EDCF

Your Development Partner

1987~2007
History Book

EDCF Your Development Partner

1987~2007

MINISTRY OF STRATEGY AND FINANCE

Development Cooperation Division International Economic Affairs Bureau Government Complex, 88 Gwanmoonro, Gwacheon City Gyeonggi Province, 427-725, Korea TEL (82-2) 2150-7711 www.mosf.go.kr FAX (82-2) 503-9077

THE EXPORT-IMPORT BANK OF KOREA

EDCF Group 16-1 Yoido-dong, Youngdungpo-gu Seoul, 150-996, Korea TEL (82-2) 3779-6610 www.koreaexim.go.kr FAX (82-2) 3779-6757

PROLOGUE

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 Koreas own development experience over the years, the EDCF assists partner countries by providing funding for their industrial development and economic stability. The financial resources of the EDCF consist of contributions and borrowings from the government as well as its own operational profits. As of December 31, 2007, the EDCF had raised a total KRW 2,117 billion through these resources, for a cumulative loan commitment of KRW 3,188 billion, while its disbursements from those funds stood at KRW 1,773 billion. The EDCF offers two types of loans: (1) loans to foreign governments, government agencies, and other eligible organizations to support the economic development of developing countries; and (2) loans to Korean firms for overseas investment projects. Thus far, most of the loans have been extended to foreign governments for their development projects. The highest policy-making authority of the EDCF is the Fund Management Council, which is composed of 12 members, most of whom are ministerial-level government officials. The direction of EDCF operations and the assumption of principal policymaking 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 (Korea Eximbank) 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.

CONTENTS

LIST OF ACRONYMS

ADB AfDB CABEI CCSP CRIK DAC EBRD MESSAGE FROM THE MINISTER OF STRATEGY AND FINANCE MESSAGE FROM THE CHAIRMAN AND PRESIDENT OF THE EXPORT-IMPORT BANK OF KOREA EDCF HISTORY AT A GLANCE 4 6 8 EDCF GDP GNI GNP CHAPTER 1. THE PAST OF EDCF 1. THE ROLE OF ODA IN KOREA'S ECONOMIC DEVELOPMENT 2. THE LAUNCHING OF EDCF 3. DEVELOPMENT PATH OF EDCF 22 28 32 IBRD IDA IDB IMF JBIC CHAPTER 2. THE PRESENT OF EDCF 1. ODA POLICY 2. ODA SYSTEM 3. OUTLINE OF EDCF LOANS 4. VOLUME OF EDCF LOANS 5. CASE STUDIES OF EDCF PROJECTS 6. STRENGTHENING EXTERNAL RELATIONSHIP AND HARMONIZATION 40 44 48 60 130 142 KAIST KOICA KSP MDB MDG MOFAT MOSF NGO ODA CHAPTER 3. THE FUTURE OF EDCF 1. BLUEPRINT FOR MEDIUM AND LONG TERM STRATEGY 148 OECD PCR PEA APPENDIX 1. KOREAS ODA VOLUME BY MAIN CATEGORIES 2. EDCF VOLUME BY TYPES OF LOANS (COMMITMENTS) 3. EDCF VOLUME BY TYPES OF LOANS (DISBURSEMENTS) 4. EDCF VOLUME BY REGION (COMMITMENTS) 5. EDCF VOLUME BY SECTOR (COMMITMENTS) 6. EDCF FUNDING RESOURCES 7. CHRONOLOGY 152 154 155 156 157 158 159 PMU PPP TDC UN UNDP UNKRA WFP WTO

Asian Development Bank African Development Bank Central American Bank for Economic Integration Country Cooperation Strategy and Program Civil Relief in Korea Development Assistance Committee European Bank for Reconstruction and Development Economic Development Cooperation Fund Gross Domestic Product Gross National Income Gross National Product International Bank for Reconstruction and Development International Development Association Inter-American Development Bank International Monetary Fund Japan Bank for International Cooperation Korea Advanced Institute of Science and Technology Korea International Cooperation Agency Knowledge Sharing Program Multilateral Development Bank Millennium Development Goal Ministry of Foreign Affairs and Trade Ministry of Strategy and Finance Non-governmental Organization Official Development Assistance Organisation for Economic Co-operation and Development Project Completion Report Project Executing Agency Project Management Unit Public-Private Partnership Technology Development Center United Nations United Nations Development Programme United Nations Korean Reconstruction Agency World Food Programme World Trade Organization

Message from the Minister of Strategy and Finance

Message from the Minister of Strategy and Finance

In just half a century, Korea has made a remarkable economic transformation from being a least developed country into the worlds 13th largest economy. Its per capita income rose from USD 79 in 1960 to USD 20,045 in 2007. Korea, once a recipient country, is now supporting developing nations as a donor country. The major driving force behind such exceptional economic development was the right combination of the governments export-oriented economic development strategy, entrepreneurship, and talented and diligent human resources. At the same time, aid received from the international community significantly contributed to the nations dynamic growth. Approximately 80 percent of the aid from the international community was in the form of loans. These loans laid the very foundation for Koreas economic growth as they helped to finance a variety of development and construction projects which established Koreas key infrastructures and backbone industries such as the Seoul-Busan expressway, POSCO, and Korea Advanced Institute of Science and Technology (KAIST). Furthermore, in the process of managing the loan, the nation was able to develop and strengthen its fiscal management capabilities. Recognizing the responsibility to return what we received to the developing nations, Korea established the Economic Development Cooperation Fund (EDCF) in 1987 to share the nations development achievements with the global society. Over the past two decades since its inception, the EDCF has extended concessional loans totaling KRW 3.19 trillion to 172 projects in 43 countries. These loans helped recipient countries to build not only the economic infrastructures in the field of transportation, communication, and energy but also social infrastructures in the education and public health sectors, all of which play a pivotal role in the socioeconomic advancement of developing countries.

assistance packages that link the EDCF loans with the Knowledge Sharing Program (KSP) which has been implemented since 2004 to share our economic development experience with the developing countries. EDCF, Your Development Partner is a record of the EDCFs history and it also represents the reaffirmation of our commitment to join the global efforts to combat poverty as a responsible member of the international community.

Man-Soo Kang The Korean governments efforts to provide a helping hand for the economic growth of developing countries will continue. Korea will further expand its support
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Minister of Strategy and Finance

through the EDCF to establish infrastructure in developing countries and offer them

Message from the Chairman and President of The export-import bank of korea
Message from the Chairman and President of The Export-Import Bank of Korea

The EDCF, Koreas bilateral loan aid program, has just passed its 20th anniversary since being established in 1987. Looking back, we have come a long way in helping the industrial development and economic stabilization of developing countries and strengthening the economic cooperation with partner countries. Building on our past achievements, the EDCF now stands to open a new chapter and leap forward to becoming an advanced donor agency through change and innovation.

Efforts have also been made recently to tune our assistance programs accordingly with the changing international ODA environment towards enhancing aid effectiveness. We have diversified the type of aid modalities like co-financing with MDBs to meet the various needs of developing countries, and also improved the effectiveness of our aid program in line with the global standards. In spite of all our past achievements, however, the EDCF recognizes that there

As of last year, EDCF assistance reached the total amount of KRW 3.19 trillion, supporting 172 projects in 43 countries. Our aid efforts mainly concentrated on helping developing countries build their social and economic infrastructure, which contributed to boosting the economic development and improving the status of welfare in those countries. The sustainable growth of our partner countries achieved through the sharing of our development experience and know-how has become a barometer of the EDCFs commitment to become a development partner for international cooperation. Korea knows well through firsthand experience of the invaluable role development assistance plays in a nations development. The once-recipient country underwent remarkable economic transformation during the past four decades to achieve a per capita income of USD 20,000 in 2007. Although the strong leadership and strategy of the Korean government to pursue export-driven growth and industrialization led the development, another significant contributor to the astonishing growth was the development assistance approximating USD 30 billion from the international community. In particular, concessional loans from bilateral development agencies and MDBs injected into building the necessary social and economic infrastructure laid the very foundation for Korea to overcome poverty and grow into the 13th largest economy in the world. Hence, in recognition of the importance of concessional loans, the Korean government has consistently scaled up the volume of EDCF assistance, and in line with the governments policies, the Export-Import Bank of Korea has also strengthened EDCF operations as one of its core businesses along with its export
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are still many challenges and goals lying ahead of us. As the Korean government signed the Paris Declaration, the EDCF will work towards coordinating and harmonizing its aid efforts with other donors and align our ODA strategies with partner countries development strategies. Against this backdrop, I believe the publication of EDCF, Your Development Partner is both timely and meaningful as it not only provides us with the opportunity to reflect upon the EDCFs past footsteps, but more importantly, presents us with a blueprint for the EDCFs future strategies in this shifting ODA environment. I sincerely hope that this publication containing the past, present, and future of the EDCF will help to raise the international donor communitys awareness of our operations and also provide an opportunity to share our development cooperation efforts with our partner countries.

Dong-Soo Chin Chairman and President The Export-Import Bank of Korea

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credit and Inter-Korean Cooperation Fund operations.

EDCF history AT A GLANCE

2000 1980
Dec. 2004 First Grant Assistance for the Ex-post Assistance : The 2nd Misamis Oriental Telephone Expansion and Modernization Project, The Philippines Feb. 2005 Signing of the Memorandum of Understanding between the Korea Eximbank and the InterAmerican Development Bank

Jun. 1987 Establishment of the EDCF

1990
May. 1989 Conclusion of the first Loan Agreement: Passenger Coach Purchase Project, Nigeria Feb. 1992 Completion of the first EDCF-financed project: Misamis Oriental Telephone Expansion and Modernization Project, The Philippines

Dec. 1987 Approval of the first EDCF loan : Padang By-Pass Project, Indonesia

Nov. 2006 Signing of the Memorandum of Understanding between the Korea Eximbank and JBIC

Jul. 2006 The first Consultation between Korea Eximbank and JBIC on International Development Cooperation

Jul. 1997 Conclusion of the Framework Arrangement for Cooperation between the Korea Eximbank and KOICA

Dec. 2007 Approval of the first Untied Loan. Toliara Province Road No.35 Rehabilitation Project, Madagascar

Oct. 1995 Hosting of the first EDCF Workshop for Government Officials from Nine Partner Countries

Jul. 2007 Hosting of the EDCF International Conference in Commemoration of its 20th Anniversary

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Asia
1. Modi Khola Hydroelectric Project, Nepal 2. Procurement of Equipments of Combined Cycle at the Ba Ria Power Plant Project, Viet Nam 3. Internet Information Network Expansion Project, Bangladesh 4. Mudanjiang-Jixi Highway Construction Project, China 5. Luang Prabang National University Establishment Project, Laos 6. Ratnapura-Bandarawela Road Rehabilitation Project, Sri Lanka 7. National Road No.3 Rehabilitation Project (Phase II), Cambodia

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Africa
1. LPG Cylinder Manufacturing Plant Project, Ghana 2. Agriculture Modrnization Project, Angola 3. Establishment of a Technology Development Center Project, Kenya 4. Road Maintenance Equipment Renewal Project, Kenya 5. The Fisher Boat Building Project, Angola 6. The Buipe-Bolgatanga Petroleum Products Pipeline Project, Ghana 7. Locomotive Modernization Project, Nigeria 8. Olympic Stadium Construction Project, Tunisia

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Latin America
1. Direcion General de Aduanas Computerization Project, Dominican Republic 2. Medical and Health Services Modernization Project, Panama 3. Educative Informatics Highway Project, Guatemala 4. Rural Telecommunication Ecuador-Korea Project, Ecuador 5. The Potable Water Supply Expansion Project for Santo Domingo de los Colorados, Ecuador 6. Rural Power Distribution Improvement Project, Honduras

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Eastern Europe
1. Prahova Telecommunication Network Modernization Project, Romania 2. Gaziantep Water Supply Modernization Project, Turkey 3. Hospital Modernization Project, Bosnia-Herzegovina 4. Dunaferr Steel Modernization Project, Hungary 5. Rijeka Port Modernization Project, Croatia 6. Alba and Buzau Provinces Telecommunication Network Modernization Project, Romania 7. Opole Province Telecom Network Project, Poland

EDCF History

CHAPTER 1

THE PAST OF EDCF

THE ROLE OF ODA IN KOREAS ECONOMIC DEVELOPMENT

Chapter 1. The Past of EDCF

Aid Inflow* to Korea (1945-1999) Type Loan Grant Total * Including ODA and OOF Bilateral 5,709(21.8%) 6,077(88.2%) 11,786(35.6%) Multilateral 20,527(78.2%) 815(11.8%) 21,342(64.4%)

(USD million) Total 26,236(100.0%) 6,892(100.0%) 33,128(100.0%)

Major donors to Korea

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1.1. KOREA, A MAJOR RECIPIENT OF ODA Volume and trend Korea began receiving aid from the international community right after the country ended its 35-year suffering under the Japanese colonial rule in 1945. Since then, Korea has written a successful history as a model recipient. The aid that Korea received from advanced donor countries and international institutions for the period of 1945 through 1999 amounts to USD 33.1 billion in total. This can be broken down into bilateral aid of USD 11.8 billion and multilateral aid of USD 21.3 billion, accounting for 36% and 64% of the total aid received, respectively. In terms of aid type, grants represent 21% and loans 79%. Grants were mainly provided as an emergency aid to supply essential items such as medicines and foods for the people to survive from the devastations of the Korean War. By contrast, concessional loans mostly focused on the financing of infrastructures, which were significant for the reconstruction of the nation. The Seoul-Incheon expressway, Seoul-Busan expressway and Soyang River Dam, are good examples of the outcome of concessional loans.

The aid inflow to Korea has increased at a consistent pace, reaching its peak in 1981, and then showed a downtrend. Grants increased rapidly to its height of USD 380 million during 1945 through 1957, and then showed a consistent downturn. In contrast, Korea saw a dramatic increase in loans along with the implementation of the governments Five-Year Economic Development Plan in 1960s, and a consistent uptrend until the end of the 1980s, when Korea developed a solid base to achieve further economic growth on its own. Since then, the amount of loans Korea received decreased until the Asian financial crisis broke out in 1997 and the amount of loans spiked again. Until 1999, bilateral aid from the U.S. and Japan made up over 90% of Koreas total bilateral aid received: of the bilateral loans, 56.4% was from Japan, and 36.5% from the U.S., while of the bilateral grants, 64.2% was from the U.S. and 22.3% from Japan. When it comes to multilateral aid to Korea, concessional loans from the IBRD accounted for 69% of multilateral aid mainly due to the huge amount of loans from the IBRD during the Asian financial crisis. Of the multilateral grants, 71% was from the Civil Relief in Korea (CRIK) and the United Nations Korean Reconstruction Agency (UNKRA), which provided aid to Korea from 1945 to 1960.

Seoul-Busan Expressway

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Aid Received by Donor Country (1945-1999) Total Amount Bilateral U.S.A. Japan Germany France Saudi Arabia Austria Netherlands Others Sub-total Multilateral IBRD ADB CRIK UNKRA IDA WFP UNDP Other UN Agencies Others Sub-total Total 5,982.1 4,571.1 887.5 96.9 96.6 52.7 18.5 80.7 11,786.0 14,818.9 5,594.8 457.4 121.8 115.6 98.5 69.1 63.6 1.9 21,341.5 33,127.5 Ratio 50.8 38.8 7.5 0.8 0.8 0.4 0.2 0.8 100.0 69.4 26.2 2.1 0.6 0.5 0.5 0.3 0.3 0.0 100.0 Amount 2,082.7 3,217.8 307.1 96.6 1.7 5,712.9 14,818.9 5,592.1 115.6 20,526.5 26,235.8 Loan Ratio 36.5 56.4 5.4 1.7 0.0 100.0 72.2 27.2 0.6 100.0

(USD million, %) Grant Amount 3,899.3 1,353.3 580.3 96.9 52.7 16.8 77.3 6,076.6 2.8 457.4 121.8 98.5 69.1 63.6 1.9 815.0 6,891.7 Ratio 64.2 22.3 9.6 1.6 0.9 0.3 1.2 100.0 0.3 56.1 14.9 12.1 8.5 7.8 0.2 100.0

bated the nations long-standing current account deficit. During the period of 1945 through 1961, the approximate USD 3 billion foreign aid to Korea helped protect Korea from falling into an economic collapse, and offset enormous fiscal deficit for the nation.
Key Economic Indicators before Economic Development Year Growth rate (%) 1954 1955 1957 1959 1960 Source: Bank of Korea 5.6 4.5 7.6 3.9 1.2 Inflation (%) 30.0 65.4 20.7 2.9 11.3 Per capita income(USD) 70 65 74 81 79 Export (USD million) 24.2 17.6 21.5 19.2 31.8 Import (USD million) 243.3 341.4 442.1 303.8 343.5

Economic stabilization through grants Before Korea began to put its economic development plan into force, the nations economy depended entirely upon foreign aid, and grants apparently contributed to the nations economic stability. The contribution of grants to post-war economic stability becomes quite obvious as seen through the fact that the foreign aid to Korea for the period of 1953 to 1960 accounted for nearly 8% of the nations GDP. That aid enabled the nation to achieve stable GDP growth in real terms up to as much as 5% per annum from 1953 to 1957.
Share of Grants against GDP(1953-1960) 1953 Grant Grant/GDP 194 7.3 1954 153 4.2 1955 237 10.3 1956 327 10.8 1957 383 9.8 1958 321 7.8 (USD million, %) 1959 222 5.1 1960 249 6.4

Source: Ministry of Strategy and Finance of Korea

1.2. KOREAS ECONOMIC DEVELOPMENT AND ODA Korea suffered chaos and extreme poverty caused by a sequence of events in history such as independence from the Japanese rule and the Korean War. The nations industrial productivity plunged to a level as low as that of the 1940s and at the same time, the investment essential for national reconstruction was utterly enervated by the continued lack of funds, which was attributable to the low annual savings rate of 4%. Even though foreign aid managed to keep Koreas economy afloat after the Korean War, economic ineffectiveness continued under the vulnerable economic circumstances including chronic inflation. Social and economic disorder following Koreas independence generated sky-high inflation, culminating in various harmful effects on the economy such as waste of resources, speculation, and instability of the peoples livelihoods. Furthermore, the consumption-oriented economic structure exacer-

Source: Bank of Korea

The aid financed 70-80% of the nations import of raw materials, agricultural products and other items, which were desperately in need. With a shortage in foreign exchange reserves caused by the sluggish exporting business, Korea heavily depended on foreign aid in importing its required resources.

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Share of Grants against Nations Import(1953-1960) (%) 100

Trend of Concessional Loans and Total Aid to Korea(1960-1980) (USD million) 1200 Total Aid Concessional Loans

1953

Before the 1960s, grants were dedicated to procuring raw materials and intermediate products as well as filling the shortage of funds required for buying consumer goods. Such products of the primary industry covered more than 76% of total grants Korea received. Consequently, grants failed to make a considerable contribution to stimulating the 1954 1955 1956 1957 1958 1959 1960 investment required for building up the base on which the nations economy could grow on its own. The aid flow into industrial and economic infrastructures and technical assistance accounted for merely 23% and 1%, respectively. While grants played a significant role in creating post-war economic stability by supplying commodities in need from a short-term perspective, they did not succeed in facilitating investment in social overhead capital required for building a foundation for long-term economic growth. Economic growth through concessional loans At the beginning of the 1960s, the Korean government established its economic development plan to overcome poverty and create a selfsuporting economic environment. As Korea started to implement the economic development plan, the flow of concessional loans to Korea began to increase from 20% of the total aid received during the 1960s to over 90% during the 1970s. As much as 80% of foreign concessional loans to Korea were provided in the form of project aid and directly contributed to the strengthening of capital investment. Especially, a large share of concessional loans flowed into economic infrastructure development projects, which were significant in constructing a solid economic growth base.

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

Furthermore, the successful utilization of concessional loans led to the introduction of commercial loans from abroad with the nations enhanced credit rating supported by strengthened economic resilience and improved industrial productivity. Once funding from the international capital market was made available, Korea was able to grow independent from foreign aid and establish a strong foundation for the economy to stand on its own. Koreas track record of economic development demonstrates that concessional loans played a pivotal role in establishing a solid ground for sustainable economic growth by satisfying the demand for capital goods. In comparison, grants helped the nation to procure primary industrial goods under the devastated post-war economic circumstances.

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the LAUNCHING OF EDCF

Chapter 1. The Past of EDCF

Foreign Debt of Developing Countries 1970 Total Foreign Debt (USD billion) Debt/GDP (%) Interest/GDP (%) DSR (%) Source: World Bank, World Development Report, 1985. 68 14.1 0.5 14.7 1975 204 18.1 0.8 13.6 1980 430 20.9 1.6 16.0 1985 686 33.8 2.8 19.7

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2.1. ECONOMIC SITUATION OF DEVELOPING COUNTRIES IN THE 1980s During the 1980s, economic changes, which were caused by the worlds economic recession, rise of protectionism, and price decline in primary products, brought poor progress in the economic development policy and the increase of foreign debt to developing countries. This made developing countries suffer from economic contraction and hardships. In addition, the development and income gap between developed and developing countries widened as developing countries grew at a slow rate of 2.6% annually between 1980 and 1985.
Annual Economic Growth Rate 1962-1972 Developed Countries Developing Countries Source: World Bank, World Development Report, 1985. 4.9% 6.3% 1973-1979 2.8% 5.2% 1980-1985 2.0% 2.6%

Since developing countries could not show their ability to make a breakthrough in the economic circumstances, the idea was spread that new institutional frameworks and attempts were needed to solve the economic problems in developing countries. With rising concerns over the increasing development gap between the more advanced developing countries and late developers, as well as between the developing and developed countries, developing countries came to realize that cooperation for self-help among developing countries was very crucial.

2.2. WHY THE EDCF? Raised awareness on governmental cooperation in various forms As a developing country, Korea had constantly expanded cooperation with other developing countries in various fields such as trade and investment. Developing countries were one of Koreas most important economic cooperation partners in the 1980s as they took up one third of the nations trade volume, half of foreign investment, and the absolute majority of Korean companies overseas construction businesses. Since governments of developing countries are in charge of drafting and carrying out economic development plans, they play a very important role in facilitating the development of a nation. Therefore, forging cooperative ties on a governmental level is both crucial and effective in facilitating economic cooperation and exchange between countries. It was within this context that the EDCF was established, based on general consensus, to play a mediating role as a form of intergovernmental cooperation.

Another factor adding to the economic hardship was the increasing pressure over the foreign debt developing countries received since the 1970s to spur economic development. Foreign debt of developing countries, which recorded only USD 68 billion in 1970, increased ten times to USD 686 billion in 1985. Along with that, a significant rise in debt-service ratio (DSR) was witnessed from 14.7% to 19.7%.
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Complying with cooperation requests and boosting south-south cooperation As developing countries implemented their own economic development plan, development demand for the expansion of infrastructures, import substitution, investment on infant industries, and food production increased sharply. However, in most cases, they did not have enough resources and skills to meet those demands. To overcome these obstacles, governments strived to attract foreign capital and introduce technologies. Late-developing countries looked to the inflow of capital and technologies from other forerunners such as Korea, which possessed the necessary development experience and skills gained through their own rapid economic growth. Unfortunately, Korea did not have the effective means or financial resources to satisfy their needs at that time. Although there were several attempts by Korea to provide aid through programs such as the international development exchange progra since 1982 or technical cooperation in construction sector in 1984, the amount of aid provided was too small to meet the recipients demands. Koreas ODA amount totaled USD 93.2 million at the time and excluding the contributions of USD 79 million to multilateral development banks (MDBs) such as IBRD and ADB, the amount dropped to a mere USD 14 million. As such, the need for the establishment of an economic development cooperation fund was brought up in order to facilitate economic exchange with developing countries and to comply with the requests of developing countries to provide capital and technical skills to assist economic growth. The establishment of the EDCF was based on reciprocal necessity, in that Korea supports the economic development of developing countries, expands economic exchange with them, and contributes to south-south cooperation by providing capital as well as the necessary facilities and technologies.

2.3. ESTABLISHMENT OF THE EDCF Based on a national consensus, the Korean government designated Ministry of Finance the operating body for the EDCF and prepared the institution of a new law. The EDCF Law approved by the National Assembly was 1 promulgated on December 26, 1986 and the Ministry of Finance set to work, formulating the rules and preparing for the establishment and management of the fund. After the Enforcement Decree of the EDCF was enacted on April 23, 1987, the operational bylaw was passed and principal 2 policies were deliberated in the 1.2 Establishment of the EDCF in June 1987 first Fund Management Council on May 29, 1987. In 1987, the Ministry of Finance entrusted the task of operating the EDCF to the Export-Import Bank of Korea (Korea Eximbank) and the bank established the EDCF Department in June the same year. Also, the Korean government made a contribution of KRW 15 billion to the EDCF on July 1, 1987. With this, Korea entered into a new era of development aid as a donor country.

