Bangladesh, Korea sign $3bn soft loan deal for mega projects

Bangladesh and Korea on Sunday signed a soft loan agreement worth $3 billion aimed at implementing new mega projects in the country.

Under the signed Letter of Understanding (LoU) and Cooperation Arrangement (C/A), Korea will provide the loan through the Economic Development Cooperation Fund (EDCF) during 2023-2027, according to a press release of the Ministry of Finance on Monday.

The LoU was signed by Sharifa Khan, secretary of the Economic Relations Division (ERD) and Seong-wook Kim, deputy minister for international affairs at the Korean Ministry of Economy and Finance, on behalf of the respective countries.

At the same time, the cooperation arrangement was signed by Md Shahriar Kader Siddiky, additional secretary of the ERD and Tae-soo Kim, executive director of Korea Exim Bank, said the release.

The interest rate of the soft loan agreement will be 1% with a 30-year repayment period, including a 7-year grace period. The management fee would be 0.4% and contractors will be appointed through international bidding, it added.

Korea has been providing soft loans through the EDCF for the development of socio-economic, infrastructure and ICT sectors in Bangladesh since 1993.

So far, 16 projects worth $619.78 million have been completed with Korea's assistance from the EDCF and seven more worth $616.28 are currently ongoing.

Until now, the total commitment amount from the EDCF for Bangladesh is $1.31 billion, which is the second largest amount committed by Korea for its development partner countries.