Korean Ambassador Chang Won-sam(left) and Treasury Secretary Dr. R.H.S.Samaratunga exchanging agreements
A framework arrangement enabling Sri Lanka to obtain soft loans from the Korean government up to US $ 300 million till 2018 was signed recently. This framework arrangement is based on the agreement signed between the two governments in December 1995 concerning loans from the Economic Development Cooperation Fund (EDCF).
Under the newly signed framework arrangement, the two governments expect to work closely to develop a diverse range of projects in such sectors as transportation, education, water treatment and rural development, identified as the priority areas under the country partnership strategy between Korea and Sri Lanka.
The projects will be carefully selected through in-depth assessment and multiple discussions to reflect Sri Lanka’s development needs and strategic directions. The EDCF was established in 1987 with the purpose of promoting economic cooperation between Korea and the partner countries. Drawing on Korea’s own development experience over the years, the EDCF assists the partner countries in their industrial development and economic stability through the provision of long-term, low-interest credit.
Korea Eximbank, entrusted by the Korean government, implements operations and management of the fund and the bank has provided Sri Lanka with loans worth US $ 606 million for 27 projects since 1990. Sri Lanka thus remains the fifth largest recipient of the EDCF and a significant portfolio lies in the water supply and transportation sectors besides projects in other sectors such as information communication technology (ICT), education and skills development, public administration and waste management. The Ruhunupura water supply, Hatton- Nuwara Eliya road rehabilitation, Hambantota administrative complex and e-governance system are some recently completed projects that are being successfully operated.
The ongoing projects include solid waste disposal facilities, Colombo vocational training center, Gampaha technical college and Deduruoya and Ruwanwella water supply projects. With the establishment of the official representative office of Korea Eximbank in Colombo early this year, the Korean government expects to continue strengthening its ties with Sri Lanka and build a stronger foundation to assist the nation towards achieving economic growth targets in the future.
In addition to the EDCF support, Korea Eximbank as a trade facilitator of the Korean government plans to provide competitive financing for infrastructure projects and foreign direct investment (FDI) projects in Sri Lanka on its own account. Accumulated trade finance and FDI finance have reached US $ 314 million and US $ 64 million, respectively, since 1978.