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DEVELOPMENT PATH OF EDCF

Chapter 1. The Past of EDCF

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3.1. LAYING THE FOUNDATION OF THE EDCF (1987-1992) Commencing the operation Soon after obtaining the governments funding of KRW 15 billion, the EDCF received loan requests from eight developing countries through the Ministry of Foreign Affairs of Korea on 15 projects amounting to USD 120 million in 1987. Among them, the EDCF decided to support the Padang By-pass Project in Indonesia and the Passenger Coach Purchase Project in Nigeria in December of the same year. The projects amounted to USD 13 million and USD 10 million, respectively. Demand for EDCF assistance began to rise after 1990, but the lack of structured research and studies on recipient countries development strategies made it difficult for the EDCF to find the most effective means of development assistance that were in harmony with the recipients strategies. As a result, there were some challenges in identifying the appropriate projects to support. The early stages of development assistance After the loan commitment of KRW 18 billion (USD 23 million) was made in 1987, the EDCF kept a low profile for three years until 1990 as the trade balance worsened and the Korean governments will for ODA weakened. However, as another ODA agency, the Korea

International Cooperation Agency (KOICA), entered the scene to provide bilateral grant and technical assistance in 1991, national awareness on the necessity of ODA improved. Although the assistance commitment amount was small at the time, prospects to expand EDCF operations began to gain greater recognition. From 1987 to 1990, 34.6% of the EDCFs loan commitments went to Asia, followed by Eastern Europe (29.1%), and Africa (25.9%), showing a relatively even distribution among regions except for Latin America, where no assistance was made during this period. By sector, economic infrastructure projects took up 53.9%, more than half of the assistance.

3.2. EXPANSION OF THE EDCF (1993-1996) The shifting global economic order and the EDCF With the advent of the World Trade Organization (WTO) and other changes in the global economic environment in the early 1990s, Korea began to pursue neo-liberalism: striving to ease regulations, open up its trade market, and join globalization. In an effort to tune its economic framework in line with the changing global environment, Korea also entered the Organisation for Economic Co-operation and Development (OECD). Koreas joining of the OECD brought dramatic changes to EDCF operations since tied aid practice was put under the tight regulation of the OECD Arrangement. In 1993, the new government announced its outward policy to strengthen partnership with developing countries in parallel with the entering of the OECD. The governments ODA policy focused on increasing Koreas ODA volume to 0.2% of the GNP by the end of the 1990s, which was the minimum level set by the OECD Development Assistance Committee (DAC) at the time. Supported by the governments The National Assembly Agrees to Ratify Koreas Entering of the OECD in 1996 strong ODA drive, the amount of

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EDCF loan commitments skyrocketed to a record KRW 303 billion in 1996. Meanwhile, the Soviet Unions collapse at the end of 1991 contributed to strengthening Koreas relationship with socialist countries making a transition into market economy. Until the end of 1996, KRW 79 billion was committed to Viet Nam and KRW 74 billion to China, making them the second and third largest EDCF recipient country, respectively. By the end of 1996, the EDCF assisted seven countries that transformed into market economies. The total loan amount to these countries reached KRW 304 billion, constituting 43% of the EDCFs total accumulated commitment, and these countries emerged as new partner countries for the EDCF. Reforming the EDCF operation procedures In order to reinvigorate EDCF operations, the Korean government drafted a comprehensive reform plan in April 1995. First, the number of priority partner countries was reduced from eight to five. Second, the EDCFs support projects were categorized into three business sectors. Third, a goal was set to reduce the time consumed in going through the stage of receiving loan requests to the stage of providing loan commitments, from 30 months down to 18 months. Various measures were hence introduced to simplify the loan procedures. Also, the EDCF exerted coordinated efforts with KOICA in supporting development projects. To enable a seamless connection in the process leading from KOICAs feasibility studies or engineering works to the EDCFs loan commitment, the two ODA agencies closely cooperated from the project preparation stage of initial project identification. These efforts allowed the elimination of possible causes for project delay, and helped the projects to proceed smoothly. In the meantime, the Korean government decided to ease the terms and conditions of the EDCF loan in April 1996. The previous interest rate of 2.0-5.0% was decreased to the advanced donor level of 1.0-5.0%, while the repayment period of 10-25 years including a grace period of 5-7 years was extended to 10-30 years with a 5-10 year grace period. Furthermore, the EDCF provided preferential terms and conditions for strategic countries. One more feature during this period was the beginning of the EDCF Workshop. The first EDCF workshop was held in October

1995. Government officials from partner countries were invited and had the opportunity to enhance their understanding of Koreas ODA and EDCF policy and to share knowledge on Koreas development path. Lastly, the annual consultation meeting with MDBs was strengthened. In 1995, a total of 28 co-financing projects in seven countries were reviewed together with the ADB, IBRD, and AfDB. Furthermore, the first mixed credit was approved in December 1996 for the Laguindingan Airport Development Project in the Philippines, under the cooperation of the export financing division of Korea Eximbank and Nordic Investment Bank. This opened a new chapter for the EDCF as its source of funding was diversified compared to the previous cases where the lack of adequate funding limited the support of large-scale infrastructure projects.

3.3. CONTRACTION OF EDCF OPERATIONS (1997-2002) The Asian financial crisis and suspension of government funding The overall Korean economy in 1997 struggled as a large number of Korean firms recorded low profits and went bankrupt as a result of their excessive investment and overly aggressive business practices. In addition, as the current account balance continued to record a minus level, international credit rating agencies degraded Koreas credit rating, fostering a foreign capital exodus from Korea and resulting in a national liquidity crisis. The incident nearly led Korea to a moratorium but the nation was able to avoid it with the USD 10 billion emergency capital injection from the IMF and G8. Consequently, the government capital subscription to the EDCF was suspended for five years from 1998 to 2002. Temporary setbacks in EDCF operations The EDCF loan commitment was drastically decreased due to the suspension of the governments capital subscription. To make matters worse, the exchange rate hike caused the Korean won denominated EDCF loan to face project cost overrun. As a result, many partner countries who could not bear the counter funding back then, called for the modification of project scope or loan cancellation.

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The aggregate commitment volume showed large fluctuations as it peaked to KRW 303 billion in 1996, drastically dropped to KRW 95 billion in 1997, hiked up to KRW 243 billion in 2000 and then decreased again to KRW 145 billion in 2002. The accumulated commitment amount between 1997 and 2002 was KRW 908 billion, averaging down to approximately KRW 151 billion on an annual basis, which was higher than the annual average amount of KRW 135 billion recorded during the period between 1993 and 1996. By region, Asia benefited the most between 1997 and 2002 , taking KRW 651 billion, 71.7% of the accumulated total, and a relatively even distribution was witnessed among eastern Europe, Africa, and Latin America, constituting 8.8%, 9.2%, and 9.4%, respectively. By sector, transport & storage topped the list with 27.6%, followed by energy 11.9%, and communications 9.5%. It is noted that assistance to overall economic infrastructure projects diminished to 49% during this period while support for the social infrastructure sector increased with the health sector representing 21.0%, water supply & sanitation 12.8%, and education 8.3%. Meanwhile, the accumulated loan disbursement increased to KRW 813 billion despite unfavorable external factors. In the year 2000, the disbursement amount exceeded KRW 200 billion for the first time since the EDCFs foundation.

3.4. MAKING A GREAT LEAP FORWARD (2003-2007) Scaling up the assistance volume The United Nations International Conference on Financing for Development, better known as the 2002 Monterey Conference held in March 2002 declared that advanced nations will expand the ODA level up to 0.7% of the GNP in order to meet the Millennium Development Goals (MDGs). Furthermore, in May 2005, the DAC High Level Meeting of OECD stated through the Paris Declaration that every endeavor will be made to enhance aid effectiveness. Meanwhile, the Korean government finally proclaimed in late 2002 that Korea was officially over with the financial crisis. Despite the downward trend of international trade conditions, Korea maintained an annual 10% export growth rate since 2003 and became the worlds 13th largest trading country in 2004.

As Koreas status in the international community enhanced over time, there were increasing voices, both domestically and internationally, to reshape its ODA strategy and policies in proportion to its economic size, mainly regarding the scale up of ODA volume. In 2004, Koreas ODA/GNI was 0.06%, only a quarter of the OECD DAC average of 0.26%, which was below the level of Portugal and Greece whose per capita income was similar to Koreas. The increasing public awareness on ODA gained momentum with the occurrence of two catastrophic events, which took place consecutively: Tsunami in 2004 and the massive earthquake in Pakistan in 2005. Triggered by the numerous NGOs advocating the expansion of Koreas ODA, the Korean government, led by the Sustainable Development Committee, an advisory group to the President, started to seriously look into this issue from 2003 as the ODA funding sources became available in line with the continued current account surplus. Later in October 2005, a comprehensive ODA reform plan prepared by the Office of Government Policy Coordination was revealed. The plan aimed to increase the ODA volume significantly and to utilize the ODA strategically to enhance Koreas status in the international community, and strengthen economic cooperation with developing countries. Since the 2002 Monterey Conference, the accumulated EDCF loan commitment continued to expand, reflecting the international communitys strong will to boost up aid. The amount recorded KRW 172 billion between 2003 and 2006. During this period, the portion of commitment to Asia slightly dropped to 58.1%, easing the uneven distribution among regions, while the support to Latin America increased to 12.9% due to the summit meeting between Korea and Latin America in 2005 and the Korean presidents state visit. Loan disbursements peaked in 2002 with the amount of KRW 205 billion but then slipped to an annual average of KRW 150 billion between 2003 and 2006. Contrary to the gradual increase in loan commitments, in 2006, the disbursement record remained low due to the prolonged project implementation period caused by the introduction of mandatory competitive bidding procedures which aimed to enhance transparency of procurement procedures.
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Establishment of advanced development assistance system The EDCF has initiated various reform measures, one of which was a proactive project identification mechanism. The mechanism includes regular policy dialogues with counterpart governments, especially those of priority countries, to identify prospective projects and prepare project formation. Since 2003, a total of 57 policy dialogues were held in 26 partner countries and as a result, 35 projects in 13 countries were identified and assisted. In the end of 2005, the EDCF also introduced the Country Cooperation Strategy and Program (CCSP) with the intention of expanding its commitment amount to priority countries of high development cooperation prospects such as Viet Nam and Indonesia. Meanwhile, projects with high development prospects but little preparation were identified and given technical assistance such as conducting feasibility studies or project design. In the meantime, the EDCF tried to enhance project efficiency by simplifying the operation process. In this context, the EDCF Information System was established, which sets a standard time limit for each operational step and connects its electronic system with the governments, making it possible for the relevant authority to check the status of the project in real time. In January 2006, the Korean government founded the Medium Term EDCF Operation Strategy and Plan 2006-2009 in order to enhance aid effectiveness and improve its operation. It basically lays out major objectives and targets on improving Koreas image and establishing a long-term stable relationship with key developing countries. The operation principles are to strengthen the ownership of developing countries in line with the EDCFs strategies to meet the MDGs. In terms of project evaluation, the EDCF made it mandatory to conduct ex-post evaluation for all loan projects, starting from 2007. It will contribute to improving the aid effectiveness, transparency, and accountability by providing the results and lessons learned to the interest parties.

CHAPTER 2

THE PRESENT OF EDCF

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ODA POLICY
Chapter 2. The Present of EDCF

1
1.1. KOREA'S ODA POLICY In 2005, the Korean government announced the Comprehensive Plan for Improving ODA of Korea and set up a target to reach an ODA/GNI ratio of 0.1% by 2009. The plan reflects the governments efforts to expand ODA volume in line with the MDGs and to harmonize ODA-related policy makings. The Commission on International Development Cooperation chaired by the Prime Minister of Korea was launched in January 2006 with the purpose of reviewing governmental policies and plans on development cooperation. In 2007, the ODA Mid-term Strategy 2008-2010 was approved by the commission, which set the primary objective of Koreas ODA as contributing to the achievement of the development goals and building institutional capacities of developing countries in order to reduce poverty and achieve sustainable development in those countries. As the year 2010 is the mid-point of reviewing the MDGs, the mid-term strategy makes it its first priority to concentrate on actively participating in the mid-term review and achieving the mid-term goals. The strategy also calls for attention towards improving the basic human needs of least developed countries such as those in sub-

Saharan Africa by expanding Koreas ODA. Support will also be substantially increased to areas such as human resources development, healthcare, governance improvement, information technology, and rural development as part of an effort to eradicate poverty and achieve socio-economic development. The strategy also aims to align Koreas development cooperation policies with other national strategies to maintain consistency and induce synergy effects. It also plans to expand the involvement of the private sector including the civil society in various ODA projects so as to utilize their expertise and raise public awareness. Especially, when conducting grass-roots level projects in countries with no official diplomatic relations, the Korean government will increase the participation of non-governmental organizations that have much field experience. The strategy also plans to encourage monitoring and evaluation by the civil society, which, in turn, will enhance transparency and accountability. The ODA white paper will be produced as well to publicly announce the results of development assistance and utilize those results to improve Koreas ODA practices. Meanwhile, despite the 20-year history in development assistance, Korea still has no high-level policy statement governing its ODA. As of today, there are two legislative acts, the Economic Development Cooperation Act (enacted December 26, 1986) and the Korea International Cooperation Agency Act (enacted January 14, 1991), which only broadly state the development objectives. As such, the government began the task of drafting a policy statement called the Policy Statement of Koreas International Development Cooperation, which is set as a long-term task. It will include Koreas ODA philosophy and objectives, detailed policy priorities, and implementation plans. The final version of the policy statement will be drafted by the end of 2008 reflecting the results of the discussion held at the third meeting for the Commission on International Development Cooperation held in January 2008. The meeting suggested Koreas ODA philosophy as securing the basic needs for all mankind and thereby contributing to the worlds peace and co-prosperity. Also, Koreas ODA objectives was set as contributing to poverty reduction and sustainable development of the international community.
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1.2. EDCF POLICY As specified in the EDCF Act, the EDCF was established in order to support industrial development and economic stability of developing countries and to stimulate economic cooperation between these developing countries and the Republic of Korea including the increase of economic exchange between them. In line with this objective, the Basic Principles of the Management of the EDCF, approved by the Fund Management Council in 1987, guides the EDCF as follows: First, in the early stages, the EDCF will focus more on supporting sectors through which great economic impacts can be achieved from the cooperation with partner countries, and later on, its support will shift more towards meeting the development needs of countries through aid. Second, regional allocation will be based on strategic and cooperative needs rather than simple distribution by region. Third, efforts will be made to enhance aid effectiveness by utilizing technical assistance elements such as assistance for feasibility studies. In 2006, the Korean government established the Medium Term EDCF Strategic Management Plan 2006-2009 to enhance mid-term predictability and to more effectively utilize the EDCF. The plan was revised every year and the latest plan, revised in 2008, consists of the following goals for 2008 to 2012: First, the EDCF will increase its assistance volume in accordance with the governments ODA expansion plan. In this regard, increased contributions from the governmental budget account are planned as well. Second, in line with the principle of focusing strategy, the EDCF will select priority partner countries with high development cooperation prospects where aid effectiveness can be maximized with the limited financial resources. Based on the partner countrys development plan, the EDCF will provide goal-oriented and results-based development assistance and enhance aid effectiveness by staying in tune with the partner countrys development strategy and by harmonizing aid with other donor countries. Third, the EDCF will be committed to global issues such as climate change and food crisis, and within this context, concentrate especially on sectors in which Korea has a comparative advantage. By carrying out these commitments, the EDCF will help Korea to bolster its position as

an established member of the international community. Fourth, the Knowledge Sharing Program, which was designed to share Koreas development experience gained from its rapid economic growth and social development with developing nations, will be further developed to meet the socio-economic and development needs of developing nations, thereby providing a more customized set of contents. The EDCFs loan programs will also become more synchronized with other grant assistance programs of various governmental agencies and ministries. Fifth, the EDCF will increase its support for public-private partnership (PPP) projects to provide more customized services that meet the various demands and project-specific needs in which the private sector is believed to be relatively more experienced. Meanwhile, to improve aid effectiveness, the EDCF will gradually increase the proportion of untied aid, which is currently 3%, with the aim of reaching the level of other advanced donors. Finally, the plan for 2008-2012 also suggests that the EDCF strengthen its cooperative ties with the MDBs through co-financing, and work closely with bilateral aid agencies of developed countries through MOUs as well as joint research, studies, or evaluations. Expanding the CCSP and encouraging more Framework Arrangements that commit assistance three to four years in advance are also recommended to improve aid predictability.

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ODA SYSTEM
Chapter 2. The Present of EDCF

2
2.1. IMPLEMENTATION SYSTEM OF KOREAS ODA Koreas ODA takes two forms: bilateral and multilateral aid. Bilateral aid consists of loans and grants. Of those, bilateral loans are the EDCF loans and bilateral grants include both grant aid and technical cooperation. Multilateral aid consists of grants, capital subscriptions, and concessional lending to multilateral agencies. The Ministry of Strategy and Finance (MOSF) is primarily responsible for bilateral loans, capital subscriptions, and concessional lending to multilateral financial institutions including the World Bank Group, the IMF, and the ADB. The Ministry of Foreign Affairs and Trade (MOFAT) is primarily responsible for bilateral grants and grants to international development institutions such as the UN and related agencies. Bilateral ODA Bilateral loans The Korean government established the EDCF as a bilateral ODA loan program in 1987 with the vision to support developing countries achieve industrial growth and improve economic stability. Since then, not only has the EDCF program allowed Korea to contribute to the

growth of other countries, but also helped Korea to develop sound economic relations with other countries. The EDCF also seeks to contribute to the prosperity of the global economic community by assuming responsibilities commensurate with Koreas present international status. In this respect, its activities can be viewed as a means of sharing both its resources and accumulated experience with developing countries around the world. As for the management of the EDCF, the Korean government regulates the principal policies, the MOSF supervises the overall management, and Korea Eximbank conducts all EDCF operations such as execution of loan agreements, comprehensive monitoring and evaluation of projects, and provision of advisory services in accordance with the government guidelines.
Koreas ODA Operation System

ODA

Types of ODA

Executing Agency

Authorities Concerned

EDCF Loan

Export-Import Bank of Korea

Ministry of Strategy and Finance

Bilateral ODA

Grant

Korea International Cooperation Agency

Ministry of Foreign Affairs and Trade

Relevant Central and Local Goverment Ministries

Relevant Government Ministries

Multilateral ODA

Contributions to Multilateral Development Banks [World Bank, ADB, AfDB, EBRD, etc.] Contributions to UN and Other Multilateral Agencies [UN, FAO, etc.]

Ministry of Strategy and Finance

Ministry of Foreign Affairs and Trade

Relevant Goverment Ministries

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Bilateral grants The responsibility for Koreas bilateral grants and technical cooperation is shared among relevant government agencies. Specifically, KOICA, along with several central government ministries and local governments, is mainly responsible for the implementation of bilateral grants and technical cooperation under the authority of MOFAT. Multilateral ODA Koreas multilateral ODA mainly consists of grants and capital subscriptions to multilateral organizations including UN agencies, the World Bank Group, and regional development banks. The MOSF is responsible for managing grants and capital subscriptions to international financial institutions including the World Bank Group and regional development banks. MOFAT and other government agencies manage contributions to various UN agencies.

grams and financial statements, prepares principal policies concerning operation and management, selects the projects to support, and approves loans. Ministry of Foreign Affairs and Trade MOFAT works as the official window of EDCF loans. It accepts loan requests, notifies assistance policies, and executes inter-governmental agreements on behalf of the Korean government. The Export-Import Bank of Korea Korea Eximbank has four departments under the Economic Development Cooperation Fund Group for the operation and management of the EDCF. It dispatches appraisal missions, prepares appraisal reports, executes loan agreements, collects the payment of principal and interest thereon, supervises projects, fulfills ex-post evaluations, and so on.
EDCF Operational System

2.2. IMPLEMENTATION SYSTEM OF THE EDCF Fund Management Council The Fund Management Council was established as a top decisionmaking body in line with the EDCF law. The 12-member council deliberates principal policies concerning the EDCFs operation and management as well as the operational programs, and reviews financial statements. With the Minister of Strategy and Finance as Chairman, the council members include the Minister of Foreign Affairs and Trade, Minister for Food, Agriculture, Forestry and Fisheries, Minister of Knowledge and Economy, Minister for Health, Welfare and Family Affairs, Minister of Land, Transport and Maritime Affairs, Minister of Education, Science and Technology, Chief Economic Secretary of the Office of the President, Deputy Director of the National Intelligence Service, Minister of the Prime Ministers Office, Chairman and President of the Export-Import Bank of Korea, and President of the Korea International Cooperation Agency. Ministry of Strategy and Finance The MOSF, as an operating body, drafts the EDCFs operational pro-

Fund Management Council (Deliberation Council)

Other Relevant Ministries

Ministry of Strategy and Finance (Operating Body)

The Export-Import Bank of Korea (Executing Agency)

Ministry of Foreign Affairs and Trade (Official Window)

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OUTLINE OF EDCF LOANS

Chapter 2. The Present of EDCF

Terms and conditions The EDCF currently classifies all developing countries into five categories, taking into consideration the countrys economic development stage and per capita income level as well as other relevant factors. The standard terms and conditions of loans to borrowing countries are shown below. The interest rate and repayment period including a grace period can be adjusted, not exceeding the concessionality level of the EDCF standard terms and conditions.

3
3.1. TYPES OF LOANS, TERMS AND CONDITIONS Types of loans Development Project Loan provides necessary funds for governments or corporations of developing countries to conduct specific development projects. Public-Private Partnership (PPP) Loan provides necessary funds for governments or corporations of developing countries to conduct PPP projects. Equipment Loan provides necessary funds for governments or corporations of developing countries to procure equipment and other materials needed for industrial development in specific sectors. Two-Step Loan provides necessary funds to governments or financial institutions of developing countries for sub-lending to end-users. Commodity Loan provides necessary funds for governments or corporations to import commodities, which will contribute to the economic stabilization of the recipient country. Project Preparation Loan provides necessary funds to governments or corporations for the preparation of development projects, including feasibility studies, detailed designs, or pilot programs relating to such projects.

Terms and Conditions for EDCF Loans Loan Amount

Up to the total project cost (excluding general management expenses, taxes, duties, levies,
land acquision costs, resettlement costs, and other indirect costs)

For untied loans provided for countries other than the Least Developed Countries, the ceiling ratio of the coverage of the total project cost will be 85%, excluding emergency relief projects and the projects hiring Korean consulting firms Interest Rate Repayment Period Loan Currency Repayment Frequency

0.01~2.5% per annum (zero for consulting services provided by Korean firms) Up to 40 years, including a 15-year grace period Korean Won (In special cases, such as untied loans, US dollars or euros are acceptable) Semi-annual

3.2. PROJECT CYCLE Project identification and preparation Most developing countries draw up multi-year development plans to clarify their development objectives and strategies. These plans include envisaged development projects ranked in terms of their importance to the nation and investment priorities. The government of a developing country must identify and prepare projects that are not only feasible, but consistent with the countrys development plan and strategy. To determine a projects feasibility, economic and technical aspects must be closely examined. Feasibility studies may be carried out either by the governments of developing countries or multilateral organizations such as the World Bank and the ADB, or with technical assistance from donor countries. If the government of a developing country is in need of assistance in preparing for a project that will be financed out of EDCF loans, it may also request Korea Eximbank or the Korean government to assist

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in carrying out the preparations. In such cases, it may request support from the Project Preparation Facility on a grant basis. A feasibility study should provide all the data necessary for making any project related decisions including economic, financial, technical, and environmental aspects. More importantly, a project under an EDCF loan should comply with the provision on project eligibility under the OECD Arrangement, as Korea is a member of the OECD. Specifically, the project must pass the commercial non-viability test in order to be eligible for an EDCF loan. Loan request Once the feasibility study is finalized, the prospective borrowers government makes an official loan request to the Korean government by submitting the required documents to the Korean embassy in its own country. After receiving the request, the Korean embassy forwards it to the MOSF via MOFAT. At this stage, Korea Eximbank may send a fact-finding mission to obtain further information and clarify issues. Such detailed information on all aspects of the proposed project is required to proceed to the next stage of appraisal. Appraisal After receiving the loan request, the MOSF makes a preliminary decision on whether to extend the EDCF loan, based on its review of the projects contribution to the industrial development or economic stabilization of the borrowing country. If the project is deemed suitable, the MOSF then requests that Korea Eximbank appraise it. An appraisal involves a detailed review of the feasibility studies related to the project. It is through the appraisal process that Korea Eximbank judges whether the project is consistent with its own operational policies and programs, and whether it is suitable for financing. In addition to the above, Korea Eximbank sends an appraisal mission to the country to conduct on-site surveys, collect information, and hold discussions with officials of the prospective borrowing country. Korean governments decision on EDCF loans Korea Eximbank completes the appraisal report and submits it along

with its opinion to the MOSF. Then, the MOSF confirms the economic, financial, and technical soundness of the project based on Korea Eximbanks appraisal report. After consulting with the ministries concerned, the MOSF makes a final decision on the loan request and notifies the borrowing country through MOFAT. Agreement and Arrangement between governments An Agreement is concluded between the Korean government and the borrowing countrys government, introducing the basic framework of the EDCF loan and outlining their responsibilities. Once signed by both parties, the Agreement remains in force for a minimum of 10 years. The two governments also sign an Arrangement for an individual project, stating the basic financing terms and conditions. As long as the Agreement is in force, only an Arrangement needs to be signed for any new EDCF loan. If the two governments sign the Framework Arrangement, they are allowed to omit the Arrangement for an individual project. The Agreement and Arrangement are promises by the Korean government that it will do all in its power to realize the loan. Loan Agreement Prior to drafting a Loan Agreement, Korea Eximbank sends the borrower country a legally binding questionnaire to determine the legal background pertaining to the loan. Legal answers to the questionnaire should be prepared by the Minister of Justice or someone in the position to provide objective and authoritative answers. When loan negotiations are completed and the specific terms and conditions are agreed upon, a Loan Agreement is signed between Korea Eximbank and the borrower. The Loan Agreement becomes effective as soon as condition-precedent documents such as evidence of authority, specimen signature, and legal opinion are submitted by the borrower and accepted by Korea Eximbank. Project implementation Once the Loan Agreement is signed, the project is implemented by the project executing agency (PEA) according to the agreed schedule and procedures.
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Employment of consultants Korea Eximbank strongly urges the borrower to hire consultants during project implementation. During this period, a consultant is generally employed to prepare detailed engineering designs and draft bidding documents, undertake or assist in the evaluation of bids, supervise the construction of civil projects, and carry out other specified project activities. Consultants are to be hired in accordance with the Guidelines for the Employment of Consultants under the EDCF Loan. During the implementation stage, the borrower may request help from the Project Implementation Facility, which is provided on a grant basis to assist the borrower in implementing and managing the project more effectively and efficiently. Korea Eximbank conducts mid-term reviews including on-site visits to assess the progress of the project throughout the implementation period. Procurement The borrower is responsible for the implementation of the project, while Korea Eximbank is responsible for supervision. The PEA prepares the specifications and evaluates bids for the procurement of goods and services for the project. Korea Eximbank reviews this activity to ensure that the procurement guidelines have been followed. The procurement method acceptable to Korea Eximbank is competitive bidding among Korean suppliers. Disbursement Loan proceeds are disbursed at the borrowers request as the project progresses. Commitment Procedure, Reimbursement Procedure and Direct Payment Procedure may be adopted as the mode of payment in accordance with the Disbursement Procedures under the EDCF loan. Evaluation The primary purpose of the evaluation is to improve the quality of EDCF assistance by incorporating lessons learned and recommendations from similar projects in the past and to ensure accountability and transparency by providing the evaluation results to various stakeholders. In this context, Korea Eximbank conducts completion monitoring and ex-post evaluation.

