South Korea increases soft loan commitment to Sri Lanka to US$ 500 million
The governments of Sri Lanka and South Korea have entered into an agreement where South Korea has increased its soft loan commitment to Sri Lanka from US$ 300 million to US$ 500 million.
The agreement was signed during President Maithripala Sirisena’s visit to South Korea.
A statement from the Korean embassy has stated that the funds will be Official Development Assistance (ODA) from EDCF (Economic Development Cooperation Fund) entrusted with Korea Eximbank.
“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,” the statement has said.
According to reports, this new FA will result in the two governments working 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 has noted.
“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 has noted.
“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.
OSL take:
The increased financial assistance from South Korea to Sri Lanka is expected to open up several new pipeline projects in the island nation including the supply of garbage compactors, establishment of an ICT Hub for secondary education, land data infrastructure and land information service system. Therefore, interested parties could explore these new business opportunities in Sri Lanka.
| Article Code : | VBS/AT/05122017/Z_2 |