit standing.
According to the minister, Pakistan’s rating has remained stuck since 2003-04. A stronger rating could help the country raise funds from international markets at longer maturities. These maturities could extend to five, seven or even 10 years. That would reduce Pakistan’s need to seek short-term bilateral rollovers so frequently.
Aurangzeb also clarified the purpose of the proposed $10 billion US facility. He said it would mainly act as a market signal rather than provide direct financing. “This is a signal about our currency stability,” he said. “A signal about our foreign exchange stability.”
Pakistan has already started preparing for renewed access to international debt markets. The government has appointed three arrangers as part of that effort. Muhammad Aurangzeb also highlighted Pakistan’s recent use of different debt instruments. These include a Eurobond, Islamic Sukuk and a dollar-settled rupee-linked bond.
The finance minister said the government’s broader goal is to return to international markets. It aims to secure financing with five-, seven- and 10-year tenors.