6. Evaluation

1. Project Identification & Preparation

2. Appraisal

Project Cycle

5. Project Implementation

4. Loan Agreement

3. Governments Decision on EDCF Loan

3.3. EVALUATION SYSTEM Introduction The EDCF evaluation system has two important purposes. One is to improve the quality of EDCF assistance and strengthen feedback by incorporating the lessons learned and recommendations from similar projects in the past. The other purpose is to ensure accountability and transparency by providing the evaluation results to the public, partner countries, and international donor agencies. To enhance the evaluation process, the EDCF introduced ex-post evaluation in 2002 and the performance indicator in 2007. As of 2007, the EDCF conducted ex-post evaluation on 14 projects in 9 countries.
Number of Ex-post Evaluation (As of 2007) Year No. of Projects 2004 4 2005 3 2006 4 2007 3 Total 14

EDCF evaluation system The EDCFs evaluation system consists of setting up a performance indicator, completion monitoring, and ex-post evaluation. Performance indicator The performance indicator, which was introduced in 2007, is set up for every EDCF project at the stage of project appraisal. It is jointly made with partner countries after comprehensively analyzing the project benefits, resources required to achieve the benefits, and obstacles in pursuing the project. Since partner countries participate in developing the performance

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indicator, they can have ownership and responsibility for the project. The performance indicator demonstrates the output, outcome, and impact of the implementation of the project, based on which the evaluation unit can comprehensively examine the project from various angles. It is also used for regular monitoring and ex-post evaluation in order to measure the achievement of the projects original objectives. The performance indicator is also in accordance with resultbased management, an essential element of aid effectiveness currently being emphasized by the international donor society. Completion monitoring Completion monitoring is carried out on all projects when the project management unit (PMU) in charge of the project reports the completion of the project. It focuses on examining whether the project has been completed as planned and whether the output has been put to proper use by applying the check-list method based on the project completion report (PCR), which is provided by the PMU. The PMU should submit the PCR within six months after the project completion date or such later date as shall be agreed upon between the PMU and Korea Eximbank. Ex-post evaluation Ex-post evaluation is conducted on all projects within two to three years after the completion monitoring. It basically uses five evaluation criteria of the OECD DAC guidelines; Relevance, Efficiency, Effectiveness, Impact, and Sustainability. For a more objective evaluation, an independent evaluation unit consisting of evaluation experts and technicians is set up to carry out the evaluation. For large-scale projects, external evaluators can perform the evaluation. The lessons learned and necessary follow-up actions from the expost evaluation are applied to similar on-going EDCF projects so that the maintenance process can be strengthened. These lessons and recommendations could also help to improve aid effectiveness for future projects and benefit partner countries by improving their capacity to prepare, implement, and maintain development projects. Finally, the ex-post evaluation reports are opened to the public, various stakeholders, partner countries, and other donor agencies to ensure transparency and accountability, and also to strengthen the feedback process.

3.4. CO-FINANCING WITH MDBs Introduction of EDCF co-financing Recently, the EDCF is raising the level of co-financing with the MDBs to meet the recipient countries growing demand for large-scale development projects. EDCF co-financing refers to any arrangements under which EDCF funds are associated with funds provided by the MDBs for a particular project or program. Co-financing is categorized into parallel co-financing and joint co-financing. Until 2006, the EDCF provided funds in MDB-assisted co-financing projects on a parallel basis. Parallel co-financing enables the co-financier to finance separate components of the project, making it possible for the EDCF, as a cofinancier, to apply its own procurement procedure for the component it finances. Since the approval of untied EDCF loans for co-financing in 2007, joint co-financing is expected to increase, opening new opportunities in partnership with the MDBs. Co-financing with the MDBs has certain advantages; i) enhances, together with the MDBs, the impact of development assistance to the recipient countries ii) bridges the financing gap of large-scale development projects iii) enhances donor coordination and harmonization iv) reduces time and cost for project identification, formulation, and preparation v) enables better project implementation review and completion monitoring Efforts and track record The Korean government has approved EDCF loans for 9 co-financing projects, amounting to USD 184.9 million as of 2007. Although the volume of co-financing has been small, it is increasing significantly these days. Three commitments were made in 2007 alone, representing 33% of the EDCFs total co-financing commitments.

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EDCFs Co-financing Track Record MDB ADB Country Philippines Project Mindanao Power Transmission Project Loan 10.7 Remarks - Parallel

(USD million)

- Government approval of EDCF loan made in July 1994 Mongolia Road Development Project (Choir-Sainshand Section) 23.9 - Parallel - Government approval of EDCF loan made in July 2004 Viet Nam GMS Southern Coastal Corridor Project 49.7 - Parallel - Government approval of EDCF loan made in March 2007 Laos Northern GMS Transport Network Improvement Project 22.4 - Parallel - Government approval of EDCF loan made in August 2007 IDB Bolivia Pailon-San Jose Highway Construction Project (Component 2) 23.0 - Parallel - Government approval of EDCF loan made in July 2000 Honduras Peace and Citizen's co-existence for the Municipalities of the San Pedro Sula Region 2.5 - Parallel - Government approval of EDCF loan made in December 2003 IBRD Sri Lanka Re-engineering Government Component of e-Sri Lanka Project 15.0 - Parallel - Government approval of EDCF loan made in December 2004 CABEI Guatemala Educative Informatics Highway Project 23.6 - Parallel - Government approval of EDCF loan made in September 2006 AfDB Madagascar Toliara Province Road No.35 Rehabilitation Project 14.1 - Parallel - Government approval of EDCF loan made in December 2007 Total 184.9

Among those projects, the AfDB-assisted Madagascar Toliara Province Road Rehabilitation Project was meaningful as the EDCF extended an untied loan for the first time in its history through this project in 2007. Prospects With recent emphasis on the importance of ODA, advanced donor countries are raising the level of development assistance. Unfortunately, the volume of ODA committed by the Korean government remains small compared to the OECD DAC member countries. In an effort to close the gap, the EDCF will increase the volume of cofinancing with the MDBs. To this end, the Korean government and Korea Eximbank will i) increasingly provide untied loans because the EDCFs tying status has been a limiting factor for co-financing with the MDBs, ii) establish a more efficient and systematic cooperation channel with the MDBs, iii) explore opportunities to support multilaterally-assisted infrastructure development projects, and iv) expand program aid in the social infrastructure sector. Especially, efforts will be made to extend more EDCF co-financing funds towards the least developed countries.

3.5. SPECIAL ASSISTANCE PROGRAM Special assistance programs are designed to facilitate and expedite the EDCF loan process from the project identification and preparation stage all the way to the implementation and maintenance phase after project completion. These activities are carried out by the consultants employed and dispatched by the EDCF. There are three types of programs as follows: Project Preparation Program During the preparation stage of development projects, the borrowing countries face difficulties in coming up with a well-prepared feasibility study, mainly due to financial and technical limitations. Under such circumstances, the EDCF supports borrowing coun-

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The increase in co-financing is the result of various efforts to broaden the cooperation channel with the MDBs. For instance, the EDCF holds annual consultations with the MDBs to explore cofinancing opportunities. It also introduced untied loans in an effort to meet the preference of other donor agencies including the MDBs. MDBs have expressed their reluctance to be associated with tied loans because tied loans hinder the coordination between co-financiers and the continuity of procurement procedures. The EDCFs co-financing track record includes 4 projects with the ADB, 2 projects with IDB, and 1 project each with the IBRD, CABEI, and AfDB. They were all carried out on a parallel basis.

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tries through the Project Preparation Program, made available for use by borrowers for the following activities in the project identification and preparation stages. - Pre-feasibility studies - Project cost estimation - Establishment of project scope - Feasibility study on economic, financial, and technical aspects - Analysis of the economic and social impact of the project - Environmental studies Project Implementation Program The Project Implementation Program was created to provide assistance to on-going projects to ensure the smooth implementation of the projects and achievement of their goals. These assignments are carried out by consultants and experts hired by the EDCF with its own budget. The following are examples of activities under the Project Implementation Program. - Preparation of bidding documents - Procurement/Inspection - Technical assistance in project implementation - Dispatch of consultants to analyze project delays, etc. - Drafting of the progress report and project completion report Ex-post Assistance Program The Ex-post Assistance Program is provided to maximize the effectiveness of aid. As such, hindering factors are analyzed to ensure the projects long-term sustainability in terms of managerial, operational and financial aspects upon project completion, including procurement-related issues. - Dispatch of experts for local technician training - Provision of spare parts to replace or upgrade outdated ones

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VOLUME of EDCF loans

Chapter 2. The Present of EDCF

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4.1. DISTRIBUTIONS BY TYPES OF LOANS Overview Governments and governmental institutions in developing countries are striving to build and expand a foundation for development in a wide range of fields, from socio-economic infrastructure to environmental improvement. Drawing on its own development experience, Korea has helped many of its partner countries overcome economic hardships and achieve their development goals through poverty reduction and sustainable growth programs. In recent years, the accumulated external debt and budget deficits in recipient countries have spurred the need for various types of financing. Thus, the EDCF provides several types of lending programs such as development project loans, equipment loans, two step loans, commodity loans, and the project preparation loans, among which the development project loans and equipment loans account for the largest portion to date. By making use of various types of loans, the EDCF will continue to contribute to the stability and development of the international community in the years to come and also to build up a more effective cooperation and communication network with partner countries.

Development Project Loan This loan provides funds for government or corporations of developing countries to conduct specific infrastructure projects such as roads, railways, hospitals, vocational training centers, water supply facilities, and sewerage plants selected within the context of the national economic development plan. Predominant among EDCF loans, the development project loan accounted for 65.7% of the total EDCF loans. The amount of development loan commitments made by the EDCF has grown continuously and showed a remarkable increase since the year 2002. Disbursement of the development project loan normally requires more procedures than others; therefore, the interval between the date of the Korean governments loan commitment and the date of the first disbursement is longer for this type of loan. The largest portion of the development loan was channeled to the Asian region, followed by Africa and Latin America. As for the sectoral distribution, transport & storage accounted for 20.4%, followed by water supply & sanitation and telecommunications. For the education sector and medical health sector, equipment loans represented a major portion, whereas development loans did not take up a significant share. The portion of development project loan is expected to increase substantially and continuously in the future. Equipment Loan Equipment loan provides necessary funds for governments or corporations of developing countries to procure equipments and other materials needed for the industrial development of the country in specific sectors. The merit of an equipment loan lies in the simplicity and efficiency in its procedures compared to other types of lending programs. The details of a project supported by an equipment loan are far simpler than other types of projects, enabling involved parties to proceed more quickly. The average time period necessary in making disbursements for an equipment loan project is 18 months. Equipment loans and development project loans have represented the largest share among the EDCF lending programs. The share of equipment loans started to increase rapidly in 1994, and equipment loans accounted for the largest portion among all types of EDCF loans in 1998 .

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The dramatic increase started to take place in 1994 when the EDCF began providing assistance to China as Chinas demand for EDCF loans mostly were concentrated on equipment loans. Among all recipient countries, China was one of the countries with the highest share in the utilization of EDCF equipment loans. Unlike some recipient countries, project executing agencies in China were equipped with the management capacity to oversee all stages of its development projects. As a result, their need for assistance tends to stop at the procurement of equipments. The share of equipment loans is expected to shrink gradually. One of the reasons is largely associated with the changed status of China, the main user of equipment loans. China is no longer considered as an eligible recipient country by the EDCF owing to its progressed economic development. In addition, with the emphasis of the international aid community on the importance of aid effectiveness, loans solely supporting the procurement of equipments are being considered less effective, which led to the gradual decrease in assistance to projects of the same nature. Others Overseas Investment Credit Overseas investment credit supports development projects conducted by the private sector. Therefore, this credit is extended only to Korean private companies, whereas other types of loan facilities are extended to the central government of developing countries. This credit requires that the business model of the concerned project be feasible and its implementation should contribute to the economic cooperation between the two countries. Also, this credit is provided to projects that are considered too risky to be covered by Korea Eximbanks other lending programs or other financial institutions. As a result, these conditions limit the scope of applicable project types for this credit to high-risk, long-term projects such as agriculture, fishery, and mining related projects. To date, the EDCF has approved two projects for this credit, one in the Philippines in 1990 and the other in Indonesia in 1992. Since then, there has been no further demand for this type of lending program, its primary reason being that the lending conditions of this credit are less advantageous than the recent loan conditions of commercial institutions.

Loan procedures from application to approval are also more complicated and time-consuming. Thus, the demand for this credit is not expected to increase unless the lending conditions and procedures are dramatically changed. Two-Step Loan The two-step loan first provides necessary funds for the governments or financial institutions of developing countries to procure equipments necessary for the industry development. Then, financial institutions will on-lend the received funds to the end-users such as small and medium enterprises and independent farmers under designated conditions. This dual procedure distinguishes the loan program from other types of loans. Also, rather than being project-specific loans, this loan is given accordingly to the recipient countrys development need. Contrary to the mentioned features, however, demand for twostep loans has been extremely low. To date, only one project has been supported by the EDCF two-step loan, the Industrial Equipment Leasing Project in Pakistan which received KRW3,459 million in 1991. The demand is expected to increase in the future, however, as international assistance is being specialized by sector or program.

4.2 DISTRIBUTIONS BY REGION Overview By the end of 2007, the EDCF provided loan commitments totaling KRW 3,188.2 billion (USD 3.3 billion) to 172 projects in 43 countries. The largest portion of the commitments since the EDCFs establishment was given to Asia, accounting for 69.6% of the total commitment amount. This reflected Koreas close economic and diplomatic ties with many of the Asian countries. Africa (12.8%), Eastern Europe (10.0%), and Latin America (7.1%) followed the Asian region. By country, Viet Nam was the biggest recipient (KRW 448.3 billion), followed by Indonesia (KRW 249.2 billion), China (KRW 233.6 billion), Sri Lanka (KRW 212.5 billion), and Bangladesh (KRW 204.8 billion). Loan disbursements totaled KRW 1,773.2 billion for 132 projects since its establishment. Like the commitments, Asia was the largest borrower at 70.7%. Eastern Europe and Africa accounted for 13.8%

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and 10.6% each. By country, China took the first place with KRW 209.9 billion, followed by Sri Lanka (KRW 176.5 billion), Indonesia (KRW 166.9 billion), Viet Nam (KRW 142.7 billion), and Bangladesh (KRW 124.6 billion). As of 2007, the EDCFs outstanding loans to partner countries totaled KRW 1,544.1 billion, which is expected to increase as new commitments and disbursements are to take place. In the future, priority will be given to Asia according to the choice and focus strategy. For other regions such as Latin America, Africa, and Eastern Europe, the EDCF will expand its support on stronghold countries. Asia Korea has maintained close diplomatic and economic ties with other Asian countries owing to the geological proximity and historical and cultural similarities. Although the regional economy staggered during the financial crisis of 1997, Asia was able to achieve sustained economic growth since 2000 and Koreas trade and investment volume to the region increased as well. ASEAN is one of Koreas major trade and investment partners together with the U.S., China, Japan, and EU. The recent movement towards regional economic integration further emphasizes the importance of our economic cooperation with Asian countries. Considering this close relationship, the EDCF is placing its priority on Asia in providing ODA. In particular, Indonesia, Viet Nam and the Philippines are the priority countries. Indonesia has the largest population and economy among ASEAN countries, and it has formed a long cooperative relationship with Korea. Viet Nams economy is growing fast with the continued reform and open economic policy. Aided with its abundant human and natural resources, Viet Nam has high growth potential and is attracting active foreign investment inflow, following China. The Philippines, our longtime ally since the Korean War, is home to the largest number of overseas Koreans in South Asia. As of 2007, the EDCF has supported 126 projects in 17 Asian countries, which received EDCF loan commitments of KRW 2.22 trillion since the EDCFs inception, representing 69.6% of total EDCF loans committed globally. By country, Viet Nam was given the most,

followed by Indonesia, China, Sri Lanka, Bangladeshi, Cambodia, and the Philippines. Out of the top 10 recipients, 8 are Asian countries, thanks to the high priority assigned to the region. Indonesia, the Philippines, and other Southeast Asian countries have long benefited from the support of the EDCF. The establishment of diplomatic ties with China as well as the normalization of diplomatic relations with Viet Nam and Cambodia called for stronger economic cooperation. However, assistance to China dropped sharply since 2002 in line with Chinas economic growth and increased income level. Aiming to achieve maximum effectiveness with the limited funds available, the EDCF will keep focusing on Asia and expanding assistance in the region in order to contribute to the sustainable growth of Asia. (1) East and South Asia Bangladesh From the year 1991, the Korean government started reviewing economic development cooperation with Bangladesh as trade volume between the two countries started to gradually grow. The governments of Korea and Bangladesh signed a Government Agreement to extend EDCF loans in November 1993, signaling the official beginning of EDCF operations in Bangladesh. In the same year, the EDCF supported the Greater Khulna Power Distribution Project, amounting to USD 14.0 million. As of 2007, the number of EDCF supported projects in Bangladesh reached 8, amounting to KRW 204.8 billion (USD 204.1 million) in commitments.

2 1. Internet Information Network Expansion Project, Bangladesh 2. Greater Khulna Power Distribution Project (Phase II), Bangladesh

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In terms of the cumulative committed amount, Bangladesh ranked fifth out of the 43 recipient countries, sharing 6.4% of total EDCF commitments and maintaining its status as the EDCFs priority country. By sector, transport & storage constituted the largest portion of 55.6%, followed by communications (28.8%), and energy (15.6%). From 2005 to 2007, one EDCF project was committed to Bangladesh every year. The EDCF loan amount for each project varied from USD 14 million to USD 33 million, recording an average of USD 25.5 million per project. However, no project was committed between 1997 and 1999 due to the Asian financial crisis in the late 1990s, during which EDCF operations remained relatively inactive. There are bright prospects for the year 2008, however, as policy dialogues between the two governments will be settled for the Framework Arrangement.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Greater Khulna Power Distribution Project (Phase II) Locomotive Purchase Project The Intensification and Expansion of Distribution System Project (Phase II, Part A) Digital Exchange Installation Project at Khulna, Chttagong, Sylhet Locomotive Purchase Project (Phase II) Internet Information Network Expansion Project Salvage Vessel Procurement Project Locomotive Purchase Project (Phase III) Total 2002 2005 2006 2007 35,295 23,717 24,666 26,563 204,774 28.0 25.0 26.0 28.0 204.1 35,254 124,598 2001 35,259 30.0 35,082 1996 2000 27,294 20,908 33.1 20.0 27,293 16,160 1993 11,072 14.0 Disbursements KRW Million 10,809

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Cambodia Cambodia has been receiving large amounts of ODA since it regained peace and security after two decades of isolation and conflict. The EDCFs activities started in 2001 after Korea restored full diplomatic relations with Cambodia in 1997. The EDCFs first operation in Cambodia was the Capacity Expansion of Government Administration Information System Project.

The project was the EDCFs very first support case in system integration, and the successful outcome of the project led to over 10 system integration projects in over 10 countries. As of 2007, EDCF loan commitments to Cambodia reached KRW 172.2 billion (USD 159.3 million) for 6 projects. Cambodia has become one of the EDCFs priority countries, ranking sixth among all the EDCF recipient countries by cumulative commitment amount. By sector, government & civil society and transport & storage took the largest share of the EDCF financing in Cambodia, representing 32.2% and 32.1% respectively, followed by education (21.0%) and water supply & sanitation (14.7%). Although the history of EDCF operations in Cambodia is relatively short, the close partnership between Korea and Cambodia enabled the EDCF to be the second largest donor in terms of bilateral loans, followed by China. In 2001 and 2002, Cambodia became our largest recipient country with a total of 3 projects amounting to USD 64.7 million, equivalent to nearly 30% of the EDCFs total commitment amount. In 2005 and 2006, the country once again rose as our top recipient country. During this period, another 3 projects were approved with a total amount of USD 94.6 million. 1 The year 2007 was an important phase for EDCF operations in Cambodia as the EDCF outlined its strategy for Cambodia by establishing the CCSP for Cambodia from 2008 to 2011. The program specified major cooperation goals including the aggregate commitment volume and key support areas, and was finalized under the 2 mutual agreement between the 1.2 Kampot-Trapang Ropaou Road Rehabilitation Project, Cambodia two governments in March 2008.

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In accordance with the CCSP for Cambodia, the EDCF will continue to be a major development partner for Cambodia, focusing on the development of its economic and social infrastructure.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Capacity Expansion of Government Administration Information System Project National Cambodian - Korean Vocational Training School Project Kampot - Trapang Ropaou Road Rehabilitation Project Krang Ponley Water Resources Development Project Provincial Administration Information System and National Information Infrastructure Project National Road No.3 Rehabilitation Project (Phase II) Total 2006 35,007 172,186 36.9 159.3 951 98,903 2006 29,084 31.0 15,062 2005 25,330 26.7 458 2002 20,185 17.1 20,177 2002 36,230 27.7 36,226 2001 26,350 20.0 Disbursements KRW Million 26,028

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China Since Korea formed diplomatic relations with China in 1992, the economic bonds between the two countries have expanded in diverse aspects and exchanges have been further facilitated in the areas of human resources, culture, and sports. Today, China is one of Koreas biggest trading partners and relations between the two countries are expected to strengthen further in the future. The first EDCF loan commitment towards China was approved in 1994 for 3 projects:, the South Harbour Bridge Project in Tianjin Port, Multi-purpose Berth Project of Longkou Port, and Yanji Airport Extension Project, altogether amounting to USD 33 million. As of 2007, the number of all EDCF-supported projects in China recorded 22, and the total amount in commitments stayed at KRW 233.6 billion (USD 236.1 million), sharing 7.3% of total EDCF commi-tments. By sector, transport & storage recorded the largest share of 63.8%, followed by agriculture, forestry and fishing (19.2%), water supply & sanitation (6.9%), communications (5.6%), environmental protection (2.8%), and others (1.7%). One of the distinguished features of the EDCF-supported pro-

jects in China is that most of the assistance was provided in the form of equipment loans and in relatively small amounts. This is because the import volume of construction facilities rapidly increased as China had been concentrating its strengths on achieving national economic growth since the 1990s. Another notable 1 feature was that project sites were widely spread throughout 22 regions in 17 administrative districts all over China. In detail, 6 projects with EDCF loans totaling USD 73.5 million have been completed in 3 northeastern regions of Liaoning, Jilin, Heilongjiang, 7 projects (USD 2 37.4 million) in the western 1. Construction Project for Shanghai Jingan District Public Multi-level regions, and 9 projects (USD Car Park, China 2. Mudanjiang-Ningan Section of He-Da Highway Construction Project, 125.2 million) in other areas. China China was the most important recipient country for Korea before 2000. The Korean government has approved an average of 3 projects every year from 1994 to 1997. Since then, however, EDCF loan approvals for China have drastically decreased after the Asian financial crisis. Today, the Korean government has discontinued providing new loans to China after the Qufu Sewage Recycle and Reuse Plant Project in the Shandong province in 2005, because China has achieved remarkable economic growth. The already approved projects are currently in the stages of concluding procurement contracts, making disbursements, and receiving repayments of principal and interest.

