Bangladesh to get $3b in concessional loans from South Korea

South Korea and Bangladesh today signed a new framework arrangement opening up $3 billion in concessional loans.

According to the arrangement, the loan will be delivered through the Economic Development Cooperation Fund (EDCF) for five years up to 2027.

Kisun Bang, first vice minister for Economy and Finance of Korea, and Sharifa Khan, secretary of Economic Relations Division (ERD), signed the arrangement on behalf of respective countries in Incheon, Korea, according to a statement of the Korean embassy in Dhaka.

The signing ceremony took place on the occasion of the 56th Annual General Meeting of the Board of Governors of the Asian Development Bank.

A Memorandum of Understanding (MOU) on the cooperation for Dhaka MRT Line 4 and EDCF Loan Agreement for two projects -- procurement of CNG buses and modernisation of railway signaling system -- have also been signed.

The signed arrangement will serve as a legal foundation for Korean government's provision of up to $3 billion in concessional loans to Bangladesh.

As per the deal, the repayment period of the EDCF loans will be 40 years, including 15 year grace period, with the annual interest rate between 0.01%~0.05%. Candidate projects will be identified in the future in close consultation between the two governments.

With the signing of the new arrangement, Bangladesh has become the second largest recipient of Korea's Official Development Aid (ODA) across the globe.

The amount authorised by the newly signed arrangement has more than quadrupled compared to the previous EDCF Framework Arrangement that stipulated provision of up to $700 million for 2021 to 2025.

So far, the Korean government has supported 30 development projects in Bangladesh with an aggregate amount of $1.7 billion through the EDCF.

Ambassador Lee Jang-kuen said it is particularly meaningful to sign a new EDCF Framework Arrangement on the year of the 50th anniversary of diplomatic ties between the two countries.

"With the substantial increase of the concessional loan to Bangladesh, it is expected that Korea will be able to support mega projects in Bangladesh," he said.

He hoped the $3 billion serves as a catalyst for improving the daily lives of Bangladesh people, such as in the areas of transportation, health and education, and for enhancing friendship between the people of Bangladesh and Korea.

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