Cabinet approves terms for $2.4bn loan from China

ISLAMABAD: The Finance Ministry has obtained approval from the federal cabinet for a syndicated loan facility of $2.4 billion from the China Development Bank and its consortium for a three-year period at six-month SHIBOR (Shanghai Inter-Bank Offered Rates) plus 1.5 percent margin. The rate was reduced by one percent as compared to the previous facility.

According to a summary moved by the Finance Ministry, the China Development Bank has agreed to extend RMB 15 billion facility and ($2.4 billion) for a three-year period at six-month SHIBOR plus 1.50 percent margin. This facility was earlier extended in March 2019 and matured on March 24, 2022. The Chinese side has reduced the margin by one percent as compared to the previous facility.

The draft Facility Agreement shared by the China Development Bank was forwarded to the Ministry of Law and Justice and the Office of the Attorney General for Pakistan for vetting and clearance in the light of the cabinet decision dated May 14, 2019.

The Ministry of Law and Justice has cleared the draft agreement subject to fulfilment of all codal formalities. The clauses under the waiver of immunities in the draft facility agreement are the same as those under facility agreement executed on March 19, 2019.

Approval of the cabinet is solicited to the draft Facility Agreement in terms of Rule 16 (1) (d) of the Rules of Business 1973 as well as in view of the observations of the Office of Attorney General for Pakistan. "The prime minister has been pleased to approve the placement of the Summary before the Cabinet through circulation under Rule 17(1)(b) of the Rules of Business 1973 in view of the urgency to relieve the current pressures on the exchange rate."