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Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million South Harbour Bridge Project in Tianjin Port Multi-purpose Berth Project of Longkou Port Yanji Airport Extension Project Contruction of Water Supply Project of Yanji City Liaoning Sino-Korean International Exchange Center Project Hunan Province Telecommunication Project Yinchuan Hedong Airport in Ningxia Hui Autonomous Region Project Anshan Municipal Waste Disposal Demonstrative Project Integrated Agriculture Development in Ten Provinces Project Mudanjiang-Ningan Section of He-Da Highway Construction Project Wuwei Water Supply Project Kunming City Elevated Highway Construction Project Sichuan, Mianyang Nanjiao Airport Construction Project Mudanjiang-Jixi Highway Construction Project Ecological Project for Desertification Control in Yikezhao League Inner Mongolia Autonomous Region Reconstruction Project for Qingyuan-Cangzhou Section of Tianjin-Baoding Establishment Project for Agricultural Engineering Research Center of Gansu Agricultural University Construction Project for Shanghai Jingan District Public Multi-level Car Park Pengshui Highway Project The Project to Establish Demonstration Areas for Paddy Mechanization in Four Province Korla City Outer Belt Road Construction Project Qufu Sewage Recycle and Reuse Plant Project, Shandong Province Total 233,567 236.1 209,873 2003 2005 10,191 2,562 10.0 2.7 10,190 1,025 2002 2003 5,905 25,476 5.0 25.0 5,523 17,575 2001 3,358 2.5 3,357 2001 2,490 2.0 2,489 2001 23,657 20.0 16,177 2000 2000 39,829 6,638 32.0 5.0 36,749 6,638 1999 17,066 15.0 16,581 1997 1997 4,444 4,489 5.0 5.0 4,443 4,470 1997 13,466 15.0 13,466 1996 16,933 20.0 16,924 1996 2,117 2.5 2,116 1995 1996 13,038 4,657 17.0 5.5 13,038 4,586 1994 1994 1994 1995 1995 12,038 6,420 8,025 6,922 3,846 15.0 8.0 10.0 9.0 5.0 Disbursements KRW Million 10,785 4,981 8,025 6,913 3,822

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Indonesia Indonesia has evolved into one of Koreas most important trading partners, with the cumulative trade volume amounting to USD 14.9 billion and Koreas cumulative investment to Indonesia standing at USD 5.4 billion as of 2007. In 2006, the EDCF initiated the CCSP for Indonesia from 2006 to 2010 in order to specify key support sectors and overall support volume considering Indonesias own development strategy. The Country Resident Mission has also been in operation since 2006, and it is recognized as a very efficient method of communication with the Indonesian counterparts to identify prospective projects and manage project implementation. As of 2007, the amount of cumulative EDCF loan commitments to Indonesia totaled KRW 249.2 billion (USD 256.5 million). In terms of the cumulative commitment amount, Indonesia was the second largest recipient as an individual partner country with the loan amount to Indonesia accounting for 7.8% of total EDCF loans. In terms of sectoral distribution, the health sector took the greatest portion, accounting for 34.0% with 3 projects. Water supply & sanitation took second place, receiving 18.2%, followed by transport & storage (15.4%), and government & civil society (13.7%). 1 In 2007, the mid-term rolling plan was adopted as a result of semi-annual policy dialogues between the two governments. In line with the rolling plan, the Framework Arrangement was introduced to replace the former Government Agreement which previously required signing for every single project. This reduces 2 Improvement of District Hospitals in South & East Kalimantan Project, Indonesia the governmental procedure, 1. 2. Padang By-pass Project, Indonesia making it possible to save a subst-

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antial amount of time compared to the standard project implementation process. The EDCF has implemented ODA projects in line with the Indonesian development strategies and encouraged the country to build its own capability to support and develop itself at the same time. The EDCF will continue to make efforts to develop more effective aid programs and models, and increase the amount of ODA to Indonesia. In doing so, the EDCF will significantly contribute to strengthening Koreas reciprocal partnership with Indonesia.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Padang By-pass Project Mobile Training Units Development Project Nature Silk Spinning Industry Project Business and Commerce Education Development Project Manado By-pass Project Improvement of District Hospitals in South &East Kalimantan Project Hospital Waste Water Treatment Plant Project Improvement of District Hospitals in East Java Province Project National Criminal Information Center Development Project Strengthening of Teaching Hospitals Project Batam e-government Project National ICT Human Resources Development Project Manado By-pass Project (Phase II) Total 1999 2000 2004 2005 2006 2006 2006 45,336 34,369 19,438 22,769 14,747 19,362 15,179 249,160 40.0 30.0 20.2 24.0 16.0 21.0 16.0 256.5 44,913 32,902 5,881 5,103 2,667 166,880 1987 1991 1992 1994 1995 1997 9,839 18,181 978 8,110 13,318 27,534 13.0 25.0 1.3 10.0 10.0 30.0 Disbursements KRW Million 9,774 16,994 978 7,098 13,203 27,367

USD 22.7 million in 2004. As of 2007, the number of EDCF supported projects in Laos reached 4, amounting to approximately KRW 82.6 billion (USD 85.3 million) in commitments. These records are largely the result of the drastic increase in the number of projects and loan amount in 2007. Before 2007, only 1 EDCF project was committed to Laos, whereas in the year 2007 alone, 3 projects were committed with the total amount reaching USD 62.7 million. By sector, water supply & sanitation constitute the largest portion of 42.8%, followed by transport & storage (29.2%) and education (28.0%). In general, the projects were selected based on the development priority of the Laos government, which mostly focuses on establishing the socio-economic infrastructure.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Luang Prabang National University Establishment Project Northern GMS Transport Network Improvement Project Mekong River Integrated Management Project SEA Game Stadium Road Improvement Project Total 2004 2007 2007 2007 23,133 21,288 35,304 2,846 82,571 22.7 22.4 37.2 3.0 85.3 Disbursements KRW Million 22,586 22,586

Luang Prabang National University Establishment Project, Laos

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Laos Since Korea and Laos resumed diplomatic ties in 1995, the governments of Korea and Laos signed a Government Agreement to extend EDCF loans in October 1997, setting the path for official EDCF activities in Laos. Accordingly, the EDCF approved the Luang Prabang National University Establishment Project amounting to

Mongolia Mongolia was the first socialist country in Asia to form diplomatic ties with Korea (1990) and bilateral relations have shown steady improvement since then, together with the introduction of the market economy in Mongolia. In line with the Korean governments promise to extend EDCF loans, the EDCF began its support through the Disposable Syringe & Needle Plant Project in 1992, which totaled USD 5.2 mil- Disposable Syringe & Needle Plant Project, Mongolia lion.

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As of 2007, the number of the EDCF-supported projects in Mongolia reached 8, amounting to about KRW 84.6 billion (USD 83.9 million) in commitments, sharing 2.7% of total EDCF commitments. By sector, transport & storage constituted the largest portion of 41.3%, followed by communications (37.1%), energy (8.5%), government and civil society (8.2%), and health (4.9%).
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Disposable Syringe & Needle Plant Project Cogeneration Power Plant Construction Project Cogeneration Power Plant Construction Project (Supplementary) Rehabilitation of Government Communications Network Project Rural Telecommunications Project Road Development Project (Choir- Sainshand Section) Intelligence Transportation System Project Emergency Information Network Project Total 1992 1996 1999 1999 1999 2004 2006 2006 4,123 6,290 934 6,983 18,561 22,755 12,143 12,807 84,596 5.2 8.0 0.9 5.3 14.3 23.9 12.8 13.5 83.9 Disbursements KRW Million 4,048 6,290 934 6,959 17,608 3,413 39,252

economic development potential. Therefore, EDCF assistance to Myanmar is expected to maintain its current level.
Loan Commitments & Disbursements (As the end of 2007) Project Name Committed Year Commitments KRW Million USD Million Telecommunication Network Expansion Project Electric Power Distribution Improvement Project Inland Container Depot Project Passenger Coaches Procurement Project Hepatitis B Vaccines Production Project Basic e-Government Project Total 1992 1994 1996 1996 2000 2004 5,726 13,587 11,793 16,588 16,355 12,794 76,843 7.8 16.8 15.0 20.0 12.6 12.5 84.7 Disbursements KRW Million 5,726 13,586 11,793 16,588 16,354 12,792 76,839

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Myanmar Korea and Myanmar formed diplomatic relations in 1975, but it was not until February 1993 that both governments signed the Exchange Notes concerning the extension of EDCF loans. The first project supported by the EDCF was the Telecommunication Network Expansion Project with a loan amount of USD 7.8 million. As of 2007, the EDCF has supported 6 projects in Myanmar, amounting to KRW 76.8 billion (USD 84.7 million) in commitments, sharing 2.4% of total EDCF commitments. By sector, transport & storage constituted the largest portion of 36.9%, followed by health (21.3%) and energy (17.7%). In spite of the unstable political and economic circumstances currently surrounding the nation, Hepatitis B Vaccines Production Project, Myanmar Myanmar still remains as one of Koreas economic partners with its

Nepal Korea and Nepal established diplomatic relations in May 1974. Although Nepal has not engaged in economic relations with Korea on a level matching its fast-growing neighbors such as China or India, both trade and aid flow between the two countries have been steadily increasing in recent years. While loan assistance from Korea has not been as active, grant assistance through KOICA and humanitarian assistance through Korean NGOs have been significant. There is room for further loan assistance to Nepal. The governments of Korea and Nepal signed a Government Agreement to extend EDCF loans in September 1996. That same year, the EDCF supported the Modi Khola Hydroelectric Project at an amount of USD 15 million in EDCF loans. On February 18, 2008, the Korean government approved the EDCF loan for the Chameliya Hydroelectric Project, in the far northwestern corner of the country, pledging to assist USD 45 million in EDCF loans. With the Nepalese governments growing emphasis on the hydroelectric power and road sectors, the EDCF is set to play a growing role in an environment of increasing Modi Khola Hydroelectric Project, Nepal stability and opportunities.

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Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Modi Khola Hydroelectric Project Total 1996 12,441 12,441 15.0 15.0 Disbursements KRW Million 12,399 12,399

Pakistan The Korean government has constantly sought to strengthen economic cooperation opportunities with Pakistan by expanding EDCF loans in consideration of Pakistans economic growth potential. The governments of Korea and Pakistan began the first EDCF activity in 1991 through a loan supporting the Industrial Equipment Leasing Project amounting to USD 10 million. As of 2007, the number of EDCF-supported projects in Pakistan reached 4, amounting to about KRW 86.8 billion (USD 95 million) in commitments. In terms of the cumulative commitment amount, Pakistan shared 2.7% of total EDCF commitments and has been one of the EDCFs priority countries since 2006. By sector, energy constitutes half of all EDCF-supported projects in Pakistan. Other projects are also supported by the EDCF as an effort to assist Pakistan in building its economic and social infrastructure. In line with the effort, the Korean government committed an amount of USD 20 million to help Pakistan recover from a severe earthquake that devastated the northern part of the country in 2005. The Earthquake Infrastructure Reconstruction and Rehabilitation Project for Azad Jammu and Kashmir and North Western Frontier province is now being implemented to assist the Pakistani governments effort in rebuilding its communities and other infrastructures.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitment KRW Million USD Million Industrial Equipment Leasing Project Procurement of Equipment under the NTDC Development Program for 220KV Ghazi Road Grid Station Project, Lahore Earthquake Reconstruction and Rehabilitation Project GEPCO Substations for Rural Distribution Construction Project Total 2007 2007 18,974 42,691 86,757 20.0 45.0 95.0 3,459 1991 1997 7,189 17,903 10.0 20.0 Disbursement KRW Million 3,459 -

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The Philippines The Philippines and Korea have maintained amicable relations since diplomatic ties were formed in 1949. During the 1960s and 1970s, the Philippines was regarded as the best development model for Asian countries. As Koreas economy grew exponentially in the 1980s and 1990s, the Philippines became a major economic partner for Korea. Based on such historical background, it was natural for Korea to choose the Philippines as a partner country when the EDCF launched its loan projects in 1987. The EDCFs first support project in the Philippines was the Misamis Oriental Telephone Expansion and Modernization Project in 1990. As of 2007, the number of EDCF-supported projects in the Philippines reached 9, amounting to approximately KRW 113.6 billion (USD 131.6 million) in commitments, and the country ranked eighth among all the EDCF recipient countries by cumulative committed amount. All EDCF-supported projects in the Philippines are concentrated in the area of infrastructure. Especially, the transport & storage sector accounts for the largest share (73.1%) because the establishment of an efficient transport system networking over 7,000 islands is indispensable to mitigate regional disparity in the Philippines. To this end, the EDCF supported the construction of the 1 Laguindingan Airport, an international airport in northern Mindanao. The South Manila Commuter Rail and Gapan-San Fernando-Olongapo Road are also being constructed using EDCF loans. Other sectors financed by EDCF loans are energy (15.8%) and communications (10.6%), in which 4 projects have already been 2 Transmission Line and Substation Project in Luzon, The Philippines completed and evaluated as suc- 1. 2. Laguindingan Airport Development Project, The Philippines cessful cases contributing to the na-

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tions infrastructure development. The EDCF has used various kinds of instruments to finance its loan projects in the Philippines. The EDCFs first co-financing operation was carried out with the ADB for the Mindanao Power Transmission Project in the Philippines in 1994. The EDCF loan was extended on a parallel basis and used to purchase equipments such as transformers and transmission lines. In addition, mixed credit facility was introduced into EDCF projects in the Philippines. One such case was the Laguindingan Airport Development Project financed with the export credit of Korea Eximbank and Nordic Investment Bank. The other is the South Manila Commuter Rail Project, which was financed with the export credit of Korea Eximbank. The Philippines was appointed as one of the EDCFs priority countries in 2006. To operate EDCF activities in the Philippines more systematically and efficiently, the EDCF initiated the CCSP for the Philippines from 2007-2010 to further expand the overall volume and support sectors and dispatched the Country Resident Mission in 2007. A Framework Arrangement was also concluded in 2007 to extend USD 300 million for the period of 2007-2010 to speed up project implementation. Such a newly established strategic scheme will enable the EDCF to better contribute to building the infrastructure in the Philippines and ensure a closer and stronger partnership between the EDCF and the Philippines.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Misamis Oriental Telephone Expansion and Modernization Project Sericultural Business Project Mindanao Power Transmission Project Transmission Line and Substation Project in Luzon Misamis Oriental Telephone Expansion and Modernization Project (Phase II) Laguindingan Airport Development Project South Manila Commuter Rail Project Laguindingan Airport Development Project(Supplementary) Widening of GSO Road and Emergency Dredging Project 1996 2003 2004 2005 21,172 33,189 7,552 21,156 113,636 25.0 35.0 8.2 22.3 131.6 2,118 19,317 470 48,249 1990 1994 1994 1994 618 8,645 9,265 8,249 0.9 10.7 14.0 10.2 618 7,846 5,885 8,204 1990 3,790 5.4 Disbursements KRW Million 3,790

Sri Lanka Since Korea and Sri Lanka established diplomatic ties in 1977, their cooperative relations continued to grow towards the benefit of both countries. The governments of Korea and Sri Lanka signed Government Agreement to extend EDCF loans in 1990, marking the official beginning of 1 EDCF activities in Sri Lanka. That same year, the EDCF supported the Colombo-Galle Road Rehabilitation Project, providing loans of USD 14.5 million out of the total project cost of USD 18.0 million. As of 2007, the number of EDCF projects in Sri Lanka 2 reached 16, amounting to about 1. Greater Galle Water Supply Project, Sri Lanka KRW 212.5 billion (USD 227.3 2. Housing Project for Public Servants, Sri Lanka million) in commitments. In terms of the cumulative commitment amount, Sri Lanka is the fourth largest recipient country among 43 recipient countries, sharing 6.7% of total EDCF commitments and maintaining its status as the EDCFs priority country. By sector, water supply & sanitation constituted the largest portion of 27.1%, followed by transport & storage (25.3%), and government & civil society (19.6%). In 2008, policy dialogues between the two governments are expected to be settled and the Framework Arrangement will be introduced.

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Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitment KRW Million USD Million Colombo-Galle Road Rehabilitation Project Hospital Rehabilitation and Reconstruction Project Horana Area Telecommunication Facility Improvement Project Expansion of Outside Line Plant of Gampaha Secondary Switching Center Area Project Power Sector Development Project Medical Equipment Project Ratnanapura-Bandarawella Road Rehabilitation Project Housing Project for Public Servants Medical Equipment Project (Compact Loan) Greater Galle Water Supply Project Balangoda-Bandarawela Road Rehabilitation Project Greater Galle Water Supply Projct (Phase II) Re-engineering Government Component of e-Sri Lanka Project Administrative Complex in Hambantota Project Greater Galle Water Supply Project (Phase II, Supplementary) The Upgrading National Vocational Training Center at Niyagama Project Total 212,468 227.3 176,485 1996 1996 1996 1996 2000 2000 2002 2004 2004 2005 2006 2006 6,449 8,171 24,512 8,171 3,171 35,265 19,003 15,499 14,534 18,951 6,744 8,329 8.3 10.0 30.0 10.0 2.6 26.7 17.6 14.8 15.0 20.0 6.4 8.8 6,254 7,814 24,512 8,165 3,170 35,256 18,509 14,622 10,548 3,794 2,945 84 1996 11,725 15.0 11,082 1990 1996 1996 10,370 9,849 11,725 14.5 12.6 15.0 Disbursement KRW Million 9,836 9,830 10,064

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Viet Nam Since Korea and Viet Nam formed diplomatic ties in 1992, Viet Nam has evolved into one of Koreas most important trading partners and most preferred investment spot among southeast Asian countries. The governments of Korea and Viet Nam signed a Government Agreement to extend EDCF loans in April 1995, trumpeting the official beginning of EDCF activities in Viet Nam. In the same year, the EDCF supported both the Thien-Tan Water Supply Project and No.18 Highway Improvement Project, collectively amounting to USD 50 million. As of 2007, the number of EDCF-supported projects in Viet Nam reached 17, amounting to about KRW 448.3 billion (USD 470.8 million) by commitments. In terms of the cumulative committed amount, Viet Nam outranked the other 42 recipient countries, sharing 14.1% of total EDCF commitments and maintaining its status as the EDCFs priority country. By sector, transport & storage constitutes the largest portion of 32.1%,

followed by water supply & sanitation (28.5%) and health (15.5%). These noteworthy records are largely the result of the drastic increase in the number of projects and loan amount per project in the year 2007. From 1995 to 2006, the number of projects committed to Viet Nam was only 10, whereas in 2007 alone, 7 projects were committed with a total amount of Procurement of Equipments of Combined Cycle at the Ba Ria Power Plant Project, Viet Nam USD 243 million. The poor performance prior to 2007 was mainly due to the Asian financial crisis and its subsequent impact on Viet Nams development plans. In 2006, the EDCF initiated the CCSP for Viet Nam from 2006 to 2009 in order to streamline its sporadic project-based assistance by clarifying its development strategy and key support sectors including the aggregate support volume. To this end, the EDCF dispatched a Country Resident Mission in 2006 to efficiently deal with the increased volume of operations related with the EDCF. The year 2007 was also memorable because regular semi-annual policy dialogues were held between the two governments and the rolling plan was settled. The Framework Arrangement valid for multiple projects was also introduced to replace former individual Arrangements. The EDCFs joining of the Six Banks in 2007 represents Koreas elevated status as one of the major donors to Viet Nam. The Six Banks are comprised of the top six donor institutions: World Bank, ADB, JBIC, AFD, KfW and EDCF. These donors are responsible for more than 80% of the total ODA flows to Viet Nam and act as an advisory group to the Vietnamese government on efficient project management systems and policy coordination while working towards donor harmonization. EDCF activities in Viet Nam are expected to expand further in terms of assistance volume and support sector as economic ties between Korea and Viet Nam continue to strengthen.
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Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Thien-Tan Water Supply Project No.18 Highway Improvement Project Procurement of Equipments of Combined Cycle at the Ba Ria Power Plant Project Five Vaccines Production Project Thien-Tan Water Supply Project (Supplementary) Procurement of Equipments of Combined Cycle at the Ba Ria Power Plant Project (Supplementary) Hai Phong Solid Waste Management and Treatment Project Solid Waste Management and Treatment Project in Ninh Binh Province Solid Waste Management and Treatment Project in Vinh Phuc Province Expansion of Thien-Tan Water Plant Project (Phase II) GMS Southern Coastal Corridor Project Construction of Thua Thien Hue General Hospital Project Medical Equipment Supply to Dak Nong Provincial General Hospital Project Construction of Rach Gia By-pass Project Hoa Binh Water Supply System Project Five Vietnamese-Korean Vocational Colleges Establishment Project Supplying Broadcasting and IT Equipment for Multimedia Center Project Total 448,300 470.8 142,726 2007 23,717 25.0 2007 2007 2007 78,535 13,613 33,204 82.8 14.4 35.0 2006 2007 2007 2007 24,666 47,133 29,278 5,394 26.0 49.7 30.9 5.7 2005 18,503 19.5 376 2001 2004 23,400 19,894 19.6 21.0 11,977 256 1999 2000 2000 34,728 8,009 8,470 28.5 6.9 7.0 34,727 7,190 8,462 1995 1995 1996 19,885 18,355 41,516 26.0 24.0 49.0 Disbursements KRW Million 19,885 18,336 41,516

reached 4, amounting to KRW 57.4 billion (USD 63.8 million) in commitments. In terms of the cumulative commitment amount, Jordan represented 1.8% of total EDCF commitments. Among the 4 projects, 2 have been already successfully completed and the constructed plants are evaluated to be the most effective wastewater treatment plants in Jordan. In line with this, the EDCF is positively reviewing the Jordanian governments recent loan request for another wastewater treatment plant and sewage network construction project. The continued cooperative efforts are expected to further strengthen the relationship between the two governments.

2 1. Wadi es Sir Wastewater Collection and Treatment Project, Jordan 2. Madaba Wastewater Treatment System Expansion Project, Jordan

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Wadi es Sir Wastewater Collection and Treatment Project Madaba Wastewater Treatment System Expansion Project 1991 1996 2004 2005 7,235 7,622 22,769 19,733 57,359 10.0 9.0 24.0 20.8 63.8 Disbursements KRW Million 7,218 7,622 474 15,314

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(2) Middle East Jordan Although Korea and Jordan formed diplomatic ties in 1962, Koreas trade transactions and economic cooperation with Jordan have not been significantly active. Korea, however, continues to see Jordan as an important economic partner in view of its geographical and political role in the Middle East. With the pledge of the Korean government to support the Wadi es Sir Wastewater Collection and Treatment Project with a loan amounting to KRW 7.2 billion, the first EDCF loan was extended to the Jordanian government in 1991. As of 2007, the number of EDCF-supported projects in Jordan

South Amman Wastewater Treatment Project Naur Wastewater Project Total

Yemen Korea and Yemen formed diplomatic ties in 1985, and the governments of Korea and Yemen concluded a Government Agreement to extend EDCF loans on October 3, 2003, which marked the official beginning of EDCF operations in Yemen. In the same year, the EDCF supported the Expansion of Telecommunication Network Project, providing USD 30 million in EDCF loans out of the total project cost

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of USD 41 million. As of 2007, the EDCF supported 2 projects in Yemen, amounting to KRW 46.7 billion (USD 45.4 million) in commitments. In terms of the cumulative committed amount, Yemen represents a share of 1.5% of total EDCF commitments. As the Yemeni government planned to focus on constructing the technical training infrastructure, the Korean government pledged to support a modern vocational training center project and provide loans amounting to USD 15.4 million out of the total cost of USD 20 million in 2007.

far below the former communist countries average of 14.3 lines per 100 habitants. In an effort to address the shortage, the government encouraged investment and foreign assistance in this sector. In accordance with the governments efforts, the EDCF loan was committed in 1996. As the project was implemented, the quality of the telecommunication service was improved by relieving the severe backlog of demand for service.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Telecommunication Modernization Project Total 1996 16,269 16,269 20.0 20.0 Disbursements KRW Million 16,140 16,140

Kyrgyz The EDCFs first assistance to Kyrgyz was given through the Telecommunication Network Modernization Project as loan approvals were made in 1998 amounting to USD 12 million. The project aimed to relieve the backlog and improve telecommunication services in 25 sites in the Chuy region with the installation of about 45,000 digital lines. In addition, the project sought to further vitalize economic activities in the region by enhancing the overall living standard of the inhabitants and attracting domestic and foreign investment. In May 2003, however, the EDCF amended the agreement with Kyrgyz and rescheduled the original EDCF Loan Agreement for the project in accordance with the Paris Declaration concerning the consolidation of debt of Kyrgyz in 2002. To date, Korea and Kyrgyz are still in the process of undergoing the second rescheduling for the project.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Telecommunication Network Modernization Project Total 1998 16,114 16,114 12.0 12.0 Disbursements KRW Million 16,113 16,113

2 1. Expansion of Telecommunication Network Project, Yemen 2. Telecommunication Modernization Project, Kazakhstan

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitment KRW Million USD Million Expansion of Telecommunication Network Project Yemini-Korean High Technical Institute Project Total 2003 2007 32,075 14,591 46,666 30.0 15.4 45.4 Disbursements KRW Million 32,075 32,075

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(3) CIS Kazakhstan As the economy of Kazakhstan shows remarkable growth, Kazakhstans desire for ODA loan becomes smaller and aid from international institutions is shrinking. Until now, the EDCF has supported 1 project in the country; the Telecommunication Network Modernization Project amounting to USD 20 million. The telecommunication network in Kazakhstan was in a state of disrepair. As of 1992, the country had only 9.1 lines per 100 habitants,

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Uzbekistan Since the governments of Uzbekistan and Korea signed a Government Agreement to extend EDCF loans in July 1999, the number of EDCFsupported projects in Uzbekistan reached 4, recording a commitment amount of USD 107 million until 2007. In terms of the amount as well as the number of projects, Uzbekistan is the biggest EDCF recipient country in the Commonwealth of Independent States (CIS) countries and the ninth biggest recipient among the EDCF partner countries. By sector, education accounts for most of the EDCF support projects in Uzbekistan as 3 out of 4 projects have been carried out in the education sector. This reflects the nations positive evaluation of Koreas know-how in the education sector. The highly talented pool of human resources and the Korean governments aggressive investment in the education sector is known to have been a key factor in Koreas rapid economic growth. Uzbekistan and Korea have held summit talks and EDCF policy dialogues, more frequently so in recent years. The first Rolling Plan was settled in 2007 and the Framework Arrangement was introduced in 2008 through these meetings. After the conclusion of the Framework Arrangement, a new Rolling Plan including future candidate projects will be drawn up under the mutual agreement between the two countries within a set amount. Accordingly, Uzbekistan will be able to obtain loans from the EDCF for projects in the Rolling Plan without concluding separate Arrangements for individual projects up to the ceiling amount. Through this, the project cycle is expected to shorten by almost 6 months, which will also help to further facilitate the economic cooperation between the two countries. Nowadays, there is great demand for energy resource development in Uzbekistan. In line with such demands, future EDCF assistance in the country will most likely put much weight Informatization of General Education Schools Project, Uzbekistan on supporting projects related to this field.

