S Korea offers $700m for development projects
South Korea will provide $700 million in concessional loans to Bangladesh for the next five years to help implement the country's development projects, according to a press release issued by its embassy.
A new framework arrangement involving the loans from an Economic Development Cooperation Fund for the 2021-2025 period was signed between Bangladesh and South Korea yesterday, it said.
Fatima Yasmin, secretary to Economic Relations Division, and Lee Jang-Keun, South Korean ambassador to Bangladesh, signed the agreement at the former's office in Dhaka.
According to the arrangement, candidate projects will be identified for financing in close consultation between the two governments.
The repayment tenure for the loans will be 40 years, including a 15-year grace period, with an 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 those projects shall either be exempted or borne by the Bangladesh government.
Bangladesh is the second largest recipient of the fund's loans worldwide in aggregate.
So far, South Korea has funded 24 development projects in Bangladesh involving a total of about $1.2 billion through the fund.
The amount of concessional loans to Bangladesh from South Korea has been steadily increasing in recent years.
Besides, the amount authorised in the renewed framework arrangement is higher than that of a previous agreement for 2017-2020, which stipulated a provision of $500 million in four years.
"As a trusted development partner of Bangladesh, Korea will continue to support Bangladesh in its journey toward socio-economic development," Jang-Keun said.
"The new EDCF framework arrangement will provide additional momentum to further boost our economic and development cooperation," he added.
Agreements to implement projects under the new framework are expected to be signed within this year.
These projects include the sustainable economic recovery programme (Subprogram1) under the Finance Division and the procurement of CNG-run AC buses for Bangladesh Road Transport Corporation involving $51 million under the Road Transport and Highways Division.
Another involves the establishment of a modern international training institute for Dhaka Water Supply and Sewerage Authority for $25 million under local government divisions.
In addition, important projects like the construction of a railway and road across the Karnaphuli river at Kalurghat, Chattogram and establishing a multidisciplinary and specialised hospital at Bangabandhu Sheikh Mujib Medical University Hospital will be funded in the second phase.
The renewed framework arrangement will primarily concentrate on supporting several sectors in Bangladesh, such as enhancing health services and improving transportation.