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Overview

CDB provides $1 billion loan to shore up Pakistan’s foreign exchange reserves in June 2021 (Linked to Record ID#97840)

Commitments (Constant USD, 2023)$922,141,637
Commitment Year•2021Country 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
Jun 28, 2021
End (planned)
Jun 28, 2023
End (actual)
Jun 10, 2023
First repayment
Jun 28, 2023
Last repayment
Jun 28, 2023

Geospatial footprint

Map overview

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CDB provided a loan to the State Bank of Pakistan to shore up Pakistan’s foreign exchange reserves. More detailed locational information can be found at: https://www.openstreetmap.org/way/225861218

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

State-owned Policy Banks

  • China Development Bank (CDB)

Receiving agencies

Government Agencies

  • State Bank of Pakistan (SBP)

Loan desecription

CDB provides $1 billion loan to shore up Pakistan’s foreign exchange reserves in June 2021

Grace period•2 yearsGrant element•11.5817%Interest rate (t₀)•3.2475%Interest type•Variable Interest RateLoan tenor•12-month rateMaturity•2 years

Narrative

Full Description

Project narrative

On June 28, 2021, China Development Bank (CDB) signed a $1 billion term facility (loan) agreement with the State Bank of Pakistan to shore up the country’s foreign exchange reserves (captured via Record ID#92618). The loan agreement was later presented to Pakistan's Cabinet on December 8, 2021 and approved on December 21, 2021. The loan originally carried the following borrowing terms: an interest rate of 12-month LIBOR plus a 3% margin, a 2-year grace period, and a 2-year maturity (final maturity date: June 28, 2023). However, on April 28, 2023, CDB and the State Bank of Pakistan signed an amended version of the term facility (loan) agreement that reset the loan's base reference rate from LIBOR to SOFR. The loan fully disbursed and it was repaid ahead of schedule (on or around June 10, 2023). The lender agreed to waive the prepayment penalty that is typically charged when a borrower decides to repay ahead of schedule. Then, on June 16, 2023, China Development Bank signed a $1 billion rollover term facility (loan) agreement with the State Bank of Pakistan to shore up the country’s foreign exchange reserves (as captured via Record ID#97840). The borrowing terms of the loan are unknown.

Staff comments

1. The all-in interest rate was calculated by adding 3% to average 12-month LIBOR in June 2021 (0.243%). 2. The EAD Record ID number is CDB28062021. 3. One official source claims that the loan’s interest rate was 6-month LIBOR plus a 3% margin. Another official source claims that the loan’s interest rate was 12-month LIBOR plus a 3% margin. This issue warrants further investigation. 3. One official source indicated that the loan's original maturity was 1 year rather than 2 years, which suggests that a debt rescheduling (maturity extension) may have taken place. This issue warrants further investigation.