EDCF Major Revisions in Interest Rates and Repayment Period After 13 Years
Green EDCF Expanded to $600 Million by 2025
[Asia Economy Reporter Jang Sehee] The government has decided to completely overhaul the interest rates and repayment and grace periods of the Economic Development Cooperation Fund (EDCF) for the first time in 13 years. The concessional loan interest rates for low- and middle-income countries will be drastically reduced from the current 0.15-0.25% to 0.1%. This is intended to support the sustainable development of developing countries.
On the 17th, the government held the "222nd Ministerial Meeting on Economic Cooperation and the 138th EDCF Management Committee Meeting" at the Sejong Government Complex, chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, to discuss the EDCF advancement plan containing these details.
The EDCF is a policy fund established in 1987 to promote economic cooperation between South Korea and developing countries.
To improve the system tailored to demand, the government plans to ▲reorganize the current five groups into four groups ▲introduce multiple options for non-concessional support conditions (interest rate and maturity) ▲apply a single concessional interest rate (minimum interest rate set at 0.1%).
Additionally, the government plans to establish a new institutional foundation by utilizing program loans and emergency disaster response sector development loans. In particular, considering the humanitarian nature of the emergency disaster response loans, the interest rate will be adjusted from the current 0.05-0.2% to 0.05%.
Efforts will also be made to enhance the quality of project implementation. The government plans to improve the quality of feasibility studies by involving external financial experts, adding climate change impact assessments, and expanding local personnel participation.
Furthermore, the system will be reorganized into a comprehensive support system that strengthens software support such as equipment usage training after completion and the establishment of operation systems.
The scale of Green EDCF projects will also be expanded to $600 million by 2025, increasing its share to 40%. The government plans to develop its own EDCF Green Index to quantitatively evaluate the carbon reduction contribution by reflecting climate factors from project discovery onward.
Meanwhile, the government intends to accelerate the establishment of a system in which the EDCF actively participates in the discovery, formation, and execution of PPP projects from the early stages of projects.
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