Completed Development AidData Chinese Aid

China’s SAFE provides $500 million deposit loan to shore up Pakistan's foreign exchange reserves in January 2009

$500K USD

Funder	China State Administration of Foreign Exchange (SAFE)
Recipient Organization	State Bank of Pakistan (SBP)
Country	Pakistan
Start Date	Jan 23, 2009
End Date	Aug 04, 2033
Duration	8,959 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`73341`

Grant Description

China’s SAFE provides $500 million deposit loan to shore up Pakistan's foreign exchange reserves in January 2009 On January 23, 2009, China’s State Administration of Foreign Exchange (SAFE) provided a $500 million deposit loan to State Bank of Pakistan (SBP) in order to shore up the country’s foreign exchange reserves (and address the country’s weak current account situation).

📋 Loan / Grant Terms

📅 Maturity4 years

⏳ Grace Period4 years

The loan was repayable semi-annually and it was scheduled to mature on January 23, 2013.

On January 23, 2013, the $500 million SAFE deposit loan from 2009 was repaid and reissued (i.e. 'rolled over') with a maturity date of January 23, 2014.

Then, on January 23, 2014, the $500 million SAFE deposit loan from 2013 was repaid and reissued (i.e. 'rolled over') with a maturity date of January 23, 2015.

One year later, on January 23, 2015, the $500 million SAFE deposit loan from 2014 was repaid and reissued (i.e. 'rolled over') with a maturity date of January 23, 2016.

Then, on January 23, 2016, the $500 million SAFE deposit loan from 2015 was repaid and reissued (i.e. 'rolled over') with a maturity date of January 23, 2017.

Rather than rollover for yet another year, the Government of Pakistan decided to repay the loan in 2017 due to the country’s strong macroeconomic performance and stable foreign exchange reserves position.

Pakistan’s Finance Minister directed the SBP to make payment of $500 million to China’s State Administration of Foreign Exchange (SAFE) on January 23, 2017.

The then-Prime Minister Muhammad Nawaz Sharif expressed his deep appreciation to the Chinese Government for the critical support it provided through the SAFE deposit, which had stabilized the country’s current account since 2009.

📋 Staff Comments

For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
The Fiscal Year 2011 Annual Report of SBP identifies ‘two long-term deposits of USD 500 million each received from the State Administration Foreign Exchange (SAFE) China carrying interest at six month LIBOR plus 1% payable semi-annually. Out of these, one deposit of USD 500 million has been set off against the rupee counterpart receivable from the Federal Government [of Pakistan via] letter dated March 26, 2009 between SBP and Federal Government whereby the Federal Government has agreed to assume all liabilities and risks arising from SBP's agreement with SAFE China.’ The Fiscal Year 2013 Annual Report of SBP identifies ‘two long-term deposits of USD 500 million each received from the State Administration Foreign Exchange (SAFE) China in January 2009 (rolled-over in January 2013) and June 2012 carrying interest at six months LIBOR plus 100 bps and twelve months LIBOR plus 100 bps respectively, both payable semi-annually. These deposits of USD 500 million each have been set off against the rupee counterpart receivable from the Federal Government and have been covered under Ministry of Finance (MoF) Guarantees dated February 7, 2013 and June 29, 2012 whereby the MoF has agreed to assume all liabilities and risks arising from the Group's agreement with SAFE China. Further, this also includes a deposit of USD 500 million received from SAFE in June 2008 carrying interest at six months LIBOR plus 100 bps payable semi-annually. The outstanding balance of this deposit is USD 100 million as on June 30, 2013 (2012: USD 200 million). This deposit is the direct liability of the [SDP].'

📚 Sources & References

China to roll over $500m loan to shore up Pakistan's reserves
May 2011 Statistical Review
Pakistan borrows another $500m from Chinese bank
Domestic External Debt
November 2017
The State of Pakistan's Economy - Third Quarterly Report
STATE BANK OF PAKISTAN ANNUAL PERFORMANCE REVIEW
STATE BANK OF PAKISTAN ANNUAL PERFORMANCE REVIEW
Repayment of Chinese Loan Islamabad
Pakistan’s Debt and Liabilities-Summary
Annual Report Performance Review 2012-2013
Pakistan’s Debt and Liabilities-Summary
Pakistan to repay Chinese US$ 500 million loan: Minister Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.