ISLAMABAD : The Federal Cabinet is said to have rectified a mistake of the Finance Division about the date of loan of $ 500 million from Industrial and Commercial Bank of China (ICBC).
The Finance Division under the Rules of Business, 1973 was responsible for arranging finances, including foreign exchange, to meet the current and development expenditure requirements, and maintaining sustainable balance of payments position of the country. An important avenue for the purpose is raising foreign exchange from the international financial markets including international commercial banks. The commercial loans / credit facilities so procured by the Finance Division have been exempted by the Prime Minister from the PPRA provisions on recommendation of the PPRA.
It was further informed that a financing agreement was executed between the Finance Division and the China Development Bank for loan facility amounting to $ 1000 million on 28th June 2021, after obtaining comments from the Ministry of Law and Justice and the Office of Attorney General for Pakistan. This loan facility was presented to the Cabinet through a Summary for Cabinet of December 8, 2021 and approved by the Cabinet on December 21, 2021. The mark-up reference rate prevalent at that time was LIBOR and thus LIBOR was used as a reference rate. However, since LIBOR was to cease to be published on June 30, 2023, an Amendment Agreement to effect the transition from LIBOR to SOFR has been executed with the China Development Bank on 28th April 2023. The Amendment Agreement has been cleared by the Ministry of Law and Justice.
The Cabinet was apprised that a financing agreement was executed between the Finance Division and the Industrial and Commercial Bank of China for a loan facility amounting to USD 500 million on 1 March 2023 and funds were disbursed on 3rd March 2023. Approval of this loan facility was sought from the Cabinet through a Summary for Cabinet dated 7th July 2023 and approved by the Cabinet vide case no. 537/Rule-19/2023 on August 9, 2023. However, in the summary for the Cabinet, the date of disbursement had been inadvertently written as 3rd March 2021 instead of 3rd March 2023, which was approved as such. Therefore, the Cabinet decision to the extent of this loan facility needs to be amended to the extent that the date of disbursement of the ICBC loan facility of $ 500 million is 3rd March 2023 instead of 3rd March 2021. The Cabinet approved the proposal of without going into details.
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