Last Year, EDCF Approved 3.7 Trillion Won... Signed 2.1 Billion USD Agreement with Ukraine

Last year, South Korea approved a record-high 3.7 trillion won in concessional loans through the Economic Development Cooperation Fund (EDCF) to assist developing countries. The government plans to approve a total of 13.8 trillion won in official development assistance (ODA) over the next three years starting this year. Additionally, a basic agreement worth 2.1 billion dollars will be signed with Ukraine.

On the 7th, Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, presided over the first Ministerial Meeting on Foreign Economic Affairs and the EDCF Management Committee since his inauguration at the government’s Seoul office, stating, "We intend to use the expanded resources to contribute to realizing global values while enhancing economic cooperation with developing countries, stabilizing supply chains, and promoting national interests."

Last year, the scale of EDCF support increased by 19.6% compared to the previous year, reaching 3.7 trillion won, approving 22 projects across 14 countries. The disbursement amount was 1.4 trillion won, achieving a disbursement rate of 92.9% against the target for the year. The goals for the priority areas outlined in the EDCF mid-term operational direction established in January last year (green, digital, and health sectors) were also exceeded at 168.1%.

The government strengthened cooperation foundations with major recipient countries such as Bangladesh, Vietnam, and the Philippines, and newly signed grant agreements with Ukraine and Tajikistan. New partner countries were actively identified, including Rwanda, with which a basic agreement worth 500 million dollars was newly signed. Deputy Prime Minister Choi emphasized, "It is important for the EDCF to serve as a catalyst for Korean companies to enter the Ukrainian reconstruction market," adding, "We will promptly finalize domestic and international procedures for EDCF support, including the swift signing of the 2.1 billion dollar basic agreement."

Under the goal of expanding ODA to rank among the world’s top 10, the government plans to approve a total of 13.8 trillion won in EDCF over the next three years and disburse 6.5 trillion won. This represents a 17.9% increase compared to the three-year target of 11.7 trillion won set last year. To achieve this, the annual EDCF approval amount will be significantly increased starting this year, with 4.5 trillion won approved?700 billion won more than last year’s target. The approval target will continue to expand by 100 billion won annually thereafter. Disbursement will also be substantially increased from this year, with plans to disburse 2 trillion won, a 35.2% increase from last year. The disbursement amount will be further increased by 100 to 200 billion won annually, reaching 2.2 trillion won next year and 2.3 trillion won in 2026.

The Ministry of Economy and Finance plans to restructure the EDCF operational strategy to focus on high value-added projects in response to international environmental changes. Deputy Prime Minister Choi explained, "Previously, we focused on small-scale projects under 100 million dollars, but going forward, we will promote large-scale, high value-added projects exceeding 500 million dollars, such as bridges and metro systems, to enhance Korea’s recognition and establish landmarks in recipient countries."

The EDCF will also be utilized to stabilize supply chains. He stated, "We will contribute to supply chain stabilization by expanding EDCF support for supply chain infrastructure development and key supply chain countries," adding, "While EDCF support has mainly been provided as loans to recipient country governments, we will introduce new business models that involve public-private partnership (PPP) projects where the public and private sectors of developing countries cooperate, and utilize local financial institutions in developing countries."

Deputy Prime Minister Choi said, "For a country like ours with high external dependence, any geopolitical risk anywhere is not a 'fire across the river' but can become a 'fire on the doorstep' at any time." He added, "This year, centered on the Ministerial Meeting on Foreign Economic Affairs, we will further strengthen supply chain security and the government and related agencies will work together with full force to ensure that the achievements of economic diplomacy are felt by the public in their daily lives."