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EDCF Arrangement of USD 500 Mn signed

November, 30, 2017

A framework arrangement (FA) was signed yesterday between the Government of Sri Lanka and Government of Korea in the presence of the Presidents of the two countries. The commitment amount of the FA was increased from USD 300 million to USD 500 million to celebrate the 40th anniversary of diplomatic ties between Sri Lanka and Korea. This FA will now enable the GoSL to obtain bilateral concessional loans up to USD 500 million as means of Official Development Assistance (ODA) from EDCF (Economic Development Cooperation Fund) entrusted with Korea Exim bank. 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.

Under this new FA, the two governments will work 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. 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.

As of now, Korea Exim bank 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 Exim bank 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. The mid-term pipeline projects to be financed through the new FA include for example, Supply of garbage compactors, Establishment of ICT Hub for secondary education, Land data infrastructure and land information service system etc. 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. 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.