From Ariba, a martyr

Karachi, July 23 (Reuters) - Pakistan's efforts to leverage good diplomatic relations with U.S. President Donald Trump's administration to secure economic support have raised skepticism among economists, who say any new funding will do little to address reforms that Islamabad has long avoided implementing.

Reuters, citing sources who were not authorized to speak publicly on the matter, reported that during Pakistani Finance Minister Muhammad Aurangzeb's visit to Washington this week, Pakistan requested the creation of a $10 billion US exchange rate stabilization fund.

In a previously undisclosed development, a source not authorized to discuss the matter publicly said that Pakistan later also submitted a separate proposal to secure trade finance facilities from the US Export-Import Bank. Both proposals would support the Pakistani rupee and diversify funding sources away from the International Monetary Fund, China, and Saudi Arabia.

Pakistan helped broker a ceasefire between the United States and Iran this year, but the country’s economic fundamentals have remained largely unchanged compared to before the war.

Amid tensions with the UAE, Pakistan paid $3.5 billion to Abu Dhabi in April, equivalent to one-fifth of its foreign reserves, and resorted to a $3 billion Saudi support umbrella to fill the gap.

While it remains unclear whether the United States will agree to the Pakistani proposals, some analysts believe that Washington could reap benefits from any potential agreement.

Ozeer Yunus, a partner at Asia Group, said the Trump administration is seeking to strengthen its role in Pakistan's vital minerals sector, adding that potential funding is likely to solidify the US role in future mining deals.

But others questioned the usefulness of any US-Pakistani agreement.

Adeel Malik, an associate professor at Oxford University, described the proposed facility to support reserves as a "geopolitical rent," noting that it comes in the wake of Pakistan's mediation in the US-Israeli war against Iran, and amid a new wave of escalation in the Middle East over the past few days.

* 'Vitual cash reserve'

The reforms imposed by the International Monetary Fund are beginning to yield some results. On Wednesday, Standard & Poor's Global Ratings raised Pakistan's sovereign rating to "B" from "B-", the country's first upgrade in nine years, citing improvements in its financial and institutional conditions.

But the IMF’s $7 billion program comes with a political cost, requiring unpopular tax increases and spending cuts, at a time when the Pakistani government, concerned about its history of governments not completing their terms, is looking ahead to elections scheduled for 2029.

Gareth Leather of Capital Economics said the proposed US fund would provide an "important cash safety net" for Pakistan's reserves, without the stringent conditions imposed by the International Monetary Fund or the need for constant renewal of Chinese and Saudi deposits.

On the other hand, the proposed facilities from the US Export-Import Bank would allow Pakistani buyers to defer payments to US exporters for a period of one to three years, which would help reduce the US trade deficit with the South Asian country.

However, the real test lies not in the arrival of new funds, but in whether Pakistan will finally implement reforms related to taxes, the energy sector, and state-owned enterprises, according to Pakistani economist Waqar Ahmed, who said the country will continue to return to the International Monetary Fund unless it implements these reforms.

He added, "New liquidity can buy time, but it cannot buy growth."

A statement attributed to the US Treasury Secretary this week praised the reforms being implemented by Pakistan, but stressed the importance of strengthening the Pakistani economy's ability to become self-reliant and return to international capital markets, without any reference to the requested $10 billion facility.

The U.S. Export-Import Bank confirmed on Wednesday that the talks are limited to a "strategic framework" that is targeted for signing during the United Nations General Assembly meetings in September.

Hungarian Prime Minister Viktor Orban, another Trump ally, sought in November 2025 a “financial shield” similar to that given to Argentina, but Trump did not provide him with such support, before Orban’s party lost the Hungarian elections five months later.

China is unlikely to oppose US aid to Pakistan. Yun Sun, director of the China program at the Stimson Center, said Beijing wants stability in Islamabad but does not want to be its sole backer and would welcome Washington sharing the burden.

Few expect the US exchange rate stabilization fund to allow Pakistan to withdraw from the IMF and its reforms.

Malik said that the IMF programs have become closely aligned with US geopolitical interests in Pakistan and constitute a key instrument of US influence, something Washington is unlikely to give up.