China’s SAFE provides $2 billion deposit loan to shore up Pakistan’s foreign exchange reserves in March 2020 (Linked to Project ID#92087, 73343)

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 Project 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 Project 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.

Additional details

1. AidData has estimated the all-in interest rate by adding 1% to average 12-month LIBOR in March 2020 (0.922%). 2. 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). 3. The World Bank's Debtor Reporting System records the 2020 SAFE loan as having a 2-year maturity and 2-year grace period rather than a 1-year maturity and 1-year grace period. See https://www.dropbox.com/s/949n5rctiue6d7c/IDS_Average_grace_period_and_maturity_on_new_external_debt_commitments.xlsx?dl=0 and https://www.dropbox.com/s/2sw4f7gluxa52fk/DRS%20Official%20Commitments%20from%20China%20Through%202021.xlsx?dl=0. This discrepancy warrants further investigation

Number of official sources

4

Number of total sources

12