ICBC contributes to RMB 15 billion loan to shore up Pakistan’s foreign exchange reserves in March 2019 (Linked to Project ID#57695, #98786, #96215)

On March 19, 2019, China Development Bank (CDB), Bank of China, and the Industrial and Commercial Bank of China (ICBC) signed an RMB 15 billion ($2.1837 billion) facility (loan) agreement with the State Bank of Pakistan (SBP) to shore up the country’s foreign exchange reserves (as captured via Project ID#57695). The loan carried the following borrowing terms: a 3-year maturity (final maturity date: March 25, 2022) and an interest rate of 6-month SHIBOR plus a 2.5% margin. The loan fully disbursed, and when it reached maturity in March 2022, it was fully repaid. AidData estimates that CDB contributed $727,900,000 (captured via Project ID#57695), that Bank of China contributed $727,900,000 (captured via Project ID#98786), and that ICBC also contributed $727,900,000 (captured via Project ID#98785) to this syndicated loan. Then, on June 22, 2022, CDB, Bank of China, and ICBC and the State Bank of Pakistan signed an RMB 15 billion ($2.240,310,000) syndicated rollover facility (loan) agreement to shore up the country’s foreign exchange reserves (as captured via Project ID#96215). The loan carried the following borrowing terms: a 3-year maturity and an interest rate of 6-month SHIBOR plus a 1.5% margin. The loan had fully disbursed by June 24, 2022. Prior to the signing of the June 2022 loan agreement, CDB told the State Bank of Pakistan that (a) future loan proceeds 'could not be used' (i.e. the proceeds from a rollover facility could only be used to bolster gross reserves and serve as 'window dressing') due to weakening of the external sector position of Pakistan, and (b) it expected the Government of Pakistan to remain in good standing with the International Monetary Fund. However, when the June 2022 loan agreement was finalized, CDB authorized the borrower to freely use the proceeds of the loan (including for external debt service and foreign reserve accumulation).

Additional details

1. Project ID#54767 is an umbrella record that captures the $2.53 billion commitment from ICBC and CDB in 2019 to shore up the Pakistan’s foreign exchange reserves. 2. The Economic Affairs Division (EAD) within Pakistan’s Ministry of Finance identifies the purpose of this loan as balance of payments (BOP) support. 3. The all-in interest rate was calculated by adding 2.5% to the 6-month SHIBOR rate in March 2019 (2.85%). 4. More information regarding the June 2022 loan can be found via https://www.finance.gov.pk/supplement_2021_22.pdf and https://tribune.com.pk/story/2362848/23b-loan-deal-inked-with-china and https://tribune.com.pk/story/2363132/china-deposits-23-billion-to-boost-sbp-reserves and https://twitter.com/MiftahIsmail/status/1540307883799506944 and https://www.thenews.com.pk/print/963562-cabinet-approves-terms-for-2-4bn-loan-from-china 5. The exact size of CDB, Bank of China, and ICBC’s respective financial contributions to the $2.1837 billion syndicated bridge loan are unknown. For the time being, AidData assumes that all 3 members of the lending syndicate contributed equal amounts ($727,900,000).

Number of official sources

10

Number of total sources

16