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Telecommunication Network Modernization Project Capacity Expansion Project of the Special Professional Education Vocational Education Development Project Informatization of General Education Schools Project Total 2003 2006 25,615 28,461 105,813 27.0 30.0 107.0 47 50,978 1996 1999 12,486 39,251 15.0 35.0 Disbursements KRW Million 12,450 38,481

Africa Africa has been known for having the highest number of least developed countries compared to other continents and currently suffers from the lack of talented human resources and the eruption of hostile disputes among nations and tribes. In light of these circumstances, many donor countries have paid close attention to the poverty reduction program for Africa. In recent years, however, significant changes have been taking place and Africa is beginning to be recognized as a land of opportunities and a promising market. In 2007, the continent witnessed unprecedented economic growth as it recorded a growth rate of 6.2%. This is a remarkable advancement compared to the 3.7% growth rate in 2002. This upward trend is strongly backed by skyrocketing oil prices. Oil dollars are fueling infrastructure development in Angola, Congo, and many other oil producing countries. Many reports state that the all-time high oil price and exploration of new oil fields will help Africa to exceed even the newly developing countries. Furthermore, nations have increasingly settled their regional disputes and many have become politically and socially stable. Such an environment is attracting overseas investors. China, U.S., and many EU countries are promising huge amounts of ODA. Korea has also exerted efforts to financially assist Africa. The EDCF committed KRW 408.1 billion and disbursed KRW 187.6 billion, which takes up 12.8% of the EDCFs total commitments and 10.6% of total disbursements. Africa was ranked as the EDCFs second largest recipient region following Asia, in terms of commitment amount. A total of 20 projects in 11 African countries have been financed through the EDCF.

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The EDCF will continuously support Africas development needs in fields such as social infrastructure, human resources, and information communication technology. Development of these areas is expected to improve employment rate and the quality of life for the people of Africa.
The Fisher Boat Building Project, Angola

Angola After the 2002 cease-fire agreement, the rehabilitation of social infrastructures led to a construction boom in the country and the majority of those projects were implemented through the ODA. Thanks to social and political stabilization, Angola is emerging as one of the leading nations in Central Africa and now carries significant diplomatic weight in the region. To date, the EDCF provided USD 124.9 million for 4 projects in the country and considers Angola as one of its major partner countries. With that title, Angola has great potential to receive EDCF loans for its projects related to the development of natural resources and social and economic infrastructures. Considering the vast cooperation opportunities with Angola as one of the EDCFs major partner countries, the EDCF and Angola plan to conclude a Framework Arrangement. The arrangement will set an amount for the EDCFs mid-term support for candidate projects with Angola. The arrangement is expected to ease the administrative burden and accelerate the overall loan procedure.

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million The Fisher Boat Building Project Agriculture Modernization Project Government ICT Infrastructure Project Poultry Processing Project Total 1998 2005 2006 2007 10,798 33,119 33,204 46,486 123,607 9.5 31.4 35.0 49.0 124.9 Disbursements KRW Million 10,798 16,270 9,305 36,373

Egypt Egypt is a large country in terms of population and economic size in North Africa. The countrys status as the most populous Arab country and its historically close ties with the U.S. has enabled it to carve out a firm position as a power broker in the Arab world. However, until 2005, there has been no active relationship between Korea and Egypt through the EDCF. In 2006, through a policy dialogue, the Korean government confirmed the Egyptian governments will to receive EDCF assistance. The next year, the Egyptian government made official requests for an EDCF loan and the Korean government committed USD 30 million for the Modernization and Mechanization Process of Rice Crop Project. The project was the EDCFs very first support case in Egypt. Farming in three governorates in Egypt has suffered from ineffectiveness and low productivity owing to the lack of mechanization. To solve the problem, the Egyptian government decided to mechanize its agricultural processes and started establishing agricultural mechanization stations in 1980. The government also made requests to aid institutions including the EDCF for assistance concerning the agricultural sector. The mentioned modernization project by the EDCF was initiated as a result. The project, which involves the procurement of agricultural machineries, establishment of a rice processing complex, and the transfer of agricultural technologies, was approved by the Korean government in 2007. When executed, the outcome is expected to enhance the quality of agricultural products and improve productivity through the accelerated mechanized process and modern production techniques. The successful completion of the project will also act as a stepping stone towards further economic and diplomatic cooperation opportunities between the two countries.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Modernization and Mechanization Process of Rice Crop Project Total 28,461 30.0 2007 28,461 30.0 Disbursements USD Million -

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Ghana Ghana is located in the west coast of Africa and its political and social structure is considered stable at present. On the political scene, for the first time since Ghanas independence, the opposition party assumed power with the election in December 2002, which has brought a new era of democracy to the nation. President Kufuors market-oriented economic policy has accomplished the stabilization of consumer prices and the reduction of government deficit. Such achievements were highly acknowledged by the IMF and World Bank, which means more ODA tools will be available for Ghana in the future. Ghana, which once suffered from heavy external debt, received debt relief from the IMF amounting to USD 4 billion under the Highly Indebted Poor Countries (HIPC) Initiative. Since then, Ghana effectively implemented the poverty reduction program in alliance with the IMF, World Bank, and many creditor countries. The EDCF has so far committed 3 projects totaling USD 59.2 million in Ghana, mainly focusing on the energy sector. As the negotiation on debt rescheduling is at its final stage, the EDCF is now considering whether to provide new loans. During a poli1 cy dialogue with the government of Ghana in February 2008, the EDCF learned of Ghanas development priorities in the areas of human resource development, water supply, and procurement of construction equipments. With that in mind, the EDCF will cooperate closely with the 2 Ministry of Finance of Ghana to 1. The Buipe-Bolgatanga Petroleum Products Pipeline Project, Ghana identify candidate projects in line 2. Petroleum Products Storage Depots Project, Ghana with such priorities.

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Petroleum Products Storage Depots Project LPG Cylinder Manufacturing Plant Project The Buipe-Bolgatanga Petroleum Products Pipeline Project Total 1990 1994 2000 8,997 6,400 45,558 60,955 13.0 8.0 38.2 59.2 Disbursements KRW Million 8,997 6,400 45,200 60,597

Kenya As of 2007, the EDCF has supported 3 projects in Kenya, amounting to KRW 47.1 billion (USD 50.1 million) in loan commitments. In the early 1990s, primary industries accounted for about 28% of the GDP in Kenya, and almost 77% of the total labor force was engaged in these industries. With regard to this, the government placed strong emphasis on human resources development in order to achieve industrialization of the national economy. The industrialization process of Korea through vocational training and human resources development seemed attractive to the Kenyan government. Hence, requests were made to the Korean government to share its development experiences through EDCF support on the Technology Development Center (TDC) Project. 1 After the first project was completed in 1997, the Kenyan government asked for EDCF assistance on the Road Maintenance Equipment Renewal Project. The Korean government committed to provide USD 25 million for the project so that the Ministry of Roads, Public Works & Housing could be equipped 2 with a reliable fleet of equipment 1.2 Establishment of a Technology Development Center Project, Kenya for road maintenance works.

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Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Establishment of a Technology Development Center Project Road Maintenance Equipment Renewal Project Technology Development Center Extension Project Total 1992 2004 2007 10,994 25,917 10,191 47,102 14.4 25.0 10.7 50.1 Disbursements KRW Million 10,994 25,917 36,911

that ensures time and cost efficiency. Throughout the entire project implementation, the EDCF will work in close cooperation with the AfDB to bring the most impact and benefit for Madagascars development.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Toliara Province Road No. 35 Rehabilitation Project 2007 13,396 13,396 14.1 14.1 Disbursements KRW Million -

Through the project, a substantial amount of costs were reduced in vehicle operation, safety was enhanced, greater comfort was brought for passengers, and damage to cargo was reduced, which, all combined, will further boost the economic and socio-cultural activities in Kenya. In 2007, Kenya requested a loan for the TDC Extension Project as it recognized the need to upgrade its equipments by applying the technological advancements that were made since the equipments were delivered to the TDC back in 1996. Also, the expanded education and training programs since the TDC was first established called for new equipments and facilities. In light of these needs, the Korean government committed USD 10.7 million for the TDC Extension Project in 2007. It is very inspiring that the Kenyan government is showing continuous interest in the EDCF, and it is expected that the EDCF will play a significant role in strengthening the close relationship between the two countries. Madagascar Since the establishment of diplomatic ties between Madagascar and Korea in 1962, interactions between the two nations have stayed relatively low in the socio-economic context, compared to the vast investment and cooperation potential present in both countries. There were significant endeavors between the two governments in 2007, however, to strengthen bilateral economic interaction and cooperation. The Korean government extended its first EDCF loan to support the Toliara Province Road No. 35 Rehabilitation Project in Madagascar, committing an amount of USD 14.1 million. Not only was this the EDCFs first untied loan ever to be provided in its history, but also its first co-financing project with the AfDB. Once the Government Arrangement is concluded, procedures for the Loan Agreement and procurement will proceed promptly in a manner

Total

Nigeria Nigeria, the worlds 10th largest oil reserve country with an estimated 35.3 billion barrels, is an oil dependent economy. At present, 33% of its GDP comes from the oil and gas industry, which makes Nigeria vulnerable to the ever changing oil price. The EDCF has so far financed 2 train-related projects involving the procurement of locomotives and passenger cars in Nigeria. The implementation of these projects enhanced Nigerias capacity for passenger transportation and rail road cargo deliveries. Nigeria procured 50 self-generating passenger cars with a budget of USD 10 million and 5 diesel-powered locomotives including spare parts amounting to USD 15 million. Through the projects, many engineers were also able to receive the training necessary for maintenance and operation works. The EDCF is now considering oil exploitation related railway projects. To deliver oil nationwide, cargo trains are prerequisite and the experience and knowledge of Koreas train manufacturers will be of significant assistance in such projects. Future candidate projects are likely to involve items like train, railway, and human resources development.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Passenger Coach Purchase Project Locomotive Modernization Project Total 1987 1991 8,051 10,930 18,981 10.0 15.0 25.0 Disbursements KRW Million 8,051 10,930 18,981

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Senegal Senegal, one of the most industrialized countries in West Africa, is relatively stable, socially and politically. Great efforts have also been witnessed to reduce poverty as President Abdoulaye Wade strives to execute his key poverty reduction programs. Recently, Senegal has been concentrating especially on the development of human resources and information communication technology. In light of this, Koreas experience and ICT knowledge is expected to be of great assistance in meeting Senegals development needs. The Korean government approved its first EDCF loan to Senegal in 2007, committing USD 25 million for the establishment of the governments information communication technology infrastructure. The project will connect 665 government buildings nationwide. The EDCF plans to maintain close communication with the Senegal government to identify future candidate projects. Once potential projects are listed, the EDCF will specify all future candidate projects through a policy dialogue with Senegal.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Government ICT Infrastructure Establishment Project Total 2007 23,717 23,717 25.0 25.0 Disbursements KRW Million -

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Tanzania As of 2007, the EDCF supported 2 projects in Tanzania, amounting to KRW 40.8 billion (USD 43.0 million) in loan commitments. Youth unemployment was a serious issue, especially in the urban areas of Tanzania where the agricultural industry offered 81% of all job opportunities. Against this background, the Vocational Education and Training Authority planned to build an IT vocational training center in the capital city of Dar es Salaam and 4 other vocational training centers in four major cities across the country. In this context, the EDCF extended a loan of USD 18 million for vocational training center establishment project in 2004. An exceedingly poor transportation infrastructure has also been one of the critical constraints in the economic development of Tanzania. In light of this, the Tanzanian government is placing high

priority on improving the transportation sector as part of its National Economic Development Plan. The Korean government decided to extend USD 25 million towards the Malagarasi Bridge and Associated Roads Project to construct 3 bridges along the Malagarasi River and new all1 weather roads near the river. Both projects are now ongoing, and the successful implementation of these projects will contribute to the development of Tanzanias human resources through various skill trainings and career development programs, and the completion of the trunk road linking Kigoma with 2 Tabora, one of the most important 1. Vocational Training Centers Establishment Project, Tanzania connections within the central 2. Olympic Stadium Construction Project, Tunisia transportation corridor. Nowadays, there is great demand for development in various sectors of Tanzania. Considering the cooperative and positive attitude of Tanzania towards the EDCF, it is likely that the EDCF will provide more assistance to help Tanzania achieve its development goals.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Vocational Training Centers Establishment Project Malagarasi Bridge and Associated Roads Project Total 2004 2007 17,093 23,717 40,810 18.0 25.0 43.0 Disbursements KRW Million 4,433 4,433

Tunisia The Tunisian government has been pushing forward various economic reforms and keeping a good relationship with its Western allies as well as

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Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Olympic Stadium Construction Project Total 1997 26,854 26,854 30.0 30.0 Disbursements KRW Million 24,874 24,874

its neighboring Arab states since 1987 when President Ben Ali took presidency. Given such a background, the country has received an ample inflow of ODA from developed countries including the EU, which, on the other hand, reduced Tunisias demand for the EDCFs tied aid. Hence, Tunisias Olympic Stadium Construction Project supported by the EDCF was especially meaningful. The successful construction of the stadium served as an important opportunity to confirm the technological advancement of Korean construction companies with Korean companies winning in international competitive bidding. The project contributed to the successful hosting of the Olympics as it played a positive role in the social and cultural development of the country. Uganda Since gaining independence from the United Kingdom in 1962, Uganda experienced political and social instability until Yoweri Museveni became president in 1986. Under President Musevenis strong will to promote economic development by inheriting the development experiences of developed countries, Korea became involved in supporting the nations development through the EDCF. To support the Ugandan governments development plan, the EDCF assisted the countrys Regional Telephone Network Expansion Project through the financing of USD 7.5 million out of the total project cost of USD 7.8 million. As of 1987, Uganda had a capacity of 57,700 installed telephone exchange lines, 27,900 connected subscriber lines or direct exchange lines (DELs), and a telephone density of 0.18 DELs per 100 persons. This density was comparable to Regional Telephone Network Expansion Project, Uganda Sudan (0.2) and Tanzania (0.2), but considerably lower than Kenya (0.6)

and other developing countries in Africa (0.4). The project focused on the installation of 8,750 digital lines and the provision of related technical assistance and personnel training. Through the installation of a modern telecommunication system, the project was able to contribute to improving the countrys quality of telephone service, expanding the existing subscriber base, providing telephone service to unserved areas, and promoting and enhancing commercial and industrial activities in Uganda.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Regional Telephone Network Expansion Project Total 1991 5,406 5,406 7.5 7.5 Disbursements KRW Million 5,406 5,406

Eastern europe The Korean government has made efforts to keep an intimate relationship with the Eastern European countries since the early 1990s through EDCF assistance. The EDCF especially paid attention to Eastern European countries of pre-socialist states which gained political, economic, and diplomatic significance in the international community after the change of their social structure. The EDCFs assistance to Eastern European countries not only strengthened the friendship between Korea and these countries, but also promoted the economic and human exchange between both parties. As of 2007, the EDCF has supported 11 projects, amounting to KRW 318.5 billion in commitments. The EDCF assisted 3 projects each in Turkey and Romania, and 1 project each in Croatia, Poland, Albania, Hungary, and Bosnia-Herzegovina. Among them, Albania and Bosnia-Herzegovina are countries in the Balkan region that have large potential development needs and have made various reforms to gain EU membership. Therefore, the EDCF can help these countries make a successful transition into the market economy and meet their needs to build EU standard infrastructures.

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Albania Since the ending of Albanias communist rule, the country has received ODA from European countries and highly developed countries. In 2003, the Korean government decided to provide KRW 29.0 billion to Albania for the Rural Area Electrification Project. The quality of electricity in Albania had been unsatisfactory as evidenced by the low voltage prone to frequent fluctuations and outdated transmission and distribution lines. Moreover, since the opening of the countrys economy, there has been a dramatic increase in electricity demand especially from household appliances. Accordingly, the Albanian government embarked on a policy to impr-ove the countrys overall electricity facilities such as substations, transmission lines, and distribution networks. The EDCF funded project involves the construction of 3 transmission lines and 2 substations in the southwestern rural areas of Albania.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Rural Area Electrification Project Total 2003 28,984 28,984 25.0 25.0 Disbursements KRW Million 28,658 28,658

to provide more people with medical access to advanced health care services. The positive and cooperative attitude of Bosnia-Herzegovina shown towards EDCF assistance throughout the course of the project presents a positive outlook for the EDCF to engage in future development projects in the Balkan area including Bosnia-Herzegovina, which has great development potential.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Hospitals Modernization Project Total 2004 19,543 19,543 20.0 20.0 Disbursements KRW Million 19,490 19,490

Croatia After the war with Serbia, and the intervention of war in BosniaHerzegovina, Croatias social and economic base was severely destroyed. In an effort to assist the nations rehabilitation, the EDCF provided loans for the Rijeka Port Modernization Project. The decision to support the project was made in December 1998 and the final disbursement was made in 2003. The EDCF provided USD 34.5 million to expand the efficiency and capacity of the Rijeka Port so that it could accommodate the increasing demand of international cargo traffic.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Rijeka Port Modernization Project Total 1998 44,178 44,178 34.5 34.5 Disbursements KRW Million 44,169 44,169

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Bosnia-Herzegovina Recognizing the urgent development needs in the Balkan area, the Korean government sought to assist Bosnia-Herzegovinas rehabilitation process and decided to support the Hospitals Modernization Project in December 2004. The objective of the project was to improve medical services through the provision of modernized medical equipments to 3 clinical centers, each located in Sarajevo, Mostar, and Banja Luka. These clinical centers were very satisfied with the improvements, and many other hospitals in Hospitals Modernization Project, Bosnia-Herzegovina Bosnia-Herzegovina also expressed their desire to receive EDCF loans

Hungary Hungary was the first country to initiate political and economic reforms in Eastern Europe. In forming diplomatic ties with Hungary, the Korean government decided to assist the countrys top priority project in the steel industry. Hungary accorded priority to its steel industry because the sector played an essential role in the development of other industries such as automobile, railway, machinery, and construction.

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Hungarys steel industry, whose infrastructure was created with Soviet assistance in the 1960s, was mostly obsolete and inefficient, and produced low quality products. To deal with the problem, the Korean government approved EDCF loan for Hungarys economic development in late 1995 through the Dunaferr Steel Modernization Project.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million The Dunaferr Steel Modernization Project Total 1995 19,205 19,205 25.0 25.0 Disbursements KRW Million 19,201 19,201

and modernization of the telecommunications network in the Opole province, and was consistent with the long-term telecommunication development program of Poland.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Opole Province Telecom Network Project Total 1992 38,173 38,173 50.0 50.0 Disbursements KRW Million 38,173 38,173

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Poland Since Poland and Korea formed diplomatic ties in 1989, transaction between the two has increased dramatically. Moreover, after the provision of EDCF loans, Korean companies direct investment to Poland became active, further strengthening the relationship. In the early 1990s, Polands telecommunications sector was illequipped with the telephone line subscription rate being among the lowest in Europe. Recognizing the circumstances and poor infrastructure against the increasing needs of individuals and businesses, the gov1 ernment of Poland pursued the modernization of telephone services and planned to supply 10 million new lines by the year 2000, with the financial support from aid agencies. The Korean government pledged an EDCF loan of KRW 38.2 billion in April 1992 for the Opole Province Telecom Network 2 Project. The implementation of 1. The Dunaferr Steel Modernization Project, Hungary the project was of significant 2. Opole Province Telecom Network Project, Poland importance for the development

Romania As of 2007, the EDCF has supported 3 projects in Romania, amounting to KRW 80.9 billion in commitments and disbursements. All projects were concerned with the modernization of the telecommunication network in the country. The first project which was carried out in the Prahova province was committed in 1993 and the implementation process took more than four years. This project alleviated the telecommunication circuit shortage problem and helped improve telecommunication services. Projects implemented in the Buzau and Alba province were also successfully carried out. The out- 1 come of the projects satisfied the Romanian government and people in the local area suffering from low-quality telecommunication services. The Romanian goverment was highly satisfied with Koreas top-notch technology which enabled the construction of the long distance network at low costs.
2 1. Alba and Buzau Provinces Telecommunication Network Modernization Project, Romania 2. Prahova Telecommunication Network Modernization Project, Romania

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Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Phahova Telecommunication Network Modernization Project Alba and Buzau Provinces Telecommunication Network Modernization Project Alba and Buzau Provinces Telecommunication Network Modernization Project (Phase II) Total 80,888 81.0 80,884 1999 16,538 13.0 16,537 1993 1996 39,468 24,882 50.0 18.0 Disbursements KRW Million 39,468 24,879

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Gaziantep Water Supply Modernization Project Istanbul Hospital Project 32 Set Commuter Train Project Total 1992 2002 2005 11,600 28,461 47,435 87,496 15.0 30.0 50.0 95.0 Disbursements KRW Million 11,592 3,115 14,707

102

Turkey The Korean government extended the first EDCF loan to the Turkish government in 1992 for the Water Supply Network Modernization Project. Out of the total project cost of USD 27 million, EDCF loans covered USD 15 million. As of 2007, the number of EDCF-supported projects in Turkey reached 3, amounting to about KRW 87.4 billion (USD 95.0 million) in commitments. In terms of cumulative committed amount, Turkeys share accounted for 2.7% of total EDCF commitments. The first EDCF project for Turkey was initiated by the Korean governments pledge to support the Gulf War affected countries. In response to the pledge, the Turkish government requested for assistance in the Water Supply Network Modernization Project in the Gaziantep metropolitan district. On April 12, 2005, the Korean government pledged again to extend EDCF loans for the 32 Set Commuter Train Project amounting to USD 50 million, combined with Korea Eximbanks export credit of USD 10.3 million. Not only was this the EDCFs first mixed credit loan extended, but also the first U.S. currency loan from the EDCF. However, Turkey is classified as an upper middle income country according to the World Banks country classification, and it Gaziantep Water Supply Modernization Project, Turkey will be difficult to support Turkey through EDCF loans in the future.

Latin America The Latin American region is an attractive market of great potential with its vast population of half a billion and the total GDP of USD 3,000 billion. For the past five years, Latin America has experienced the most vigorous economic growth since the 1970s. For South America, external circumstances such as the terms of trade improved since commodity prices including oil have raised significantly since 2002. At the same time, many Central American countries achieved macro economic stability due to the favorable economic growth rate and successful implementation of innovation policies. As a result, many countries like Spain, Japan, and the U.S. are seeking to expand their economic cooperation with Latin America. Korea is also searching for more cooperative opportunities with Latin America. As of December 2007, the EDCFs total commitment for Latin America reached USD 227.0 million, which represents 7.1% of the EDCFs total commitment amount. The disbursement amount recorded KRW 79.3 billion representing 4.5% of total disbursements. The EDCF operation in the region began in 1995 with the Rural Electricity Project in Ecuador. Since then, however, EDCF operations were temporarily suspended from 1997 due to the Asian financial crisis. In September 2005, however, high-level talks between Korea and the Central American Integration System (SICA) presented an opportunity for the EDCF to resume its operations. Korea has committed USD 60 million to 3 projects in Guatemala, Nicaragua, and the Dominican Republic, which were all approved in 2006. The focus of EDCF loans to Latin America has been set on providing assistance in building social overhead capitals (SOCs), especially in the fields of transportation, communication network, power distribution, sanitation, and education. In order to strengthen the friendly relationship and boost further cooperation, the EDCF will expand its

103

operations in line with the regions priority sectors such as information communication technology, sanitation, and education. Policy dialogues and consultation meetings will take place regularly to cope with each countrys particular situation. Programs to share the development experience of Korea will also be provided and the EDCF will continuously reflect feedback in its long-term operation plan. The EDCF will continue to pay close attention to the dynamic advancements being made in the Latin American economy in order to better assist the region in meeting its developing needs. Such efforts will ultimately help Latin America to achieve enhanced quality of living standards and to become an economically and socially prosperous region. Bolivia In the late 1990s, Bolivia was known as a politically and economically unstable country due to its high rate of external debt and frequent change of political power. However, the country reached the completion point of the HIPC debt relief program and is now considered a potential cooperative country, owing to its growing economy, mainly through the increasing export of natural gas and mineral resources. Between the years 2001 and 2005, Bolivia has received ODA of about USD 738 million from donor countries and multilateral development banks. The first project financed by the EDCF was the Pailon-San Jose Highway Construction Project Component 2 (USD 23 million in EDCF loans), which was approved by the Korean government in July 2007. This project is part of a USD 250 million project to construct a highway that reaches from Pailon (West of Bolivia) to Puerto Suarez (East of Bolivia), of which the EDCF assisted the construction of the 1.4km long bridge over the river Rio Grande, located in the Pailon area. The construction of the bridge is expected to be completed in October 2008, and presently both governments are planning to exPailon-San Jose Highway Construction Project (Component 2), Bolivia cute another bridge construction project in a nearby area.

