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Overview

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

Commitments (Constant USD, 2023)$2,012,592,588
Commitment Year•2018Country of Activity•PakistanDirect Recipient Country of Incorporation•PakistanSector•General Budget SupportFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Mar 23, 2018
Start (actual)
Jul 23, 2018
End (planned)
Jul 23, 2019
End (actual)
Jul 23, 2019
First repayment
Mar 23, 2019
Last repayment
Mar 23, 2019

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

Government Agencies

  • China State Administration of Foreign Exchange (SAFE)

Receiving agencies

Government Agencies

  • State Bank of Pakistan (SBP)

Implementing agencies

Government Agencies

  • State Bank of Pakistan (SBP)

Loan desecription

China’s SAFE provides $2 billion deposit loan to shore up Pakistan’s foreign exchange reserves in March 2018

Grace period•1 yearsGrant element•5.6765%Interest rate (t₀)•3.66638%Interest type•Variable Interest RateLoan tenor•12-month rateMaturity•1 years

Narrative

Full Description

Project narrative

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 Record 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 Record 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.

Staff comments

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 Record 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).