Bangladesh and South Korea have signed a loan agreement to provide US$ 100 million in concessional loan from the Economic Development Cooperation Fund (EDCF) to help economic recovery of Bangladesh hit by the pandemic.

EDCF is Korea's development financing programme for assisting the socio-economic development of developing countries.

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Md Shahriar Kader Siddiky, additional secretary to the Economic Relations Division (ERD) and Kim Tae soo, executive director of Export-Import Bank of Korea, signed the deal on behalf of their respective sides on Monday. This amount will be disbursed within this month by the Korea Exim Bank.

The loan interest rate is 0.05% per annum and the maturity period is 40 years including a grace period of 15 years.

The Republic of Korea has already provided US$ 50 million of EDCF loan as budgetary support in December 2020 to help Bangladesh’s efforts for fighting the COVID-19 pandemic. It is the second provision of this type of concessional loan.

It will be the first EDCF loan to be implemented under the new EDCF Framework Agreement for the years 2021 through 2025 which was signed between the two governments on 24 October 2021.

According to the agreement, the Korean government will provide up to 700 million USD of concessional loans to the government of Bangladesh for the five-year period.

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The new concessional loan of US$ 100 million will be used to implement several projects aimed at advancing the public finance management system and improving small and medium-sized businesses struggling from the repercussions of the pandemic.

Bangladesh is the second largest recipient of the EDCF loans worldwide in aggregate amount. So far, the Republic of Korea has funded 24 development projects of Bangladesh with a total amount of US$ 1.2 billion through the EDCF.