ICBC provides $300 million loan to shore up Pakistan’s foreign exchange reserves in February 2021 (Linked to Project ID#96258, 92624, 92625)

Between October 2020 and February 2021, Industrial and Commercial Bank of China (ICBC) issued three loans worth $1.3 billion to the State Bank of Pakistan (SBP) for the same purpose and with identical borrowing terms. On October 29, 2020, ICBC provided a $500 million loan to the State Bank of Pakistan to shore up the country’s foreign exchange reserves (as captured via Project ID#92625). The loan carried the following borrowing terms: an interest rate of 3-month LIBOR plus a 2.75% margin and a 2-year maturity. The loan was fully disbursed by March 2021. Then, on January 21, 2021, ICBC provided a $500 million loan to the State Bank of Pakistan to shore up the country’s foreign exchange reserves (as captured via Project ID#92624). The loan carried the following borrowing terms: an interest rate of 3-month LIBOR plus a 2.75% margin and a 2-year maturity. The loan was fully disbursed by March 2021. On February 22, 2021, ICBC provided a $300 million loan to the State Bank of Pakistan to shore up the country’s foreign exchange reserves (as captured via Project ID#92619). The loan carried the following borrowing terms: an interest rate of 3-month LIBOR plus a 2.75% margin and a 2-year maturity. The loan was fully disbursed by March 2021. All three ICBC loans (worth $1.3 billion) were repaid by the SBP by March 2023. In March 2023, Pakistan’s Federal Minister for Finance and Revenue, Senator Mohammad Ishaq Dar, also announced that the State Bank of Pakistan had secured a $1.3 billion rollover facility agreement with ICBC to shore up Pakistan’s foreign exchange reserves (as captured via Project ID#96258). The loan carried the following borrowing terms: an interest rate of 3-month LIBOR plus a 2.75% margin and a 2-year maturity. It was scheduled for disbursement in 3 installments. The first installment of $500 million disbursed on March 3, 2023. The second installment of $500 million disbursed on March 17, 2023. The third installment of $300 million disbursed on April 14, 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 reserves to a minimum of $10 billion to cover the country’s import bill for two months.

Additional details

1. The all-in interest rate (2.94%) was calculated by adding 2.75% to the average, 3-month LIBOR rate in February 2021 (0.190%). 2. The EAD Project ID number is ICBC-300-FEB21.

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