The South Korean government has approved new projects worth 13.8 trillion won (US$11.5 billion) under the Economic Development Cooperation Fund (EDCF) to be implemented by 2026, with 6.5 trillion won to be disbursed. Established in 1987, the EDCF is a fund for concessional loans aimed at supporting the economic development of developing countries and enhancing economic cooperation between South Korea and these countries.
The Ministry of Economy and Finance announced the decision during the EDCF Management Committee meeting held on Feb. 7 chaired by Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok at the Government Complex in Seoul. This decision is part of the 2024-2026 EDCF Mid-Term Management Strategy.
For this year, the EDCF approval plan has been set at 4.5 trillion won, an increase of 600 billion won from the 3.9 trillion won planned for 2024 under the 2023-2025 EDCF Mid-Term Management Strategy. The disbursement target for this year has also been raised from 1.7 trillion won to 2 trillion won.
The significant increase in the EDCF approval and disbursement targets reflects the government’s ambition to achieve its goal of becoming one of the world’s top 10 Official Development Assistance (ODA) donor countries without delay. In June 2022, the government announced its direction for international development cooperation under the new administration, aiming to leap into the top 10 ODA countries worldwide.
The EDCF will focus on supporting the green sector with US$67 billion, the digital sector with US$33 billion, and the health sector with US$23 billion. Funding for the green sector is planned to increase from US$20 billion this year to US$22 billion in 2025 and US$25 billion in 2026. The digital sector will see an increase from US$10 billion this year to US$11 billion next year and US$12 billion in 2026. The health sector is set to receive US$7 billion this year, with US$8 billion planned for the following two years.
Regionally, the focus will be on Asia, where there is a high demand for South Korean corporate entry, maintaining a 60-70% share considering the Indo-Pacific strategy, large-scale infrastructure demand, and South Korean companies’ overseas expansion. In light of the synergy with summit diplomacy, such as the Korea-Africa Summit, and high growth potential, support for Africa will increase to 20-30%. For Latin America, the current share of 10-20% will be maintained to facilitate the entry of South Korean companies, with a focus on promoting bilateral projects in addition to cooperation loans with Multilateral Development Banks.
Deputy Prime Minister Choi Sang-mok stated, “Previously, we focused on small-scale projects within the US$100 million range, but moving forward, we aim to increase Korea’s recognition and achieve significant development effects in recipient countries by pursuing large-scale, high-value-added projects such as bridges and metros worth over US$500 million, establishing them as landmarks in the recipient countries.”