Sri Lanka gets US$500mn Korean soft loan
ECONOMYNEXT – South Korea has increased its soft loan commitment to Sri Lanka to US$500 million from $300 million with an agreement signed during President Maithripala Sirisena’s visit there this week.
The funds will be Official Development Assistance (ODA) from EDCF (Economic Development Cooperation Fund) entrusted with Korea Eximbank, a Korean embassy statement said.
“The EDCF loans with 0%~0.15% interest rate and up to 40 year repayment period (including up to 10 year grace period) are so concessional that Sri Lankan government’s shoulder to finance for infrastructure development projects will be lightened,” it said.
Under this new FA, the two governments will work closely on executing projects identified through the mid-term pipeline for year 2017-2019 under priority sectors of country partnership strategy for Sri Lanka.
These priority sectors include transportation, water and sanitation, education and rural development, the statement said.
“Importantly, these projects are aligned with Sri Lanka’s national development plan (Vision 2025: A country enriched) in its journey to reach upper middle income country.”
The mid-term pipeline projects to be financed through the new FA include for example supply of garbage compactors, establishment of an ICT Hub for secondary education, land data infrastructure and land information service system which will be finalized through policy dialogue between governments next month.
“These projects are symbolic of an effort to share Korea’s development experience and knowledge with Sri Lanka,” the statement said.
“With the newly signed FA, the Korean government will further strengthen economic development partnership with Sri Lanka by supporting Sri Lanka to achieve sustainable development.”
As of now, Korea Eximbank entrusted by the Korean government with the EDCF has approved USD 771 million for 27 development projects in Sri Lanka.
The first EDCF loan agreement with Sri Lanka has been signed in 1990, for the rehabilitation of the Colombo-Galle road (A2). In terms of the loan amounts committed from EDCF, Sri Lanka is ranked at fourth place among all 54 countries which have received the support from the EDCF.
Some of the completed projects supported by Korea Eximbank in the past are Hatton-Nuwara Eliya Road Improvement Project, Hambantota Administrative Complex Project, Greater Galle Water Supply Project Phase I & II to name a few.
(COLOMBO, November 30, 2017)