A new framework agreement involving USD 3 billion in concessional loans from the Economic Development Cooperation Fund (EDCF) for the years 2023 through 2027 was signed by Bangladesh and South Korea on Thursday.
On the occasion of the 56th Annual General Meeting of the Board of Governors of the Asian Development Bank (ADB), the signing ceremony took place in Incheon, South Korea.
The agreement was signed on behalf of each party by Kisun Bang, South Korea's First Vice Minister for Economy and Finance, and Sharifa Khan, Bangladesh's Secretary of the Economic Relations Division (ERD), according to UNB.
On this occasion, Memorandum of Understanding (MOU) on the cooperation for Dhaka MRT Line 4 and EDCF Loan Agreement (L/A) for two projects, procurement of CNG-run buses and modernization of railway signalling system, have also been signed by concerned representatives from both sides.
The signed arrangement will serve as a legal foundation for the South Korean government’s provision of up to 3 billion US dollars in concessional loans to the Government of Bangladesh for the next five years.
According to the arrangement, the repayment period of the EDCF loans will be 40 years, including 15 year grace period, with the annual interest rate between 0.01%-0.05%.
According to the arrangement, candidate projects will be identified in the future in close consultation between the two governments.
With the signing of the new framework arrangement, Bangladesh has become the second largest recipient of South Korea’s Official Development Aid (ODA) across the globe.
The amount authorized by the newly signed arrangement has more than quadrupled compared to that of previous EDCF Framework Arrangement which stipulated provision of up to 700 million US dollars for the year 2021 through 2025.
So far, the Korean government has supported 30 development projects with aggregate amount of 1.7 billion US dollars through the EDCF.
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