China Development Bank provides $700 million loan in February 2020 to shore up Pakistan's foreign exchange reserves (Linked to Project ID#92272, #96086)
Commitment amount
$ 781785901.6711793
Adjusted commitment amount
$ 781785901.67
Constant 2021 USD
Summary
Funding agency [Type]
China Development Bank (CDB) [State-owned Policy Bank]
Recipient
Pakistan
Sector
General budget support (Code: 510)
Flow type
Loan
Level of public liability
Central government debt
Infrastructure
No
Category
Project lifecycle
Description
In February 2020, China Development Bank (CDB) and the State Bank of Pakistan (SBP) signed a $700 million facility (loan) agreement to shore up Pakistan’s foreign exchange reserves (as captured via Project ID#90968). The borrowing terms included a 3-year maturity and an interest rate of 6-month LIBOR plus a 3% margin. This loan was repaid at maturity (February 2023). In February 2023, Pakistan’s Federal Minister for Finance and Revenue, Senator Mohammad Ishaq Dar, also announced that the State Bank of Pakistan (SBP) had secured a $700 million (rollover) facility agreement with China Development Bank (CDB) to shore up Pakistan’s foreign exchange reserves (as captured via Project ID#96086). The borrowing terms of the loan are as follows: a 3-year maturity and an interest rate of SOFR plus a 2% margin. The loan disbursed in full on February 24, 2023. Under a staff-level agreement with the IMF that was slated for signature on February 28, 2023, the SBP was required to build its foreign exchange reserves to a minimum of $10 billion to cover the country’s import bill for two months.
Additional details
1. AidData has estimated the all-in interest rate by adding 3% to average 6-month LIBOR in February 2020 (1.679%). 2. The precise loan commitment date is unknown. This issue requires further investigation. For the time being, AidData assumed that the loan contracted in Fiscal Year 2019-2020 was contracted in calendar year 2019, and the commitment date is coded as July 1, 2019. 3. This project is linked to a $1 billion loan provided by CDB in FY 2019-2020. It is unclear whether CDB issued two separate loans (a $1 billion loan and a $700 million loan) or a single $1.7 billion loan in two separate tranches. For the time being, the $700 million contribution is captured via Project ID#90968 while the $1 billion contribution is captured via Project ID#92272.
Number of official sources
6
Number of total sources
6
Details
Cofinanced
No
Direct receiving agencies [Type]
State Bank of Pakistan (SBP) [Government Agency]
Implementing agencies [Type]
State Bank of Pakistan (SBP) [Government Agency]
Loan Details
Maturity
3 years
Interest rate
4.679%
Grant element (OECD Grant-Equiv)
3.0227%