The Economic Development Cooperation Fund of Korea, administered by the Export-Import Bank of Korea and the Ministry of Strategy and Finance, provides concessional loans to LDCs to facilitate their industrial development and economic stability. The Fund offers five types of loans: (i) development project loans, (ii) equipment loans, (iii) public-private partnership loans, (iv) two-step loans and, (v) commodity loans. The Bank also provides compact loans, co-financing loans and mixed credit loans.
The concessional loan mechanism identifies five groups of countries for which different interest rates and repayment periods apply. The LDCs are the group receiving the most favourable conditions. LDCs are eligible for lower rates and longer repayment periods.
Korea’s development assistance to LDCs has increased significantly over the last decade, from $85.87 million in 2004 to $580.13 million in 2015 (40.1% of bilateral ODA, in current prices). Assistance to Afghanistan, Cambodia, Bangladesh, Lao People’s Democratic Republic and Tanzania accounted for more than half of the Korean ODA in 2015.
The Korean government has planned to gradually increase its assistance to Africa while maintaining its focus on Asia since 2017. In particular, the government is expanding its provision of humanitarian-type assistance by increasing its assistance to least developed countries (LDCs) in Africa.
Utilization by LDCs:
- 24 projects in 14 countries were approved in 2016 with the total amount of USD $1,430 million. Among LDCs:
- Bangladesh: Rehabilitation and Improvement of Bridges on National Highways Project; Khe Net Pass Railway Rehabilitation Project
- Cambodia: Irrigation Development and Flood Mitigation Project in Banteay Meanchey Province; Financial Accessibility Enhancement Project for Gender Equality in Cambodia; Sewerage System Development in Ta Khmau Town Project
- Ethiopia: Gore-Tepi Road Improvements Project
- Lao People’s Democratic Republic: The Mekong River Integrated Management Project; The Construction of Modern Hospital Project
- Myanmar: Rehabilitation and Modernization of Mandalay-Myitkyina Rail Line Project (Gyohtaung-Me’za Priority Section);
- United Republic of Tanzania: Wastewater Treatment System Development in Dar es Salaam Project