Pakistan, China's 'Iron Brother,' Seeks $10 Billion Lifeline from U.S. Amid Financial Crisis

Pakistan, dubbed 'Iron Brother' by China and grouped with Iran and Venezuela as a strategic tool to exhaust the United States, has turned to Washington for economic assistance. On July 21 Eastern Time, Pakistan's Finance Minister Muhammad Aurangzeb met with U.S. Treasury Secretary Scott Bessent in Washington, D.C., where he reportedly submitted a formal written request for a $10 billion 'bilateral exchange stabilization support facility.'

According to Reuters, citing two informed sources briefed on the matter, Aurangzeb handed the proposal directly to Bessent during the meeting. A U.S. official later confirmed the report's accuracy. However, Bessent made no public mention of the funding request after the meeting, and the U.S. Treasury's brief post-meeting statement made no reference to it.

Pakistan's official post-meeting statement also did not disclose the specific proposal, merely stating that Aurangzeb had requested U.S. 'assistance' to bolster Pakistan's foreign exchange reserves and expand market access based on its sovereign credit rating. The fund revealed by Reuters would directly serve both policy objectives.

The U.S. official further explained that the requested mechanism is essentially a 'currency swap line'—a facility allowing access to stable U.S. dollar funding to support and stabilize the Pakistani rupee's exchange rate.

Looking back at Pakistan's recent financial trajectory, the country narrowly avoided a sovereign default in 2023 after securing a $3 billion bailout from the International Monetary Fund (IMF). It received an additional $7 billion in 2024, significantly stabilizing its domestic currency. As a result, S&P Global upgraded Pakistan's credit outlook to 'B' on July 22, 2025.

S&P Global noted that if Pakistan maintains the fiscal discipline demonstrated over the past two years and keeps its fiscal deficit below 3% of GDP, further upgrades are possible. However, it warned that a sharp rise in market interest rates could still trigger a downgrade.

The ongoing escalation of the Iran crisis, casting a shadow over the entire Middle East's economic outlook, is seen as a key reason behind Aurangzeb's urgent push for foreign exchange stability. The Pakistani rupee faced significant downward pressure against the U.S. dollar in 2025, though it showed strong recovery in 2026. Nevertheless, Islamabad remains deeply concerned that regional inflation could erode these hard-won exchange rate gains.

Pakistan's leading newspaper, Dawn, reported on July 22, citing 'Washington diplomatic sources,' that the request has a 'high likelihood' of approval, given President Trump's public expressions of desire to strengthen ties with Pakistan and support its economic development.

The Financial Times analyzed that Pakistan's proposed framework closely resembles the $20 billion currency swap line previously extended by the Trump administration to Argentine President Javier Milei, which Argentina repaid swiftly. Amid instability triggered by the Iran crisis, several Middle Eastern allies have sought similar swap lines from the U.S. Pakistan has reportedly committed to fully repaying the requested funds within five years.