Pakistan seeks $10 billion US lifeline to shore up ailing economy: Report
- Pakistan has sought a $10 billion backstop facility from the US to boost foreign exchange reserves.
- The request comes after Pakistan mediated talks between the US and Iran.
- The facility is intended to shore up Pakistan's struggling economy and stabilize its currency.
Islamabad reaches out to Washington
Pakistan has formally asked the United States for a $10 billion financial support facility to shore up its struggling economy, according to multiple reports. The request was made by Pakistan's Finance Minister Muhammad Aurangzeb during recent engagements with US officials.
The development comes days after Pakistan played a mediating role in talks between Washington and Tehran. Sources familiar with the matter told Reuters and Dawn that Islamabad is now seeking a currency backstop from the US Treasury.
Mediation as leverage
Pakistan's request for the large-scale facility appears linked to its recent diplomatic efforts. Officials in Islamabad believe the mediation role gives the country fresh leverage to seek financial assistance from the United States.
The proposed backstop facility would help Pakistan stabilise its foreign exchange reserves, which have come under severe pressure in recent months. The country's central bank reserves have been declining, making it harder for Pakistan to pay for imports and service its external debt.
Economy under strain
Pakistan's economy has been grappling with high inflation, a widening current account deficit, and a depreciating currency. The country has already secured a bailout programme from the International Monetary Fund, but the funds have not been enough to fully stabilise the situation.
The $10 billion facility would give Pakistan a cushion to defend its currency and meet external payment obligations. Officials have not yet confirmed the exact terms being discussed with the US side.
The request is significant because the United States has traditionally provided security-related assistance to Pakistan but has been cautious about direct budgetary support. Any deal would likely face scrutiny in the US Congress.
What happens next
Negotiations between Islamabad and Washington are expected to continue in the coming weeks. Pakistan's finance minister is likely to hold further meetings with US Treasury officials to finalise the framework of the facility. The outcome will depend on how the Biden administration weighs Pakistan's strategic value against its own fiscal constraints and geopolitical priorities.