The repayment period of the EDCF loans will be 40 years, including a 15 year grace period, with the annual interest rate between 0.01%~0.05%
A new framework arrangement regarding soft loans from the Economic Development Cooperation Fund (EDCF) was signed between South Korea and Bangladesh on Sunday.
Ambassador Lee Jang-Keun of the Republic of Korea and Secretary Fatima Yasmin of the Economic Relations Division signed the framework arrangement, which is expected to be disbursed between the year 2021 to 2025.
Ambassador Lee said: “As a trusted development partner of Bangladesh, South Korea will continue to support Bangladesh in its journey toward socio-economic development. The new EDCF framework arrangement signed will provide additional momentum to further boost our economic and development cooperation.”
“I hope this new framework arrangement provides meaningful resources in achieving SDGs by the Bangladesh government and for smooth graduation from the LDCs by 2026,” he added.
The EDCF framework arrangement will serve as a legal foundation for the South Korean government’s provision of up to $700 million in concessional loans to the government of Bangladesh for the next five years.
According to the arrangement, candidate projects will be identified to be financed in close consultation between the two governments.
The repayment period of the EDCF loans will be 40 years, including a 15 year grace period, with the annual interest rate between 0.01%~0.05%.
The arrangement also mentions that all taxes, customs duties and other fiscal charges imposed in Bangladesh on goods and services related to the EDCF projects shall either be exempt or borne by the Bangladesh government.
Bangladesh is the second-largest recipient of EDCF loans worldwide in aggregate amount. The Republic of Korea has funded 24 development projects of Bangladesh with a total amount of $1.2 billion through the EDCF so far.
The amount of concessional loans to Bangladesh from South Korea has been steadily increasing in recent years.
The amount authorized in the renewed framework arrangement is up from the amount authorized in the previous EDCF framework arrangement 2017-2020, which stipulated a provision of $500 million in four years.
A renewed framework arrangement will primarily concentrate on supporting several sectors such as enhancing health services and improving transportation in Bangladesh.