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CHINESE GOVERNMENT CONCESSIONAL LOAN
 

Basic Concept

Chinese Government Concessional Loan refers to the medium and long-term, low interest rate credit extended by the China Eximbank under the designation of the Chinese Government, to the Government of the Borrowing Country with the nature of official assistance.
The Export-Import Bank of China is authorized by the Chinese Government as the sole lender of the Concessional Loan.

Objective

Promote economic development and improve living standard in developing countries
Boost economic cooperation between developing countries and China

Resource and Utilization of Funds

China Eximbank raises funds in domestic financial market through bond issuing. Chinese Government subsidizes interest rate difference.
The Loan is mainly used to procure mechanical and electronic products, complete sets of equipment, high tech product, services as well as materials from China.

Main project sectors

infrastructure
Such as energy, transportation, telecommunication

Industrial
Such as manufacturing, mining etc.

Social welfare
Such as health-care, housing etc.

Basic Criteria for Project

The project should be approved by both the Chinese Government and the government of the Borrowing country
The project should be technically feasible and can generate favorable economic returns
The project should have good social benefits
Chinese enterprises should be selected as contractor/exporter
Equipments, materials, technology or services needed for the project should be procured from China ahead of other countries. In principle, no less than 50% of the procurements shall come from China.

Terms and Conditions of Loan

Loan Amount
In principle, the Loan amount should be no less than RMB 20 million (approximately USD 2.4 million).

Loan Currency
The loan is denominated in Renminbi Yuan

Borrower
Borrower is normally the Government of the Borrowing Country represented by Ministry of Finance

Interest Rate and Maturity Period
Interest Rate and Maturity Period are Fixed by Chinese Government and stipulated in inter-governmental framework agreement

Maturity Period
Maturity Period includes Grace Period and Repayment Period

Grace Period
In Grace Period, the borrower shall pay the interest but no principal

Availability Period = Drawdown period
Borrower can make drawdown within Availability Period. The Availability Period is included in the Grace Period and matches the implementation period of the project.

Interest payment
Interest is calculated and paid semi-annually. Interest collection dates are fixed on March 21st and September 21st every year.

Principal repayment
In repayment period, the principal is repaid semi-annually in equal installments. Principal repayment dates are fixed on March 21st and September 21st every year

Management Fee
Management Fee is calculated on the basis of the total amount of the Loan and paid in one lump sum before the first drawdown

Commitment Fee
Commitment Fee is calculated on the basis of the undrawn amount of the Loan and paid on interest collection dates

Project Cycle

1 Application

Candidate project can be proposed to the Chinese Government or China Eximbank by Borrowing country based on development plan and strategy
Documents required
* Application
* The approval of the Government of the Borrowing country
* Feasibility study report: containing the objective, scope and content of the project and detailed information on technical, economical and social aspects.
* The commercial contract or other intention agreements.
* Brief introductions and financial statements of the project executing agency and Chinese contractors/ exporters.

2 Appraisal

China Eximbank conducts appraisal at its own discretion
Reports results to the Chinese Government
Following aspects are analyzed during appraisal
* Objective and necessity of the project
* Technical, financial, economical and social aspects of the project
* Macro-economic situation and debt servicing ability of the Borrowing Country
* Management capability and financial strength of executing agency.
* Qualification and performance records of Chinese contractor/exporter.

3 Agreement

Inter-governmental Framework Agreement is signed by two Governments, specifying purpose, amount, maturity period and interest rate of the facility
Loan Agreement is signed by China Eximbank and Borrower in line with inter-governmental framework agreement

4 Implementation and Disbursement

Borrower makes drawdown according to Loan Agreement
Implementation is essentially the obligation of the Borrower and the executing agency
China Eximbank monitors the implementation to ensure the efficient use of funds
The Borrower reports to China Eximbank progress of project, use of funds and provides necessary assistance
After project is completed, the Borrower sends a completion report to China Eximbank

5 Operating and Debt Servicing

Executing Agency has the responsibility to operate the project. China Eximbank may monitor the project and offer advice when it is necessary.
The Borrower has the obligation to pay interest and fees and repay the principal according to the provision of Loan Agreement.
After a period of operation, China Eximbank makes Ex-post evaluation on the project on a case by case basis.

Disbursement Procedures

Contact Information

Concessional Loan Department
The Export-Import Bank of China

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