China’s SAFE provides $1 billion deposit loan to shore up Pakistan’s foreign exchange reserves in July 2020 (Linked to Project ID#96216)

On July 23, 2020, China’s State Administration of Foreign Exchange (SAFE) provided a $1 billion loan to the Government of Pakistan in order to shore up the country’s foreign exchange reserves (as captured via Project ID#92626). The loan carried the following borrowing terms: a 1-year maturity (final maturity date: July 23, 2021), a 1-year grace period, and an interest rate of 12-month LIBOR plus a 1% margin. SAFE made a $1 billion deposit (loan disbursement) in the State Bank of Pakistan on or around July 23, 2020. The loan was provided by SAFE to help the Government of Pakistan repay part of a $3 billion loan to Saudi Arabia, which was contracted to avoid default on its international debt obligations. This was reportedly the first time that SAFE issued a deposit loan to Pakistan’s federal government rather than its central bank (the State Bank of Pakistan). In July 2021, the $1 billion SAFE deposit loan from July 2020 was repaid and reissued (i.e. 'rolled over) with a maturity date of July 23, 2022 (as captured via Project ID#96216). Then, in July 2022, the $1 billion SAFE deposit loan from July 2021 was repaid and reissued (i.e. 'rolled over) with a maturity date of July 23, 2023. As of May 31, 2022, the Government of Pakistan’s total amount outstanding under multiple deposit loans from SAFE was $4 billion.

Additional details

1. The all-in interest rate was calculated by adding 1% to the average 12-month LIBOR rate in July 2020 (0.479%). 2. The EAD Project ID# is CHINA-20. 3. Media reports suggest that the provision of this loan increased total SAFE deposit loans in Pakistan to $4 billion.

Number of official sources

18

Number of total sources

29