Economic Development Cooperation Fund (EDCF)
The Government of Korea established the Economic Development Cooperation Fund(EDCF) on June 1, 1987 with the purpose of promoting economic cooperation between Korea and developing countries.
Drawing on Korea’s own development experience over the years, the EDCF assists partner countries by providing funding for their industrial development and economic stability.
The highest policy-making authority of the EDCF is the Fund Management Council, which is composed of 13 members, most of whom are ministerial-level government officials. The direction of EDCF operations and the assumption of principal policy-making responsibilities rest with the Ministry of Strategy and Finance(MOSF), which also coordinates policy matters with other relevant ministries.
Entrusted by the MOSF, the Export-Import Bank of Korea is responsible for the administrative operation of the EDCF, including appraisal of project, execution of the loan agreements, and loan disbursements. Other duties include principal/interest payments collection, project supervision, and ex-post evaluation of project operations.
The EDCF Act (Law No.3863) was promulgated in December 1986. The first session of the Fund Management Council was held in May 1987, and in the following month, the Export-Import Bank of Korea was entrusted as a unit for business operation and management of EDCF. In July 1987, a total of 15 billion won of initial
contribution to EDCF was made by the Korean government.
In December 1987, a decision on its first official assistances, the Padang By-Pass Project in Indonesia and the Passenger Coach Project in Nigeria, was reached.
The first EDCF Workshop was held in October 1995 for government officials from nine developing countries. Assistance policy for co-financing projects with the IDB was introduced in July 2000. In Desember 2003, a debt relief program for the HIPC Initiative was set up to commit EDCF loans for developing countries. In 2010, Korea became a member of the OECD Development Assistance Committee(DAC).
In the bilateral assistance program, implementing large scale program aid is difficult on a limited budget. Instead, EDCF is concentrating on capacity building of partner countries, with the goal to help them achieve self-reliance.
For this purpose, the main areas of assistance are human resources and economic infrastructure. Specifically in the area of human resource development, Korea has committed not only to providing educational equipment for developing countries, but also to sharing the lessons it has learned from decades of development experience through operating various trainee and expert exchange programs.
In terms of economic infrastructure assistance, among other fields, EDCF has emphasized the importance of reducing the “digital divide” by seeking ways to assist partner countries in their development of the information technology (IT) industry. In this sector, we believe there is more room for participation by innovative small and medium-sized enterprises.
On January 1, 2010, Korea became a member of the OECD Development Assistance Committee (DAC), the international donor community which provides more than 80% of global ODA. Korea became the 24th member of the DAC and the second country in Asia to join the committee after Japan. As a new DAC member, the Korean government plans to increase the nation's ODA / GNI ratio to 0.15% by 2012 and to 0.25% by 2015. Korea, the first recipient country to become a donor country, now looks forward to making greater contributions to the global development agenda.
In recent years, the accumulated external debt and budget deficits of partner countries have spurred the need for various types of financing. Thus, the EDCF provides several types of lending programs to meet developing countries’ diverse needs. Of these lending programs, the Development Project Loans and Equipment Loans for infrastructure building, detailed below, account for the largest portion to date.
Development Project Loan
Provides funds for infrastructure projects such as those involving the construction of roads, railways, hospitals, vocational training centers, and water supply and sanitation systems under the economic development plan of the partner country.
Provides funds to procure equipment and other materials needed for projects under the national development plan in specific sectors or specific regions of the partner country.
Public-Private Partnership Loan
Provides funds for governments or corporations of partner countries to conduct Public-Private Partnership projects.
Provides funds to make sub-loans to end-users through the financial institutions of the partner country for the implementation of designated policies, such as the promotion of small and medium sized enterprises (SMEs) in manufacturing, agriculture, and other specified industries.
Provides funds to import commodities, bilaterally agreed upon, to contribute to the economic stabilization of the partner country.