Pakistan asks US for $10bn lifeline to shore up struggling economy: Report

Pakistan has asked the United States for a $10 billion exchange stabilisation facility in a bid to shore up its fragile economy, according to a source familiar with the matter, as Islamabad looks to ease pressure on its foreign exchange reserves and currency.The request, reported by Reuters, comes as Pakistan continues to grapple with the aftermath of its worst economic crisis in decades despite an ongoing International Monetary Fund (IMF) bailout programme. The proposed facility, if approved, would provide a significant financial cushion for the cash-strapped country while reducing its dependence on multilateral lenders.The request also follows Pakistan's role in helping broker talks during the recent US-Iran conflict, which boosted Islamabad's diplomatic standing and fuelled expectations that it could seek stronger economic backing from Washington.Seeking a rare US financial backstopAccording to Reuters, Pakistan has asked US Treasury Secretary Scott Bessent to approve a Bilateral Exchange Stabilisation Support Facility worth $10 billion with a maturity period of up to five years.The proposed facility would strengthen Pakistan's foreign exchange reserves, help stabilise the currency and improve confidence in the country's financial position while it continues implementing fiscal and monetary reforms under its IMF programme.The ministry said he sought greater US support for Pakistan's return to international capital markets through higher foreign exchange reserves, stronger sovereign credit ratings and increased investment. Both sides also reaffirmed their commitment to expanding bilateral economic cooperation and advancing strategic projects.Exchange stabilisation facilities are uncommon US Treasury instruments, typically financed through the Exchange Stabilization Fund. Unlike the Federal Reserve's permanent dollar swap lines with select central banks, these arrangements provide temporary dollar liquidity, guarantees or swaps to help countries stabilise their currencies during periods of financial stress, Reuters reported.Economy still under pressurePakistan narrowly avoided a sovereign default in 2023 after securing a $3 billion IMF standby arrangement, followed by a $7 billion Extended Fund Facility and a separate $1.3 billion climate resilience loan. However, the country's external finances remain heavily dependent on IMF support, debt rollovers and deposits from key partners including China and Saudi Arabia.Economists say Pakistan's economic difficulties stem from decades of weak policy management, persistent fiscal deficits and rapid population growth, which have constrained savings, investment and long-term growth. The country has also struggled with mounting public debt, while interest payments consume a large share of government revenue, leaving limited room for spending on health, education and infrastructure.Although IMF-backed reforms have helped stabilise the economy by restoring reserves and easing pressure on the rupee, analysts caution that Pakistan continues to face significant financing needs and a heavy external debt repayment burden. Against that backdrop, a $10 billion US-backed stabilisation facility would represent one of Islamabad's biggest attempts in recent years to secure bilateral financial support and strengthen its economic recovery.Catch the latest World News and Live updates. Download the TOI app.