South Korea will provide $700 million of concessional loans between 2021-25 to Bangladesh.
South Korean Ambassador to Bangladesh Lee Jang-keun and Secretary Fatima Yasmin of the Economic Relations Division signed the new framework arrangement between Korea and Bangladesh on loans from the Economic Development Cooperation Fund (EDCF) for the years 2021 through 2025.
The EDCF Framework Arrangement will serve as a legal foundation for the Korean government's provision of up to $700 million.
According to the arrangement, candidate projects will be identified to be financed in close consultation between the two governments.
The repayment period of the EDCF loans will be 40 years, including a 15 year grace period, with the annual interest rate between 0.01 per cent and 0.05 per cent.
The arrangement also stipulates that all taxes, customs duties and other fiscal charges imposed in Bangladesh on goods and services related to the EDCF projects shall either be exempted or borne by the Bangladesh government.
Bangladesh is the second-largest recipient of EDCF loans worldwide in aggregate amount.
So far, the Republic of Korea has funded 24 development projects of Bangladesh with $1.2 billion through the EDCF.
The amount of concessional loans to Bangladesh from Korea has been steadily increasing in recent years.
The amount authorised in a renewed framework arrangement is up from the amount authorised in the previous EDCF Framework Arrangement 2017-2020, which stipulated provision of $500 million in four years.
Ambassador Lee said as a trusted development partner of Bangladesh, Korea will continue to support Bangladesh in its journey toward the socio-economic development.
"The new EDCF Framework Arrangement signed today will provide additional momentum to further boost our economic and development cooperation," he said.
The ambassador hoped that this new framework arrangement will provides meaningful resources in achieving SDGs of the Bangladesh government and for smooth graduation from the LDCs by 2026.
A renewed framework arrangement will primarily concentrate on supporting several sectors such as enhancing health services and improving transportation in Bangladesh.