A Framework Arrangement which will enable the Sri Lankan Government to obtain a soft loan from the Korean Government of up to US$ 290 million till 2015 was signed on 31 December 2012.
This Framework Arrangement is based on the MoU which was signed between the two countries at the summit meeting during the State visit of President Mahinda Rajapaksa to Korea last April. Under the arrangement, the two Governments are expected to work closely to develop a range of projects.
They include construction of administrative complexes, renewable energy plants, and infrastructure development. The projects will be facilitated by the Korean Embassy and the Export and Import Bank of Korea.
The soft loan of the Government of Korea, which is referred to as the Economic Development Cooperation Fund (EDCF), was established by the Government of Korea on 1 June 1987 to promote economic cooperation between Korea and developing countries and to share Korea’s own development experience.
The EDCF’s favourable financing terms include its comparatively low interest rate of 0.1% per annum and a lengthy repayment period of 40 years. At present Sri Lanka is the fourth largest recipient of EDCF with approximately US$ 0.5 billion of the fund spent on 23 national projects from 1991 in the areas of water supply, irrigation, energy, transport, and establishing social safety networks.
These projects have been carefully selected through in-depth assessment and multiple discussions to draw out Sri Lanka’s developmental challenges and to reflect the country’s development needs.
Some of the most recent projects under EDCF include the Padeniya-Anuradhapura road project, the solid waste disposal facilities project, the establishment of Colombo Central Vocational Training Centre, Gampaha College of Technology and the Ruhunupura water supply development project.
The Government of Korea has recently provided approximately US$ 70 million dollars to the Sri Lankan Government in the form of grants under KOICA assistance and loans (EDCF) to achieve balanced and sustainable development and to assist social integration in line with its national development program.
With a recent agreement between the two countries on the Country Partnership Strategy (CPS), both sides are expected to adopt strategic approaches in the fields of economic infrastructure development, education and training, and governance.
Apart from financial assistance, Korea is closely involved in knowledge sharing, people and cultural exchanges with Sri Lanka through Korea International Cooperation Agency (KOICA), Korea Trade-Investment Promotion Agency (KOTRA), Knowledge Sharing Program (KSP), Korea Project on International Agricultural (KOPIA), and HRD Korea.
For example, more than 80 KOICA volunteers currently share their expertise and knowledge with various government ministries, agencies and institutes in the fields of medical service, education, culture, rural development, agriculture vocational training, computer literacy, environment, and Korean language training under the World Friends Korea (WFK) program.
The Korean Government expects to continue strengthening its ties with Sri Lanka and assist Sri Lanka and its people towards achieving their socioeconomic growth targets in the future.