China’s SAFE provides $2 billion deposit loan to shore up Pakistan’s foreign exchange reserves in 2018 (Linked to Project ID#73340 and #92087)

On March 23, 2018, the People's Bank of China signed an agreement with the State Bank of Pakistan to provide a $2 billion loan — via China’s State Administration of Foreign Exchange (SAFE) — to shore up the country’s foreign exchange reserves (as captured via Project ID#73343). The loan carried the following borrowing terms: a 1-year maturity, a 1-year grace period, and an interest rate of 12-month LIBOR plus a 1% margin. The loan fully disbursed. Then, on March 23, 2019, the $2 billion SAFE deposit loan from 2018 was repaid and reissued (i.e. 'rolled over') with a maturity date of March 23, 2020 (as captured via Project ID#92087). One year later, on March 23, 2020, the $2 billion SAFE deposit loan from 2019 was repaid and reissued (i.e. 'rolled over') with a maturity date of March 23, 2021. Then, on March 23, 2021, the $2 billion SAFE deposit loan from 2020 was repaid and reissued (i.e. 'rolled over) with a maturity date of March 23, 2022. Then, on March 23, 2022, the $2 billion SAFE deposit loan from 2021 was repaid and reissued (i.e. 'rolled over'') with a maturity date of March 23, 2023. Then, on March 23, 2023, the $2 billion SAFE deposit loan from 2022 was repaid and reissued (i.e. 'rolled over') with a maturity date of March 23, 2024.

Additional details

1. The Economic Affairs Division (EAD) within Pakistan’s Ministry of Finance identifies the purpose of this loan as balance of payments (BOP) support. 2. Umbrella Project ID#73340 records several similar SAFE loans to the Government of Pakistan. 3. The all-in interest rate was calculated by adding 1% to the 12-month LIBOR rate in 2018 (2.759%). 4. Some sources suggest that China's SAFE issued the original (2018) $2 billion loan on July 23, 2018 rather than March 23, 2018. This issue warrants further investigation. 5. Until 2018, all SAFE loans were managed by the State Bank of Pakistan (SBP). However, during the 2018-2019 fiscal year, the loans were reclassified and are now under the aegis of the Economic Affairs Division (EAD).

Number of official sources

9

Number of total sources

12