EDCF Framework Arrangement of $ 500 m signed between Sri Lanka and South Korea

A Framework Arrangement (FA) was signed yesterday between the governments of Sri Lanka and South Korea in the presence of the two countries’ presidents. 

The committed amount of the FA was increased from $ 300 million to $ 500 million to mark the 40th anniversary of diplomatic ties between Sri Lanka and South Korea. 

This FA will now enable the Sri Lankan Government to obtain bilateral concessional loans up to $ 500 million as a means of Official Development Assistance (ODA) from the Economic Development Cooperation Fund (EDCF) entrusted with Korea Eximbank. The EDCF loans, with a 0%-0.15% interest rate and up to a 40-year repayment period (including a grace period up to 10 years), are concessional so that the Sri Lankan Government’s burden to finance 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 2017-2019 under priority sectors of the country’s 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 status.    

As of now, Korea Eximbank, entrusted by the South Korean Government along with the EDCF, has approved $ 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 by EDCF, Sri Lanka is ranked fourth among all 54 countries which have received support from EDCF. 

Some of the completed projects supported by Korea Eximbank in the past are the Hatton-Nuwara Eliya Road Improvement Project, Hambantota Administrative Complex Project and Greater Galle Water Supply Project Phase I and II to name a few. 

The mid-term pipeline projects to be financed through the new FA include the supply of garbage compactors, establishment of an ICT hub for secondary education, land data infrastructure and land information service system, etc. which will be finalised through policy dialogue between both governments next month. 

These projects are symbolic of an effort to share South Korea’s development experience and knowledge with Sri Lanka. With the newly-signed FA, the South Korean Government will further strengthen its economic development partnership with Sri Lanka by helping the country achieve sustainable development.