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Pailon-San Jose Highway Construction Project (Component 2) Total 2000 24,189 24,189 23.0 23.0 Disbursements KRW Million 16,676 16,676

Dominican Republic The Dominican Republic is one of Central Americas most advanced countries with a per capita income of USD 2,347. After the summit talks between Central America and Korea in 2005, the economic ties between the Dominican Republic and Korea developed rapidly through the EDCF. The Korean government approved the EDCFs financing for the DGA (Direccion General de Aduanas: Dominican Republics Customs Agency) Computerization Project (USD 23 million) in November 2005. This project involves the development of a modernized customs system in the Dominican Republic with newly installed hardware and software equipments. The modernized system will allow the customs authority to implement advanced customs practices. Also, the country will be able to streamline its customs operation, increase transparency, and enforce tariffs collection. In addition to the mentioned project, President Fernandez of the Dominican Republic has requested the Korean government to finance the Educative Informatics Project during his visit to Korea in 2006, which is currently in discussion by the governments of both countries. The EDCF is making efforts to finance more development projects, including those in the fields of health, education, and security.
.Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Direction General de Aduanas Computerization Project Total 2005 21,820 21,820 23.0 23.0 Disbursements KRW Million 282 282

104

105

Ecuador The EDCFs first financial assistance in Ecuador was the Rural Telecommunication EcuadorKorea (TREK) Project committed in 1995. The total cost of the project was USD 17.8 million, out of which USD 15 million was provided by the EDCF. The pro1 ject aimed to digitalize the analogue operating method and enable long distance phone calls in all areas of the country. The project, now completed, was found to have raised telephone supply rates from 5.8 telephones per 100 persons to 13 per 100 persons when evaluated in 2006. The project also helped to create more jobs 2 as the new telecommunication sys1. The Potable Water Supply Expansion Project for Santo Domingo de los tem required more workforce for its Colorados, Ecuador 2. Rural Telecommunication Ecuador-Korea Project, Ecuador operation. The second EDCF project to be financed in Ecuador is the Potable Water Supply Expansion Project for Santo Domingo de los Colorados, which was approved by the Korean government in July 2006. This project with the cost of USD 56.9 million (USD 43.6 million financed by the EDCF) was initially agreed by both governments to be financed back in 2002, but was later cancelled in 2005 and then resumed in 2006. The loan agreement for the project is expected to be signed between the municipal government of Santo Domingo and the EDCF in the second half of 2008.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Rural Telecommunication Ecuador-Korea Project The Potable Water Supply Expansion Project for Santo Domingo de los Colorados 1995 2006 11,467 41,391 15.0 43.6 Disbursements KRW Million 11, 164 -

Guatemala The Guatemalan economy is growing, especially with the ratification of the FTA with the U.S. and price hike of agricultural products such as coffee. Cooperation between Korea and Guatemala is gaining greater significance as the volume of Koreas investment in Guatemala led by the garments industry is Educative Informatics Highway Project, Guatemala increasing continuously. The EDCFs first support in the country was the Educative Informatics Highway Project of USD 23.6 million which was approved in 2006. As 43% of the total population is indigenous with 23 different languages, an integrated education system is urgently needed for Guatemala. Recognizing that the nation could come as a whole and gain a sense of national identity through such a system, the government pursued the Educative Informatics Highway Project, which was financed by the EDCF. By incorporating an advanced information technology system into the education sector, Guatemala could reach out to more children in remote areas. The successful implementation of this project will be a good lesson for other countries in the region that might want to replicate the case in the poorer population that usually reside in remote areas. In addition, the project to improve citizens security is also in its identification phase in line with Guatemalas national priority and further projects such as those concerning potable water and health are in discussion.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Educative Informatics Highway Project Total 2006 22,389 22,389 23.6 23.6 Disbursements KRW Million -

106

Total

52,858

58.6

11,164

107

Honduras Since the mid-1990s, Honduras has been successful in diversifying the economic structure through expanding its export items and fostering the tourism industry. The government has also offered investment incentives to attract foreign capital. Most of such foreign investments are being injected Construction of Atlantida's Hospital Project, Honduras into the Maquila industry. In 2007, the economic growth rate of Honduras recorded 6.3%, the same as in 2006. The first EDCF project approved in Honduras was the Electricity System Expansion Project. This project helped to supply electricity to the population in remote areas and was completed in 2006. The Peace and Citizens Coexistence for the Municipalities of the San Pedro Sula Region Project involves the procurement of police equipment. This project was co-financed with the IDB and is expected to lower the crime rate and improve the defense capability of the national police. The major EDCF commitment in the nation was provided to a health project which aimed to improve the health conditions of the population in La Ceiba. A total of USD 24.2 million will be spent to replace obsolete medical equipments and old hospitals in the secondlargest city of Honduras. In recognition of the projects substantial impact on the marginalized population, an additional project to support hospitals in the rural area is waiting to be approved within 2008. As Honduras is experiencing high economic growth, it is expected that the countrys needs for development assistance will diversify in a dynamic manner. The EDCF will stay closely tuned to the nations changing needs and exert efforts to provide assistance in a timely manner.

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Rural Power Distribution Improvement Project Peace and Citizens Coexistence for the Municipalities of the San Pedro Sula Region Project Construction of Atlantidas Hospital Project Total 2005 22,958 32,280 24.2 32.7 444 8,372 1998 2003 7,002 2,320 6.0 2.5 Disbursements KRW Million 7,002 926

Nicaragua Although Nicaraguas per capita income is the lowest among the EDCFs eligible countries in Latin America, its abundant agricultural resources and geographical location make the country a highly eligible candidate for cooperation with Korea. In fact, the EDCFs commitment amount to Nicaragua is the second largest among Latin American countries following Ecuador as of 2007. The Electricity System Expansion Project, the EDCFs first project in Nicaragua, was implemented smoothly and is expected to be completed in March 2009. The project will help to supply electricity to 11 provinces throughout the county, which were previously deprived of electricity. As a result of the project, more people will be able to have access to better lighting and heating. The Juigalpa Potable Water System Expansion Project (phase I) will be completed in November 2008 and the second phase of the same project is in the process of procurement. This project will supply safer potable water to the population of Juigalpa, which will eventually improve their health conditions. The Creation of Capabilities in Vocational Training Center Project, with a value of USD 12.6 million, is in its implementation phase and the second phase of the same project is in preparation. The Nicaraguan government expects to build the capability to foster sound human resources in the country Juigalpa Potable Water System Expansion Project, Nicaragua through this project.
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108

Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Electricity Power Network Expansion Project Juigalpa Potable Water System Expansion Project Creation of Technical-methodological Capabilities in Vocational Training Centers Project Juigalpa Potable Water System Expansion Project(Phase II) Total 2007 15,125 50,786 15.9 51.4 20,338 1998 2004 2006 7,042 16,666 11,953 5.7 17.2 12.6 Disbursements KRW Million 7,041 13,297 -

Panama Panama is a middle income country with per capita income of USD 4,890 as of 2006, the highest in Central America. Its geographical advantage as an isthmus connecting North and South America has brought many benefits to the country through the large volume of transit trade and development of related industries. In 1998, as a part of the Panamanian governments Five-Year National Medical Program, Panama asked for the EDCFs support in the Medical and Health Modernization Project. The objective of the project was to support the development of modern, cost-effective, and economically sustainable hospitals in Panama. Through this project, more than 200 kinds of medical equipments have been installed in 42 medical facilities throughout the country. Not only did the project contribute to improving the quality of medical services in Panama, but also enhanced the Panamanians awareness on the high quality of Korean products.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Medical and Health Services Modernization Project Total 1998 22,668 22,668 20.0 20.0 Disbursements KRW Million 22,463 22,463

bring further economic exchanges in the future. The first EDCF-supported project in Papua New Guinea was the Stormwater Drainage Project in Wewak in 1991, in which the EDCF loan amounted to USD 12.5 million. The city of Wewak bears great economic significance for Papua New Guinea in terms of 1 production and transportation, but at the same time, it is extremely vulnerable to flooding due to its geographical feature of lowlands. This has significantly damaged not only the national economy, but also lowered efficiency in the utilization of the area for residual and social development. Hence, to protect the city from the impact of floods, 2 1. Medical and Health Services Modernization Project, Panama the government of Papua New 2. Stormwater Drainage Project in Wewak, Papua New Guinea Guinea applied for the EDCF loan for the drainage project, which was successfully implemented by building an 8km-long drain ditch, 3 bridges, 2 outlets, and a 1.1km road. As of May 2008, the governments of Korea and Papua New Guinea discussed the EDCF loan extension for the Stormwater Drainage Project in Wewak Phase II as the following project of the former project.
Loan Commitments & Disbursements (As of 2007) Project Name Committed Year Commitments KRW Million USD Million Disbursements KRW Million 8,153 8,153

110

Oceania Papua New Guinea Since Korea formed diplomatic relations with Papua New Guinea in 1976, trade volume between the two countries increased steadily and both countries complementary industry structures are expected to

Stormwater Drainage Project in Wewak Stormwater Drainage Project in Wewak (phase II) Total

1991 2003

9,080 6,000 15,080

12.5 6.3 18.8

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4.3. DISTRIBUTIONS BY SECTOR Overview The EDCF has provided assistance to the building of economic infrastructures in areas such as transport & storage, energy, and communications since its establishment. In line with the international communitys commitment to the Millennium Development Goals, support was also given to social infrastructures in areas such as water supply & sanitation, education, and public health. As for loan commitments, transport & storage accounted for 29.0%, followed by water supply & sanitation (14.7%), and education (9.7%). In terms of loan disbursement, the EDCF contributed to the economic development of partner countries and helped them meet the basic human needs by supporting sectors of water supply & sanitation (10.9%) and so on. In the future, the EDCF will allocate much of its financial resources to economic infrastructure projects to support the economic growth of partner countries. Financial assistance to social infrastructures will also be expanded. Education Characteristics The EDCFs assistance to education generally consists of construction, provision of equipments, and educational programs. The successful execution of the projects is possible only when each part is organically connected. Details of the three parts are as follows; First, the construction part involves the building of vocational training centers and accessory facilities. Construction in the area of education includes the building of pipes, network lines, gas lines, and ventilation systems. Thorough preparation at the stage of design and construction is necessary to make the construction appropriate to the educational purpose. Second, the provision of equipments concerns the supplement of educational equipments proper to the teaching subjects and industrial structure of the recipient country, with instructions on how to use the equipments. It is important to select proper equipments and to provide proper measures during the warranty period. Third, educational programs include assistance to the develop-

ment of curriculum and teaching materials, invitation of trainees, and dispatch of experts. Building long-term education programs is the most important part to enable the sustainability of education projects. Projects in the education sector will help recipient countries achieve economic development by reducing the level of unemployment rate and fostering the creation of a skilled and educated labor force.

Assistance Volume The EDCFs support for education projects started in 1991 with the Mobile Training Units 2 Development Project in Indone1. Luang Prabang National University Establishment Project, Laos sia. As of 2007, the amount of loan 2. National Cambodian-Korean Vocational Training School Project, commitments to the education Cambodia sector reached KRW 307.7 billion, representing 9.7% of the EDCFs total loan commitments. The EDCF has supported 15 projects in the education sector. Regional distribution shows that 41.3% of total EDCF loan commitments in this sector have been approved to Asia, followed by the CIS (35.1%), Africa (12.4%), and Latin America (11.2%). Since 2006, 7 projects were approved in this sector, reflecting developing countries enhanced attention and awareness towards education, especially in Koreas advanced vocational training system. The EDCFs initial disbursement in the education sector was made in 1993. The disbursement amount increased steadily and accounts for 7.7% of total EDCF loan disbursements as of 2007. Prospects Recipient countries of the EDCF understand the importance of developing human resources and training technical experts to solve unem-

112

113

ployment, reduce poverty, and develop national economy. However, the reality is unsatisfactory due to the high costs and long period of time required in executing education projects. Developing countries have a great interest in vocational training since they realize that national development significantly depends on the development of talented human resources. It is natural that many countries are showing interest in Koreas vocational training system which greatly contributed to the economic development of Korea under the assistance of its government. Accordingly, demand for EDCF support in education projects is increasing in areas such as vocational training policies and systems development, national education system, and overseas expansion of work force. Also, considering the growing interest in Koreas IT education and training system, EDCFs support in this sector is expected to expand further.
EDCF Projects in the Education Sector (As of 2007) Committed Year 1991 1992 1994 1999 Indonesia Kenya Indonesia Uzbekistan Mobile Training Units Development Project Establishment of a Technology Development Center Project Business and Commerce Education Development Project Capacity Expansion Project of the Special Professional Education 2002 2003 2004 2004 2006 2006 2006 Cambodia Uzbekistan Laos Tanzania Uzbekistan Guatemala Sri Lanka National Cambodian-Korean Vocational Training School Project Vocational Education Development Project Luang Prabang National University Establishment Project Vocational Training Centers Establishment Project Informatization of General Education Schools Project Educative Informatics Highway Project The Upgrading National Vocational Traninig Center at Niyagama Project 2006 Nicaragua Creation of Technical-methodological Capabilities in Vocational Training Centers Project 2007 2007 2007 Kenya Yemen Viet Nam Technology Development Center Extension Project Yemeni-Korean High Technical Institute Project Five Vietnamese-Korean Vocational Colleges Establishment Project Total 307,725 315.9 10,191 14,591 33,204 10.7 15.4 35.0 11,953 12.6 36,230 25,615 23,133 17,093 28,461 22,389 8,329 27.7 27.0 22.7 18.0 30.0 23.6 8.8 Country Project Name Commitments KRW Million 18,181 10,994 8,110 39,251 USD Million 25.0 14.4 10.0 35.0

Health Characteristics Health is one of the most critical sectors affecting the living conditions because it is deeply related to basic human needs. Accordingly, the global society has given special attention to this sector. Sharing this responsibility as a member of the interna- 1 tional community, the Korean government also endeavors to support health-related projects of developing countries. EDCF-supported projects in the health sector are classified into two types: medical instruments supply (equipment loan), and hospital & vaccine production facility construction (development project 2 1. Five Vaccines Production Project, Viet Nam loan). It is noteworthy that the por- 2. Medical Equipment Project, Sri Lanka tion of the equipment loan projects in this sector is higher than that of other sectors as 8 out of the total 15 projects have been supported through equipment loans. Since Korea has strong competitiveness in medical instruments, the demand for Korean medical instruments from developing countries is increasing. However, a one-time supply of medical instruments is not sufficient for the recipient country to cultivate its capacity to provide advanced medical services. Hence, to increase aid effectiveness in the long term, providing packaged support that integrates hospital construction, in addition to the supply of medical instruments, efficient medical system transfer, and training programs is essential. Assistance Volume Since the EDCFs first loan commitment to the sector in 1992, the amount of loan commitments to the health sector reached KRW 289.4 billion as of 2007, representing 9.1% of the EDCFs total loan commitments. The amount of disbursement also increased continuously, accoun-

114

115

ting for 10.1% of total EDCF loan disbursements. Prospects In the future, as life expectancy increases and the demand for highly qualified medical services rises in developing countries, the portion of support in the health sector out of all EDCF projects is expected to increase dramatically.
EDCF Projects in the Health Sector (As of 2007) Committed Year 1992 1996 1996 1997 Mongolia Sri Lanka Sri Lanka Indonesia Disposable Syringe & Needle Plant Project Hospital Rehabilitation and Reconstruction Project Medical Equipment Project Improvement of District Hospitals in South & East Kalimantan Project 1998 1999 2000 2000 Panama Viet Nam Myanmar Indonesia Medical and Health Services Modernization Project Five Vaccines Production Project Hepatitis B Vaccines Production Project Improvement of District Hospitals in East Java Province Project 2000 2002 2004 Sri Lanka Turkey BosniaHerzegovina 2005 2005 2007 2007 Honduras Indonesia Viet Nam Viet Nam Construction of Atlantidas Hospital Project Strengthening of Teaching Hospitals in Indonesia Project Construction of Thua Thien Hue General Hospital Project Medical Equipment Supply to Dak Nong Provincial General Hospital Project Total 289,371 286.3 22,958 22,769 29,278 5,394 24.2 24.0 30.9 5.7 Medical Equipment Project (Compact Loan) Istanbul Hospital Project Hospitals Modernization Project 3,171 28,461 19,543 2.6 30.0 20.0 22,668 34,728 16,355 34,369 20.0 28.5 12.6 30.0 Country Project Name Commitments KRW Million 4,123 9,849 8,171 27,534 USD Million 5.2 12.6 10.0 30.0

The EDCFs support for water supply and drainage projects aims to supply the recipient country with industrial and daily life potable water. Such projects can be divided into water supply projects that purify and collect fresh water, and drainage projects that mainly involve the construction of waste water treatment sys- 1 tems. Koreas design and construction capability in the water supply sector is considered to be highly competitive in terms of technology and price, and its support in this area is expected to expand further. Korea is also highly noted for its excellent waste water treatment 2 technology. Jordan expressed great 1. Krang Ponley Water Resources Development Project, Cambodia satisfaction towards the modern 2. Wadi es Sir Wastewater Collection and Treatment Project, Jordan facilities and high technology of the Wadi Es Sir Waste Water Collect-ion and Treatment Project (Phase I) which was the EDCFs very first project of its kind. Since then, Jordan has exclusively asked the EDCF to support its wastewater business and all four of the EDCF projects currently approved are in the same business category. Disposal of Wastes The EDCFs support for waste disposal projects aims to improve the regions environment through the construction of an integrated system for the removal, transportation, and disposal of solid wastes. The EDCF has supported four waste matter disposal projects and the assistance for this area accounts for 13.6% of all EDCFs water resource & sanitation sector assistance. In total, KRW 63.9 billion has been committed to these projects and a steady number of approved projects are witnessed every year. Viet Nam showed great confidence in Koreas technological know-

Water supply & sanitation Characteristics Well-established water supply & sanitation systems elevate the living standards of the recipient country as the sector is directly linked to the very essentials of ones everyday life. Korea is currently concentrating its support on the construction of water supply and drainage system, and the disposal of wastes.
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Water Supply and Drainage

117

how in the disposal of solid waste and three projects have been approved and are being executed. Discussions continue to take place on the prospects of future EDCF assistance in Viet Nams solid waste disposal business. Assistance Volume EDCF loan commitments to the water supply & sanitation sector is continuously increasing. As of 2007, the amount of loan commitments in the sector reached KRW 468.5 billion, representing 14.7% of the EDCFs
EDCF Projects in the Water Supply & Sanitation Sector (As of 2007) Committed Year 1991 1992 1995 1995 1996 1996 1997 1999 2000 2000 2001 2004 2004 2004 Jordan Turkey Viet Nam China Jordan China China Indonesia Sri Lanka Viet Nam Viet Nam Sri Lanka Nicaragua Viet Nam Wadi es Sir Wastewater Collection and Treatment Project Gaziantep Water Supply Modernization Project Thien-Tan Water Supply Project Construction of Water Supply Project of Yanji City Madaba Wastewater Treatment System Expansion Project Anshan Municipal Waste Disposal Demonstrative Project Wuwei Water Supply Project Hospital Wastewater Treatment Plant Project Greater Galle Water Supply Project Thien-Tan Water Supply Project (Supplementary) Hai Phong Solid Waste Management and Treatment Project Greater Galle Water Supply Project (Phase II) Juigalpa Potable Water System Expansion Project Solid Waste Management and Treatment Project in Ninh Binh Province 2004 2005 Jordan Equatorial Guinea 2005 2005 2005 2005 2006 Viet Nam Cambodia Jordan China Ecuador Solid Waste Management Project in Vinh Phuc Province Krang Ponley Water Resources Development Project Naur Wastewater Project Qufu Sewage Recycle and Reuse Plant Project, Shandong Province The Potable Water Supply Expansion Project for Santo Domingo de los Colorados 2006 2006 2007 2007 2007 Sri Lanka Viet Nam Laos Viet Nam Nicaragua Greater Galle Water Supply Project (Phase II, Supplementary) Expansion of Thien-Tan Water Plant Project (Phase II) Mekong River Integrated Management Project Hoa Binh Water Supply System Project Juigalpa Potable Water System Expansion Project (Phase II) 6,744 24,666 35,304 13,613 15,125 468,454 6.4 26.0 37.2 14.4 15.9 479.9 18,503 25,330 19,733 2,562 41,391 19.5 26.7 20.8 2.7 43.6 South Amman Wastewater Treatment Project Water Supply Project for Bata City 22,769 18,820 24.0 20.0 Country Project Name Commitments KRW Million 7,235 11,600 19,885 6,922 7,622 2,117 4,444 45,336 35,265 8,009 23,400 15,499 16,666 19,894 USD Million 10.0 15.0 26.0 9.0 9.0 2.5 5.0 40.0 26.7 6.9 19.6 14.8 17.2 21.0

total loan commitments. The commitment volume in this area ranks second following the EDCFs assistance in the transport & storage sector. Since the EDCFs initial disbursement in the water supply & sanitation sector in 1993, disbursements in this sector increased continuously, and presently accounts for 10.9% of total EDCF loan disbursements, ranking fourth among all sectors supported by the EDCF. Prospects The development of the water supply & sanitation sector will continue to be an essential sector of development priority for most developing nations as it directly relates to the quality of life of their citizens. Therefore, the EDCFs support in this sector is expected to expand further in the future. Government & civil society Characteristics The main focus in the government & civil society has been on the enhancement of public administration and management capacities. Utilizing Koreas high technological competitiveness, the EDCFs support in this sector is largely concentrated on projects related to the e-government system, tariff administration system, and crime prevention system. e-Government System The EDCFs support for e-government projects aims to improve the quality of public service in general. It also seeks to enhance efficiency and transparency of the governments administrative procedures through building an effective information and communication infrastructure. The EDCF has supported a total of 8 e-government projects, and assistance in this area accounts for 69.5% of all EDCF-supported projects in the government and civil society sector. In total, KRW 161 billion has been committed to this area and a relatively steady number of loan approvals are seen every year. Tariff Administration System Among the 13 projects conducted in the sector of government & civil society, the most distinctive project was the Customs Service Computerization Project in the Dominican Republic, which was the very first project to support the development of a customs-clearance system.

118

Total

119

The Dominican government has been greatly interested in implementing this system, as it shortens the customs clearance process from the current two days to two hours. This enhanced efficiency will help the nation in its efforts to expand trade, increase tax revenue, and improve transparency. The successful implementation of this project is also a matter of interest for its neighboring Central American countries as they will have to improve their customs clearance system after the conclusion of the Free Trade Agreement with the U.S. Assistance Volume The EDCFs loan commitment to this sector is continuously increasing. As of 2007, the amount of loan commitments in the sector reached KRW 232 billion, representing 7.3% of the EDCFs total loan commitments. The support volume in this area is on the rise since 2004 due to the developing countries great confidence in Koreas IT competitiveness. Since the EDCFs initial disbursement in the government & civil society sector made in 2001, disbursements in this sector continuously increased, and currently accounts for 5.9% of total EDCF loan disbursements.
EDCF Projects in the Government & Civil Society Sector (As of 2007) Committed Year 1996 1999 2001 Sri Lanka Mongolia Cambodia Housing Project for Public Servants Rehabilitation of Government Communications Network Project Capacity Expansion of Government Administration Information System Project 2003 Honduras Peace and Citizens Coexistence for the Municipalities of the San Pedro Sula Region Project 2004 2004 2004 2005 Indonesia Myanmar Sri Lanka Dominican Republic 2005 2006 2006 Sri Lanka Indonesia Cambodia Administrative Complex in Hambantota Project Batam e-Government Project Provincial Administration Information System and National Information Infrastructure Project 2006 2007 Total Angola Senegal Government ICT Infrastructure Project Government ICT Infrastructure Establishment Project 33,204 23,717 232,113 35.0 25.0 235.5 18,951 14,747 29,084 20.0 16.0 31.0 National Criminal Information Center Development Project Basic e-Government Project Re-engineering Government Component of e-Sri Lanka Project Direction General de Aduanas Computerization Project 19,438 12,794 14,534 21,820 20.2 12.5 15.0 23.0 2,320 2.5 Country Project Name Commitments KRW Million 8,171 6,983 26,350 USD Million 10.0 5.3 20.0

Prospects The government & civil society sector will continue to be an essential developmental priority for most developing nations as it directly relates to the efficiency of public administration, which ultimately leads to better public services. Therefore, it is expected that the EDCF will continue to expand its support in the sector. Transport & storage Characteristics The transport & storage sector represents the largest support sector for EDCF assistance. The accumulated amount of EDCF loan commitments to this sector is KRW 923 billion, accounting for 29.0% of the EDCFs total loan commitments. In terms of disbursement, the sector outranked the rest with KRW 475 billion, accounting for 26.8% of total disbursements. In this sector, the EDCF mainly financed projects involving road construction, procurement of trains, and other transport infrastructures. The majority of road construction projects are development projects and the project scope includes detailed design, construction, and supervision. Establishing an effective and efficient road network linking the cities is essential in order for the government to effectively allocate its resources. Having put much emphasis on road construction, the EDCF strongly believes that assistance in this sector significently contributed to the establishment of sound and strong economic infrastructure for its partner countries. The EDCF also sponsored 8 railway projects providing locomotives and passenger trains. These projects were equipment loan projects replacing old trains with new ones. Other transport projects included building airports, ports, and access roads to project sites. Road Road construction projects include building new roads, repairing old roads, and procuring construction equipments. The EDCF has so far financed 25 road projects amounting to KRW 513 billion, which represents 55.6% of total transport & storage projects. Railway The EDCFs support for railways amounted to KRW 249 billion, which is 27.0% of its total support for transport & storage projects.

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Those projects were mainly equipment projects modernizing trains. Assistance Volume Since 2003, EDCF loan commitments to the transport & storage sector have stayed at a stable level of 28.0%. During 2007, however, the total commitment amount reached KRW 214 billion, representing 38.5% of the EDCFs total loan commitments in the same year, topping the rest of the support sectors. Because economic infrastructures like roads, railways, and trains are essential to the development of any nation, a large share of EDCF commitments is being constantly concentrated into this sector. Most underdeveloped partner countries lack the necessary transport networks, and even those that are equipped with the infrastructure need repair works in many cases. The average commitment amount in the transport sector accounts for about 28% of the EDCFs total yearly volume in recent years and the average disbursement amount in this area is similar, outranking all other support sectors. In light of the current trend of EDCF-financed projects, the disbursement portion of this sector is expected to record approximately 30% every year, for the next 5 years at a minimum. Prospects Other sectors, such as water supply & sanitation and health, may have more visible and immediate impact on improving the peoples quality of life compared to the transport & storage sector. For governments envisioning mid and long-term development plans, however, the transport sector is also critical as it allows the efficient allocation of national resources. As many partner countries regard the transport & storage sector as their development priority, the EDCF expects to maintain the current support volume in this Ratnapura-Bandarawela Road Rehabilitation Project, Sri Lanka sector for the next several years.
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EDCF Projects in the Transport & Storage Sector (As of 2007) Committed Year 1987 1987 1990 1991 1994 1994 1994 1995 1995 1996 1996 1996 1996 1996 1996 1997 1997 1998 1999 2000 2000 2001 Indonesia Nigeria Sri Lanka Nigeria China China China Indonesia Viet Nam Sri Lanka Bangladesh Myanmar Myanmar China Philippines China China Croatia China China Bolivia China Padang By-pass Project Passenger Coach Purchase Project Colombo-Galle Road Rehabilitation Project Locomotive Modernization Project South Harbour Bridge Project in Tianjin Port Multi-purpose Berth Project of Longkou Port Yanji Airport Extension Project Manado By-pass Project No.18 Highway Improvement Project Ratnapura-Bandarawela Road Rehabilitation Project Locomotive Purchase Project Inland Container Depot Project Passenger Coaches Procurement Project Yinchuan Hedong Airport in Ningxia Hui Autonomous Region Project Laguindingan Airport Development Project Kunming City Elevated Highway Construction Project Mudanjiang-Ningan Section of He-Da Highway Construction Project Rijeka Port Modernization Project Sichuan, Mianyang Nanjiao Airport Construction Project Mudanjiang-Jixi Highway Construction Project Pailon-San Jose Highway Construction Project (Component 2) Reconstruction Project for Qingyuan-Cangzhou Section of Tianjin-Baoding 2001 China Construction Project for Shanghai Jingan District Public Multi-level Car Park 2002 2002 2002 2002 2003 2003 2004 2004 2004 2005 2005 2006 2006 2006 2006 2007 2007 China Sri Lanka Cambodia Bangladesh China Philippines Kenya Philippines Mongolia Turkey Philippines Mongolia Bangladesh Indonesia Cambodia Bangladesh Viet Nam Pengshui Highway Project Balangoda-Bandarawela Road Rehabilitation Project Kampot-Trapang Ropaou Road Rehabilitation Project Locomotive Purchase Project (Phase II) Korla City Outer Belt Road Construction Project South Manila Commuter Rail Project Road Maintenance Equipment Renewal Project Laguindingan Airport Development Project (Supplementary) Road Development Project (Choir-Sainshand Section) 32 Set Commuter Train Project Widening of GSO Road and Emergency Dredging Project Intelligence Transportation System Project Salvage Vessel Procurement Project Manado By-pass Project (Phase II) National Road No.3 Rehabilitation Project (Phase II) Locomotive Purchase Project (Phase III) GMS Southern Coastal Corridor Project 5,905 19,003 20,185 35,295 10,191 33,189 25,917 7,552 22,755 47,435 21,156 12,143 24,666 15,179 35,007 26,563 47,133 5.0 17.6 17.1 28.0 10.0 35.0 25.0 8.2 23.9 50.0 22.3 12.8 26.0 16.0 36.9 28.0 49.7 3,358 2.5 Country Project Name Commitments KRW Million 9,839 8,051 10,370 10,930 12,038 6,420 8,025 13,318 18,355 24,512 27,294 11,793 16,588 4,657 21,172 4,489 13,466 44,178 17,066 39,829 24,189 23,657 USD Million 13.0 10.0 14.5 15.0 15.0 8.0 10.0 10.0 24.0 30.0 33.1 15.0 20.0 5.5 25.0 5.0 15.0 34.5 15.0 32.0 23.0 20.0

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Committed Year 2007 2007 2007 2007 2007 Total

Country

Project Name

Commitments KRW Million USD Million 25.0 22.4 82.8 3.0 14.1 953.9

Tanzania Laos Viet Nam Laos Madagascar

Malagarasi Bridge and Associated Roads Project Northern GMS Transport Network Improvement Project Construction of Rach Gia By-pass Project SEA Game Stadium Road Improvement Project Toliara Province Road No.35 Rehabilitation Project

23,717 21,288 78,535 2,846 13,396 922,650

period was much shorter than other development projects. Hence, the proportion of disbursement is higher relative to the commitment amount compared to other support sectors. Prospects Development in the communication sector will continue to be an essential need for most developing nations as it helps the country to make a successful transition into an information oriented society and to build an infrastructure base for its e-government system, which improves efficiency and transparency of the government administration.
EDCF Projects in the Communication Sector (As of 2007) Committed Year 1990 1991 1992 1992 1993 1994 Philippines Uganda Myanmar Poland Romania Philippines Misamis Oriental Telephone Expansion and Modernization Project Regional Telephone Network Expansion Project Telecommunication Network Expansion Project Opole Province Telecom Network Project Prahova Telecommunication Network Modernization Project Misamis Oriental Telephone Expansion and Modernization Project (Phase II) 1995 1995 Ecuador China Kazakhstan Sri Lanka Sri Lanka Rural Telecommunication Ecuador-Korea Project Hunan Province Telecommunication Project Telecommunication Modernization Project Horana Area Telecommunication Facility Improvement Project Expansion of Outside Line Plant of Gampaha Secondary Switching Center Area Project 1996 Romania Alba and Buzau Provinces Telecommunication Network Modernization Project 1996 1998 1999 Uzbekistan Kyrgyzstan Romania Telecommunication Network Modernization Project Telecommunication Network Modernization Project Alba and Buzau Provinces Telecommunication Network Modernization Project (Phase II) 1999 2001 2003 2005 2006 2006 2007 Mongolia Bangladesh Yemen Bangladesh Mongolia Indonesia Viet Nam Rural Telecommunications Project Digital Exchange Installation Project at Khulna, Chittagong, Sylhet Expansion of Telecommunication Network Project Internet Information Network Expansion Project Emergency Information Network Project National ICT Human Resources Development Project Supplying Broadcasting and IT Equipment for Multimedia Center Project Total 400,554 429.7 18,561 35,259 32,075 23,717 12,807 19,362 23,717 14.3 30.0 30.0 25.0 13.5 21.0 25.0 12,486 16,114 16,538 15.0 12.0 13.0 24,882 18.0 11,467 13,038 16,269 11,725 11,725 15.0 17.0 20.0 15.0 15.0 Country Project Name Commitments KRW Million 3,790 5,406 5,726 38,173 39,468 8,249 USD Million 5.4 7.5 7.8 50.0 50.0 10.2

Communication Characteristics The communication sector is one of the key industries for the national economy, serving as an important stepping stone for a nations economic take-off. The sector also has substantial impact on almost all other industrial sectors as well as on the everyday lives of individuals, contributing to the establishment of a favorable investment environment for businesses. Most of the EDCFs support for the communication sector before 2003 concentrated on projects related to the supply of time division exchanging equipments. Since then, the scale of support grew into the construction of IT network infrastructures such as internet information network expansion projects or ICT development projects. Assistance Volume As of 2007, the EDCF has supported 22 communication projects, which account for 12.6% of the EDCFs total loan commitments. The EDCF support volume in this sector ranks third following our assistance in the transport & storage sector and water supply & sanitation sector. Every year, a consistent number of EDCF support projects in this sector are approved and the share of EDCF loan commitments in this high priority sector is showing a steady rise. The growing record also reflects our partner countries high regard for Koreas technological advancements and price competitiveness. Since the EDCFs initial disbursement in the communication sector in 1991, disbursements in this sector steadily increased and the amount presently accounts for 18.0% of total EDCF loan disbursements, ranking second among all sectors supported by the EDCF, following the transport & storage sector. As most communication sector projects in the past simply dealt with the provision of equipments such as TDX, the disbursement

1996 1996 1996

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In the meantime, communication projects are very likely to be considered commercially viable, which may narrow down the scope of eligible projects. For the LDCs, EDCF assistance in this sector is expected to increase as the LDCs are not subject to the non-commercial requirement which is necessary to receive tied aid. The picture may be different for the other countries, however, depending on the income level of the recipient country. Energy Characteristics The EDCFs support in the energy sector mainly focuses on the construction of transmission lines, procurement of equipments for substations, construction of distribution lines, procurement of equipments for distribution lines, and construction of power plants. So far, the EDCF has supported 17 energy related projects: 10 projects in the form of development project loans and 7 as equipment loans. The commitment amount varied depending on the project, ranging from USD 5.7 million to USD 49.0 million. The first EDCF assistance in the sector was provided to Bangladesh in 1993, which involved the procurement of equipments for transmission and distribution. Out of the 17 projects, 16 projects were electricity related projects whereas only one was on the construction of pipelines for petrochemical products such as oil. Power Generation The EDCF has supported 5 power generation related projects in 3 countries. This accounts for only 24.1% of the EDCFs energy sector support. The first energy generation project was a power plant project conducted in Mongolia. The project was committed in January 1996 to build a 6MW cogeneration power plant. In October 2006, the second project, a hydroelectric power plant project in Nepal, was committed and in December, the Ba Ria power plant project in Viet Nam, the largest of all EDCF energy projects, was committed (USD 49 million). Transmission and Distribution The EDCFs support in this sector aims to enhance the electricity supply environment through the construction of transmission lines, installation of substations or expansion of existing substations, and estab-

lishment of distribution lines between the substation and the end-users. The EDCF has supported 11 projects in this area, amounting to KRW 173.5 billion, which account for 60.1% of all EDCF projects in the energy sector. Assistance Volume EDCF loan commitments to the energy sector were made at a Procurement of Equipments of Combined Cycle at the Ba Ria Power Plant Project, Viet Nam steady rate of one project every year before 2000, except in 1995. Since then, however, only 2 projects were committed, one in Albania in 2003 and the other in Pakistan in 2007. The relatively low performance after the year 2000 can be attributable to the EDCFs budget limitation, which became stricter after the Asian financial crisis. As of 2007, the amount of loan commitments to the energy sector reached KRW 288.8 billion, representing 9.1% of the EDCFs total loan commitments. The support volume in this area ranks fifth following the transport & storage, water supply & sanitation, communications, and education sector. Since the EDCFs initial disbursement in the energy sector was made in 1997, disbursements in this sector continuously increased, accounting for 12.3% of the total EDCF loan disbursements, following the transport & storage, and communications sector. Prospects Access to electricity and affordable and reliable energy sources are important prerequisites for the economic and social development of any nation. Developing countries will continue to have huge energy needs in order to maintain the rapid economic growth and reduce poverty. Against this backdrop, the EDCFs role will gain greater significance in this sector as it continues to assist partner countries in meeting their growing development needs in this sector in parallel with Koreas ODA expansion policy.
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EDCF Projects in the Energy Sector (As of 2007) Committed Year 1993 1994 1994 1994 1996 1996 Bangladesh Philippines Philippines Myanmar Nepal Viet Nam Greater Khulna Power Distribution Project (Phase II) Transmission Line and Substation Project in Luzon Mindanao Power Transmission Project Electric Power Distribution Improvement Project Modi Khola Hydroelectric Project Procurement of Equipments of Combined Cycle at the Ba Ria Power Plant Project 1996 1996 1997 Sri Lanka Mongolia Pakistan Power Sector Development Project Cogeneration Power Plant Construction Project Procurement of Equipment under the NTDC Development Program for 220KV Ghazi Road Grid Station, Lahore 1998 1998 1999 2000 2000 Nicaragua Honduras Mongolia Ghana Viet Nam Electric Power Network Expansion Project Rural Power Distribution Improvement Project Cogeneration Power Plant Construction Project (Supplementary) The Buipe-Bolgatanga Petroleum Products Pipeline Project Procurement of Equipments of Combined Cycle at the Ba Ria Power Plant Project (Supplementary) 2000 Bangladesh The Intensification and Expansion of Distribution System Project (Phase II, Part-A) 2003 2007 Total Albania Pakistan Rural Area Electrification Project GEPCO Substations for Rural Distribution Construction Project 28,984 42,691 288,757 25.0 45.0 303.6 20,908 20.0 7,042 7,002 934 45,558 8,470 5.7 6.0 0.9 38.2 7.0 6,449 6,290 17,903 8.3 8.0 20.0 Country Project Name Commitments KRW Million 11,072 9,265 8,645 13,587 12,441 41,516 USD Million 14.0 14.0 10.7 16.8 15.0 49.0

EDCF Projects in Other Sectors (As of 2007) Committed Year General Environmental Protection 2000 1991 Papua New Guinea China Ecological Project for Desertification Control in Yikezhao League Inner Mongolia Autonomous Region 2003 Papua New Guinea Agriculture, Forestry & Fishing 1990 1992 1996 Philippines Indonesia China Sericultural Business Project Nature Silk Spinning Industry Project Integrated Agriculture Development in Ten Provinces Project 1998 2001 Angola China The Fisher Boat Building Project Establishment Project for Agricultural Engineering Research Center of Gansu Agricultural University 2003 China The Project to Establish Demonstration Areas for Paddy Mechanization In Four Province 2005 2007 2007 Angola Angola Egypt Agriculture Modernization Project Poultry Processing Project Modernization and Mechanization Process of Rice Crop Project Other 1990 1991 1994 Ghana Pakistan Ghana China Petroleum Products Storage Depots Project Industrial Equipment Leasing Project LPG Cylinder Manufacturing Plant Project Liaoning Sino-Korean International Exchange Center Project 1995 1997 2007 Hungary Tunisia Pakistan The Dunaferr Steel Modernization Project Olympic Stadium Construction Project Earthquake Reconstruction and Rehabilitation Project Total 278,542 303.9 19,205 26,854 18,974 25.0 30.0 20.0 8,997 7,189 6,400 3,846 13.0 10.0 8.0 5.0 33,119 46,486 28,461 31.4 49.0 30.0 25,476 25.0 10,798 2,490 9.5 2.0 618 978 16,933 0.9 1.3 20.0 Stormwater Drainage Project in Wewak (Phase II) 6,000 6.3 6,638 5.0 Stormwater Drainage Project in Wewak Country Project Name Commitments KRW Million 9,080 USD Million 12.5

Other The EDCF finances other various sectors in addition to its main ones. These sectors include agriculture, forestry & fishing, and general environmental protection, which account for about 8.7% (KRW 278,542 million) of the EDCFs total cumulative loan commitments, and 8.2% (KRW 147,197 million) of the EDCFs total cumulative disbursements as of 2007. The EDCF supported 3 environmental protection projects with loan commitments totaling KRW 21.7 billion and 9 projects in the agriculture, forestry & fishing sector with a total loan commitment of KRW 165.4 billion. Also, loans totaling KRW 91.5 billion were committed to 7 projects in the other sectors.

1995

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CASE STUDIES of EDCF PROJECTS

Chapter 2. The Present of EDCF

5
Thien-tan water supply project_Viet Nam
- Amount of Commitment / Disbursement: KRW 19,885 million / KRW 19,885 million (Supplementary: KRW 8,009 million / KRW 7,190 million) - Date of Approval / Loan Agreement / Completion: May 1995 / October 1995 / May 2004 (Supplementary: July 2000/ December 2000/ May 2004) - Interest Rate / Repayment (Grace Period): 2.5% / 20 (5) years

of local residents. Moreover, by solving the water shortage problem in industrial parks, it has improved the investment environment of the region, thus boosting foreign investment in the area. All project facilities were generally completed in accordance with the required specifications and are considered to be of a quality that ensures the project benefits to Thien-Tan Water Supply Project, Viet Nam continue throughout the projects economic life. The technical capacity of the PMU is strong enough to ensure sustainability of the projects effectiveness. Although there was a minor change to the original plan, the physical infrastructure components were constructed and installed as planned, and the ThienTan Water Plant is operating effectively at an operation rate of 90%. It has achieved the target capacity of 100,000m3/day. The project enabled the local people to benefit from reliable, treated, and piped water supplies. The increasing population growth and industrialization, however, further increased water demands and the second Thien-Tan Project was launched to address these needs.

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The Vietnamese government has emphasized the importance of infrastructure to foster economic development and industrialization. In particular, the crucial need for the expansion of water supply facilities was highlighted as a development priority in its fifth and sixth FiveYear Plan for Socio-Economic Development for 1991-1995 and for 1996-2000. Accordingly, the project in Bien Hoa city in Dong Nai province, one of the nations biggest industrial zones, was initiated to solve the water supply shortage problem by supplying treated water from the Dong Nai River thereby improving the living conditions and facilitating industrial development of the area. The project was economically and socially beneficial. By improving the water supply capacity in Bien Hoa city, the project has contributed to the industrial growth and improvement of living standards

Procurement of equipments of combined cycle at the Ba Ria power plant_Viet Nam

- Amount of Commitment / Disbursement: KRW 41,516 million / KRW 41,516 million (Supplementary: KRW 8,470 million / KRW 8,462 million) - Date of Approval / Loan Agreement / Completion: December 1996 / December 1997 / June 2003 (Supplementary: January 2000/ August 2000/ June 2003) - Interest Rate / Repayment (Grace Period): 2.0% / 30 (10) years

At the time of appraisal, power shortage in Viet Nam was a serious issue as the countrys rapid economic growth brought about an unexpected and sudden increase in power demand. The southern part of Viet Nam was more severely affected by the power shortage as most large power plants were concentrated in the northern part of the

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country. The situation was worse during the dry season since about 60% of all power production came from hydraulic power plants. Realizing this situation, the Vietnamese government placed its highest priority on the construction of power plants in the southern part of the country. The objective of the project Procurement of Equipments of Combined Cycle at the Ba Ria Power was to alleviate power shortages Plant Project, Viet Nam in the southern part of Viet Nam by converting three single-cycle power generating units into a combined-cycle power plant to increase the generating capacity by 59.1 MW without using extra fuel, thereby contributing to the stability of the electric power supply and the economic growth in the region. The project was successfully completed without any change in the scope of the project. Not only was the objective of the project fully met but the actual capacity was increased by 61.7 MW, which is slightly higher than the original target of 59.1 MW. In addition, the average annual output for the past five years exceeded the estimated production level by about 7%. This project contributed to solving the power shortage problem in the southern part of Viet Nam and spurred industrialization in the region. Also, as high temperature gas is reused to generate additional power, not only is the temperature of exhausted gas lowered but also the quality of air is improved. The budget for operation and maintenance has been appropriately allocated and experienced engineers were also secured. In view of these, it is expected that there will not be any operation and maintenance problems occurring in the future. As the first energy sector project in Viet Nam, all aspects of the project were successfully completed, contributing to the sustainable development in the region.

Luang prabang national university establishment project_Laos

- Amount of Commitment / Disbursement: KRW 23,133 million / KRW 22,586 million - Date of Approval / Loan Agreement / Completion: December 2004 / April 2005 / November 2007 - Interest Rate / Repayment (Grace Period): 1.0% / 30 (10) years

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The long geographical distance between the northern and southern regions served as one of the major barriers to the balanced development of Laos. A balanced nation-wide development can be attained through developing regional industries, building necessary infrastructures, and evenly distributing public facilities such as schools and hospitals. To this end, the establishment of the Luang Prabang National University was expected to play a pivotal role for the development of the local community. The establishment of this university was important for the government of Laos, as there had been an urgent need to nurture talented human resources that will foster the countrys socioeconomic development. The objective of the project was to develop the countrys educational capacity to produce necessary human resources equipped with post-secondary qualifications in a cost-effective way. The project specifically aims to consolidate and systemize the post-secondary education system through 1 the establishment of the national university in Luang Prabang. The project was successfully completed in line with its scope. Not only was the objective fully met but also facilities such as faculty apartments and an enhanced library were added to the scope of the project to maximize the educational effect. This project con- 2 tributed to meeting the educational 1.2 Luang Prabang National University Establishment Project, Laos needs of eight northern provinces,

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and helped to increase the pool of qualified workforce needed for the development of regional industries as well as for the balanced development of Laos.

Ratnapura-Bandarawela road rehabilitation project_Sri Lanka

- Amount of Commitment / Disbursement: KRW 24,512 million / KRW 24,512 million - Date of Approval / Loan Agreement / Completion: August 1996 / August 1996 / September 2003 - Interest Rate / Repayment (Grace Period): 2.0% / 30 (10) years

contract administration, and high-quality asphalt concrete production. This project also facilitated the agricultural sector by providing easy access to the market. During the one-year warranty period, all technical adjustments were successfully carried out without any problems. The budget for operation and management has been appropriately allocated and experienced engineers also secured. The road has been satisfactorily and smoothly operating since the project was commissioned in 2005. The government of Sri Lanka and the project executing agency were both very satisfied with the outcome of this project. As the second road sector project in Sri Lanka, all components of the project were successfully completed.

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At the time of approval, road transport was the predominant means of transportation catering for approximately 95% of the transport demand in Sri Lanka. However, the road system of the country was far below satisfactory levels, with low operating speeds, delays, and high operating costs due to the poor conditions of the road infrastructure. Hence, the government of Sri Lanka initiated the Second Road Improvement Project (SRIP) in 1989 to improve the roads by using cost-effective and innovative techniques of design, construction, and maintenance. This project was carried out as part of the SRIP and aimed to improve the road section from Ratnapura to Bandarawela (length: 43.5km). The objective of the project was to meet the increasing traffic demand in the region and contribute to the industrial growth of neighboring regions. There were no technical problems in implementing this project as EDCF consultants participated from the phase of the basic design. According to the Road Development Agency in 2005, the vehicle speed of the project road has increased by about 15% (from 57km/h to 65km/h), contributing to the decrease of vehicle operating costs and other social costs. The project achieved considerable Ratnapura-Bandarawela Road Rehabilitation Project, Sri Lanka technological transfer, mainly in the areas of project management,

Basic e-government project_Myanmar

- Amount of Commitment / Disbursement: KRW 12,794 million / KRW 12,792 million - Date of Approval / Loan Agreement / Completion: July 2004 / February 2005 / September 2006 - Interest Rate / Repayment (Grace Period): 1.0% / 30 (10) years

Myanmar has experienced great difficulties in developing its economy due to the lack of IT infrastructure such as telecommunication networks and internet facilities. Attempting to improve its public services by computerizing the administration system, the government of Myanmar placed its highest priority on this project in accordance with the Myanmar Information and Communications Technology Development Master Plan. The goal of the project was 1) to increase the efficiency of government management and improve public services in Myanmar through the development of an e-settlement system and a document transmission system 2) to establish an information infrastructure essential for the countrys IT development and 3) to facilitate Myanmars efforts to keep pace with the trend towards digitization so as to secure national competitiveness. This project helped to enhance transparency and efficiency in the administration process and accelerated the decision-making process, which is expected to contribute to the countrys overall national competitiveness. The budget for operations and management has been appropri-

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ately allocated and experienced engineers were secured for maintenance works. In view of these, it is expected that there will not be any O&M problems occurring in the future. As the first IT sector project in Myanmar, all aspects of the project were successfully completed.

Madaba wastewater treatment system expansion project_Jordan

- Amount of Commitment / Disbursement: KRW 7,622 million / KRW 7,622 million - Date of Approval / Loan Agreement / Completion: December 1996 / December 2000 / December 2002 - Interest Rate / Repayment (Grace Period): 2.5% / 30 (10) years

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When the severe lack of water resources stifled the social and economic development of Jordan, the wastewater treatment system in the project site of Madaba city was in urgent need of expansion. While the capacity of the former wastewater treatment system stood at 2,000 tons/day, the actual amount of wastewater flowing into the system reached an average of 2,077 tons/day with a maximum of 2,433 tons/day. Also, the quality of the discharged water from the former wastewater treatment system lagged way behind Jordans standard, contaminating underground water, the primary source of drinking water in the area. Moreover, the discharged water was used at nearby arable fields, damaging the crops as well. In this respect, improving and expanding the then-existing wastewater treatment plant was of an urgent matter. The objective of the project was to improve the sanitary environment by constructing an additional wastewater treatment plant to upgrade the capacity and ability of wastewater resources management, thereby contributing to the improvement of hygiene conditions for residents and the prevention of underground water pollution. The Jordanian government and residents were satisfied with Madaba Wastewater Treatment System Expansion Project, Jordan the implementation result because unpleasant smell was remarkably

reduced and the quality of treated wastewater was better than expected by adopting the advanced water technologies. For the first time in Jordan, the project integrated the nitrogen and phosphorus removal process to extended aeration, of which the technique was considered to be excellent and suitable for Jordans situation. As for the technology transfer, the project successfully passed on the operational and management technologies by providing Jordanian engineers with training both at the project site and in Korea. On top of the technical influence mentioned above, the project created job opportunities and helped the local economy to be brisk. As part of the environment-friendly industry, the project was effectively carried out to improve the sanitary environment and prevent water contamination. As the facilities are 3km away from the residential area, they do not cause air pollution or noise problems. The established wastewater plant has been satisfactorily and smoothly operating since it was commissioned in 2002. With the completion of the project, the Jordanian government was able to overcome the deteriorating living conditions of the residents and underground water pollution, while the population of the project area increased. As a consequence, the project significantly contribute to setting a model example for other wastewater treatment facilities in Jordan.

Olympic stadium construction project_Tunisia

- Amount of Commitment / Disbursement: KRW 26,854 million / KRW 24,874 million - Date of Approval / Loan Agreement / Completion: July 1997 / November 1997 / June 2001 - Interest Rate / Repayment (Grace Period): 3.0% / 25 (7) years

In March 1992, the Tunisian government decided to host the Mediterranean Games and drafted a plan to construct an Olympic City, a sports complex consisting of field stadium, track stadium, gymnasium, swimming pool, and tennis court. Tunisia proceeded with the project with high priority, and the project was included in the governments Ninth Economic Development Plan. The objective of the project was to support the construction of an Olympic stadium for the Mediterranean Games 2001 in Tunis. The project consisted of constructing a football stadium and three auxiliary

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stadiums, accompanying parking areas, and miscellaneous facilities. The project area was appropriate to build a stadium accommodating 60,000 spectators. Through the project, the Mediterranean Games 2001 was held successfully as planned. The stadium continued to serve as an important venue for all kinds of Olympic Stadium Construction Project, Tunisia international games such as the Olympic Games, World Cup, and African Cup, as well as for big national games. Moreover, the project contributed greatly in enhancing the institutional capacity of the sports industry in Tunisia. The project also helped to boost more job opportunities and improve the countrys infrastructure. After the warranty period ended in 2004, maintenance and operations were managed by the project execution agency, the Ministry of Youth and Childhood. The stadium and its miscellaneous facilities received the necessary operation and maintenance services on a regular basis, and they appear to be in good condition to date. The government and the people of Tunisia were very satisfied with the technical status of the stadium and its facilities contributing to the successful hosting of the Games. The Hyundai & Ferrovial consortium was selected through international competitive bidding and constructed the stadium successfully. The technical capabilities of Korean construction companies were highly acknowledged through this project to the extent that the stadium was even dubbed the Korean stadium by local residents.

ments Economic Recovery Program initiated in 1983, the national demand for oil products have increased substantially in Ghana. The outdated oil factories and lop-sided oil production structure, however, made it impossible for the country to meet its national demand. Hence, the Energy Development Plan was set up under the countrys Pubic Petroleum Products Storage Depots Project, Ghana Investment Program to renovate old oil facilities such as oil refineries and oil depots, and to improve the oil distribution system nationwide. The Petroleum Products Storage Depots Project, which belongs to the second stage of the Improvement of Petroleum Products Storage and Delivery Plan, was launched to establish five petroleum product storage depots (strategic storage sites). This development project was implemented in three different sites to set up three oil storage tanks for petroleum, diesel and kerosene (all nine tanks in three sites) with the volume of 4,375m3 (equivalent to about 220,000 barrels), and seven LPG storage tanks totaling 600m3. The completion of the project helped Ghana to reach its strategic goal of securing emergency energy lots, enabling the country to increase national petroleum storage volume from what is good for 21 days to good for 37 days. In addition, the country was able to provide oil stably and regularly to remote areas where bad weather often hampered oil delivery and the oil price became very stable in turn. Ghana could now export extra oil to neighboring countries as well.

Petroleum products storage depots project_Ghana

- Amount of Commitment / Disbursement: KRW 8,997 million / KRW 8,997 million - Date of Approval / Loan Agreement / Completion: March 1990 / July 1991 / February 1998 - Interest Rate / Repayment (Grace Period): 3.5% / 20(5) years

Alba and Buzau provinces telecommunication network modernization project_Romania

- Amount of Commitment / Disbursement: KRW 24,882 million / KRW 24,879 million - Date of Approval / Loan Agreement / Completion: October 1996 / August 1998 / January 2002 - Interest Rate / Repayment (Grace Period): 2.5% / 20 (10) years

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As the economy became more vibrant with the success of the govern-

139

Until the 1980s, the telecommunications sector in Romania lagged behind its neighboring Eastern European countries. Since 1991, however, realizing the importance of the sector in the economic development, the Romanian government placed its priority on the modernization of the telecommunication sector by expanding and upgrading the communication networks. The objective of the project was to improve telecommunication services in the Buzau province and its adjacent areas by installing telephone lines with digital switching systems, transmission systems, and related equipments, as part of the governments efforts to modernize the national telephone network system. The project was implemented timely and efficiently, reducing the time needed for completion by more than 38%, which resulted in costs savings of 5% of the local currency portion of the loan. The project was expedited by applying the direct contract method for the selection of the supplier of works, under the good recommendation from the Romtelecom, the project executing agency. In addition, the project helped Romania receive the necessary technology transfer from Korea. During the free warranty period, the supplier provided maintenance services in accordance with the agreement between Romtelecom and the supplier. Trained by the supplier, the professional staff of Romtelecom was able to successfully make the necessary technical adjustments and conduct maintenance works after the warranty period. As a result of the project, the Buzau province was equipped with a full automatic switching system, which was also the first in Romania. The project also contributed to the development of the provinces telecommunication sector and had a positive effect on its socio-cultural aspect as well.

Medical and health services modernization project_Panama

- Amount of Commitment / Disbursement: KRW22,668 million / KRW22,463 million - Date of Approval / Loan Agreement / Completion: December 1998 / August 2000 / October 2002 - Interest Rate / Repayment (Grace Period): 3.0%, 25 (7) years

At the time of identifying this project, the Panamanian government was concerned about the nations health indicators that showed no signs of improvement for some time. Though life expectancy was gradually increasing, infant mortality and maternal mortality remained significantly high. Except for a few national hospitals, most of the hospitals lacked proper medical equipments and well-trained medical staff to attend the patients. Many hospitals were offering limited types of services and few hospitals had emergency facilities. To deal with this situation, the Panamanian government established the Five-Year National Medical Program and as a part of its action plan, the Minister of Foreign Affairs of Panama visited Korea and requested for EDCF loans to modernize the medical service sector in Panama. The objective of this project was to support the development of modern, cost-effective, and economically sustainable hospitals as part of the National Medical Program prepared by the Ministry of Health specifically aiming at strengthening medical facilities. The Ministry of Health supplied 208 kinds of medial equipments to 42 medical facilities in 13 provinces throughout the country. The project contributed to improving the quality of public medical services, and enhanced the capacity of hospitals clinical preventive services. As a result, the urban and rural areas evenly benefited from the modernized medical facilities.

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Alba and Buzau Provinces Telecommunication Network Modernization Project, Romania

Medical and Health Services Modernization Project, Panama

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Strengthening External Relationship and Harmonization

Chapter 2. The Present of EDCF

6
6.1. RAISING PUBLIC AWARENESS ON INTERNATIONAL DEVELOPMENT COOPERATION As a government agency, it is important that the EDCF gain public consent to a certain extent in order to scale up the ODA volume. However, public awareness on the governments ODA activity was rather low. According to a survey result of the MOSF in October 2005, only 44% of the Korean people were even somewhat aware of ODA, and 46% had heard about it but were not fully aware of ODA. The survey also showed that 18% of those surveyed were strongly in favor of increasing the ODA levels, 35% supported a moderate increase, 28% thought the current level was appropriate and 13% wanted a decrease in ODA. Recognizing the need to put more weight on enhancing public awareness to successfully scale up its ODA volume, the EDCF began to exert efforts to this end. To strengthen public support for its ODA activity, the EDCF devises action plans to raise public awareness on an annual basis, focusing on: 1) advertising EDCF activities through the media, 2) providing indirect experience of EDCF activities to the public by releasing related information and publishing case studies of EDCF projects, and 3) enhancing the relationship with various EDCF stakeholders

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such as lawmakers, government officials, civil societies, and academia by providing opportunities for lawmakers or government officials to participate in the EDCF project evaluation process, or by contributing to domestic and international seminars or workshops organized by civil societies or the academia. The media can be a very powerful tool for the EDCF to deliver its opinion or related information to the public. Since 2005, the EDCF contributed seven special reports and eight professional opinions to the newspapers, sent out press releases, and broadcasted three TV documentaries. The documentaries were especially an indirect, yet effective means, providing the people with a clear picture of what the EDCF is doing and how the EDCFs ODA activities contribute to the economic growth of developing countries. Lawmakers and government officials are the main stakeholders to the EDCF in terms of budgeting and policy making. So, it is important for them to have knowledge on the mechanism of EDCF activities; how the EDCF addresses development issues in developing countries, the EDCFs past achievements, and the EDCFs future goals. To enhance the relationship with lawmakers and government officials, the EDCF engaged them in the project evaluation process, which is also expected to greatly enhance their understanding on EDCF activities. Another major stakeholder to the EDCF is the civil society, who helps to reinforce accountability and transparency of ODA activities. They collect various opinions from the society and deliver them to the government through seminars or workshops. The EDCF has tried to enhance communication with the civil society by participating in or organizing seminars or workshops, so that civil societies interested in EDCF activities could express or deliver their opinion. In 2007, an international conference under the title of Promoting Aid Effectiveness among Donors, was held by the EDCF, as well as a workshop and seminar. Also, the EDCF participated in 28 seminars or workshops organized by various civil societies, institutions, and other government organizations. The EDCFs interaction with the civil society in the ODA context is expected to grow further in the future. The academia also plays a significant role in the governments ODA activities by providing theoretical grounds for such aid and

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helping to set the directions. About 200 members consisting of professors, specialists, and civil society staff members launched the Korea Association on International Development and Cooperation (KAIDC) in October 2007. KAIDC, as the first academic association in the Korean ODA society, is expected to conEDCF International Conference in Commemoration of its 20th Anniversary tribute to the development of in 2007 good contents on Koreas own development experience and provide its professional opinion to the government. These efforts will help to balance the domestic voice on any ODA disputes or controversies that may occur. The EDCF highly welcomes such efforts and will actively support their activities. In addition, the EDCF has also established its own website under Korea Eximbanks homepage (www.koreaexim.go.kr) to communicate more effectively with the public.

6.2. ENHANCING HARMONIZATION WITH OTHER DONORS As indicated in the Paris Declaration in March 2005, harmonization among donors is one of the five main objectives of this declaration. To deliver aid more effectively, the declaration recommends that donors actions be more harmonized, transparent and collectively effective. The EDCF has fully supported this agenda by communicating more with other multilateral and bilateral development agencies, participating in various international joint initiatives or statement, independently or jointly hosting international seminars, and contributing to joint activities which are related to reducing poverty in developing countries. To enhance harmonization with MDBs and the OECD, the EDCF operates staff exchange programs with them aiming to build the staffs capacity and expand human network. The program started in December 1989 when the EDCF seconded a staff to the ADB. Currently, six staff members are seconded to the OECD and MDBs

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such as IBRD, ADB, AfDB, EBRD, and IDB. In January 2007, the EDCF set up a project development office within the EDCF group in Korea Eximbank, an independent office to cover cofinancing and collaboration issues with MDBs. As of 2007, the project development office held three joint seminars and supported nine co-financing projects totaling The Third Working Level Meeting between the EDCF and JBIC in 2008 USD 185 million with various MDBs. Also, they annually hold a consultation meeting with each MDB to seek more opportunities to work together and enhance donor harmonization. The first EDCF partner for enhancing bilateral harmonization was JBIC. In March 2006, the EDCF contacted JBIC to discuss cooperative prospects for the enhancement of mutual relationship. Through a number of discussions, the EDCF and JBIC were able to have their first working level staff meeting in July 2006. Since the first meeting, the EDCF and JBIC continued to hold meetings to enhance harmonization. Semi-annual working level staff meetings were held three times since July 2006, one joint study was conducted, discussions aiming to seek the possibility of co-financing were held, and field level discussions were carried out in some partner countries such as Viet Nam, Indonesia, and the Philippines. The EDCFs strategy for bilateral harmonization is to extend its JBIC network to other donors. For instance, the five banks initiative among major donors in Viet Nam became the six banks initiative as the EDCF joined the initiative in 2007. Currently, the six banks initiative consisting of World Bank, ADB, AFD, JBIC, KfW Entwicklungsbank, and Korea Eximbnak is working together to enhance aid effectiveness in Viet Nam by realizing the division of labor among members and developing a best practice for delivering and processing ODA projects. The work is being carried out in close cooperation with the Vietnamese government. Also, the EDCF has participated in several international joint initiatives or joint statements such as the Joint Initiative for Sustainable Urban Development held in 2006 which

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urged the participating seven donor agencies to strengthen their efforts to address negative side effects of urban development, and the Joint Statement for Sustainable Debt Management held in 2007 which was accepted by five donor agencies who operate concessional loan aid. The next step of the EDCF in enhancing bilateral harmonization is to expand its network with both advanced donors such as the AFD, KfW, and other emerging donors.

CHAPTER 3

THE FUTURE OF EDCF

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Blueprint for Medium and Long Term Strategy

Chapter 3. The Future of EDCF

1.2. REORGANIZATION OF THE ODA ADMINISTRATION SYSTEM The current administration system governing Koreas development assistance is dichotomized according to the type of ODA: the MOSF in charge of loans and the MOFAT in charge of grants. However, in order to maximize the effectiveness of aid flow and increase the synergy effect between assistance measures, the administration system should be implemented in accordance with the objective of the assistance itself. Regardless of the assistance type, it would be more appropriate for the MOSF to take responsibility for all foreign assistance related to the economic development and infrastructure building of recipient countries, and for MOFAT to take responsibility for the ODA related to humanitarian and diplomatic objectives.

1
1.1. DEVELOPMENT OF THE KOREAN ECONOMIC COOPERATION MODEL Korea has had difficulties establishing a clear objective and legitimacy for its ODA provision due to the relatively short experience as a donor country. Until 1999, Korea was in the position of receiving foreign assistance from the international community and although the nation now joins the ranks of donor countries, its situation is different from that of other donors. Koreas per capita income is no more than a half of the developed countries, and Korea has to prepare for the dramatic increase of potential ODA demand from North Korea when the seclusive regime determines to open its door towards economic development in the near future. Therefore, Korea needs to establish its own distinct objective for ODA provision reflecting these unique circumstances. In addition, as a successful role model case of a recipientturned-donor country, Korea is expected to create its own economic development model to effectively deliver its development experiences to partner countries.

1.3. EXPANSION OF ASSISTANCE VOLUME Compared to its status in the world economy, the volume of Koreas ODA is estimated to be far behind its full capacity. In order to meet the expectations of the international society and promote national interests, the Korean government plans to increase its ODA volume up to 0.1% of GNI by 2009, and 0.25% by 2015 which is the first target year set by the Millennium Development Goals (MDGs). However, considering the possible budgetary burden that could occur from sudden increase, the ratio of loans over grants will remain more than 50% of the bilateral ODA for the time being.

1.4. FOCUS ON SPECIFIC REGIONS AND SECTORS Based on the principle of selection and concentration, the EDCF will focus on the regions and sectors where Koreas comparative advantages can be maximized and through which global issues such as climate change and food shortages can be substantially resolved. By joining the global efforts to tackle these challenges, the EDCF will help improve Koreas standing in the international community and lay the foundation for Korean businesses looking to establish their presence in overseas markets.

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149

1.5. ENHANCING AID EFFECTIVENESS In order to make the most of the limited funds and maximize aid effectiveness, grant projects implemented by KOICA and other government departments and agencies, as well as development needs identified through the Knowledge Sharing Program will be taken into full consideration before final decisions regarding EDCF loans are made. In addition, steps will be taken to facilitate the utilization of non-commercial infrastructure assets built to support Korea Eximbanks commercial projects; financing for plant exports, overseas investments, and mineral and energy resources development. Efforts to improve the competitiveness of EDCF loans will continue as well. Improvements to the terms of EDCF loans such as lower interest rates and a higher loan amounts relative to the size of a project will be made to improve the concessionaliy level of EDCF loans. A number of measures to provide loans that best meet the needs of developing countries are also taken into consideration, which include a wider use of small loans, a greater focus on large projects and privately funded infrastructure projects, and the introduction of floating rate loans.

APPENDIX

1.6. COMPLYING WITH GLOBAL STANDARDS With the Paris Declaration on Aid Effectiveness on the five principles to improve aid effectiveness adopted in 2005 as a guiding principle, the EDCF will exert efforts to improve its aid effectiveness. Most EDCF loans have been extended on a tied basis. However, the EDCF sees the need to expand untied loans since tied aid is less efficient than untied aid from the perspective of the recipient country. A recipient country of tied aid is required to purchase or procure goods and services from a donor country, whereas untied aid allows the recipient country to usually benefit greatly from international competitive bidding.

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1. KOREAS ODA VOLUME BY MAIN CATEGORIES

(USD Million, Net disbursements)

1987 Official Development Assistance (ODA) (A+B)

Appendix

1988 34.00 2.10 2.10 1.71 0.39 31.90 31.90 2.95 6.97 18.93 2.38 0.67 0.02

1989 33.80 5.04 3.27 2.25 1.02 1.78 1.78 28.75 19.98 3.10 7.58 0.59 8.08 0.64 8.77 0.02

1990 61.16 12.25 3.26 2.18 1.08 8.99 8.99 48.91 48.91 4.05 11.50 18.39 14.35 0.62 0.02

1991 57.48 31.52 25.04 10.32 6.19 0.82 0.11 7.60 6.48 6.48 25.96 17.60 4.58 11.10 0.72 1.21 8.36 0.02

1992 76.80 45.22 30.99 9.42 8.53 1.03 0.20 11.57 0.24 14.23 14.23 31.59 29.49 6.29 10.43 11.05 1.72 2.10 0.02

1993 111.56 60.12 32.68 10.03 10.51 0.51 0.23 11.15 0.25 27.44 27.44 51.44 35.92 8.38 13.43 1.39 10.85 1.87 15.52 0.03

1994 140.22 60.07 38.45 13.64 12.28 0.57 0.25 11.36 0.35 21.62 21.62 80.15 38.52 9.88 13.42 1.39 10.84 3.00 41.62 0.03

1995 115.99 71.46 50.11 16.71 16.89 0.53 0.64 0.20 0.29 14.49 0.36 21.35 21.35 44.53 37.50 11.00 13.98 1.39 7.31 0.97 0.03 2.82 7.03 0.02

1996 159.15 123.31 53.41 19.84 16.56 0.93 0.67 0.97 14.43 69.90 69.90 35.84 35.84 22.41 1.39 3.70 1.80 0.02 6.52 0.03

1997 185.61 111.34 54.77 23.21 17.38 0.64 0.60 0.05 0.51 12.38 56.57 56.57 74.27 64.59 20.74 20.26 3.39 11.12 1.85 7.23 9.68 0.04

1998 182.71 124.70 37.21 13.53 14.18 0.48 0.23 0.13 8.65 87.48 87.48 58.01 61.91 28.20 6.30 21.32 6.10 -3.90 0.05

1999 317.49 131.35 38.95 14.32 14.67 1.02 0.36 0.05 0.46 8.08 92.40 92.40 186.14 197.16 34.36 78.90 46.98 14.51 0.40 0.03 22.01 -11.02 0.07

2000 212.07 131.18 47.78 18.08 19.79 0.51 0.55 0.05 0.83 7.98 83.41 83.41 80.89 87.58 19.60 34.56 0.33 25.88 0.42 0.04 6.76 -6.69 0.04

2001 264.65 171.54 52.97 12.77 21.69 8.18 0.79 0.04 0.70 8.11 0.70 118.57 118.57 93.11 95.14 25.53 33.37 1.66 24.38 2.36 0.03 7.80 -2.03 0.06

2002 278.78 206.76 66.70 21.59 30.21 2.96 1.39 0.72 9.03 0.80 140.06 140.06 72.02 85.16 21.46 33.93 0.52 19.50 0.71 9.03 -13.14 0.05

2003 365.91 245.17 145.46 83.34 36.93 1.02 2.99 6.66 0.35 1.15 13.03 99.71 99.71 120.74 137.46 25.10 51.94 0.59 34.29 1.16 0.04 24.33 -16.72 0.06

2004 423.32 330.76 212.09 123.78 53.83 12.90 1.75 0.40 0.25 1.67 17.51 118.68 118.68 92.56 102.58 21.58 43.67 0.51 28.29 0.75 0.04 7.74 -10.02 0.06

2005 752.32 463.30 318.00 184.99 80.16 26.66 3.77 0.76 2.27 19.38 145.30 145.30 289.01 295.66 38.27 119.73 0.39 125.92 0.77 0.04 10.55 -6.64 0.10

2006 455.25 376.06 258.95 81.58 116.78 24.37 5.12 0.22 2.53 25.31 3.05 117.11 117.11 79.19 111.67 42.86 0.71 53.91 1.13 0.10 12.95 -32.48 0.05

2007a 671.76 462.09 329.90 N/A 136.29 N/A N/A 17.22 N/A N/A 6.53 6.53 N/A N/A 28.23 N/A N/A 132.19 132.19 209.67 209.67 50.99 86.49 58.14 14.05 0.07

23.50 1.42 1.42 1.14 0.28 22.08 22.08 2.62 6.19 1.76 10.93 0.59 0.02

A. Bilateral ODA (1+2) 1. Bilateral Grants Project and Programe Aid Technical Co-operation ODA Grants in Associated Financing Packages Developmental Food Aid Humanitarial Aid Debt Forgiveness Other Action on Debt General Support to National NGOs General Support to International NGOs General Support to PPPs Promotion of Development Awareness Administrative Costs Refugees in Donor Countries Other (incl. recoveries) 2. Non-Grant Bilateral ODA Loans by Government or Official Agencies Acquisition of Equity Other Offsetting Entry for Debt Forgiveness B. Multilateral ODA (1+2) 1. Grants and Capital Subscriptions UN Agencies EC IDA IBRD, IFC, MIGA Regional Development Banks Global Environment Facility Montreal Protocol Other Agencies 2. Concessional Lending ODA / GNI (%) a. Preliminary data

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153

2. EDCF VOLUME BY TYPES OF LOANS (COMMITMENTS)

(KRW Million)

3. EDCF VOLUME BY TYPES OF LOANS (DISBURSEMENTS)

(KRW Million)

Year

Development Project Loan Amounts

Equipment Loan Number 1 1 2 5 4 8 5 4 1 6 3 2 4 2 3 2 3 56 32.6%

Two-Step Loan Amounts 7,189 7,189 0.2% Number 1 1 0.6% Amounts 618 978 1,596 0.1%

Overseas Investment Credit Number 1 1 1.2% Amounts 17,890 23,775 58,021 71,594 50,540 80,739 106,036 302,662 94,690 107,802 179,397 242,761 114,514 145,079 163,850 237,587 296,873 340,132 554,224 100.0%

Total Number 2 4 6 6 2 9 8 21 6 6 8 11 6 6 8 13 13 16 21 172 100.0%

Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Share

Development Project Loan 4,928 8,619 47,512 29,479 27,654 30,379 48,881 52,925 75,174 61,244 55,079 134,757 100,939 109,073 117,453 87,434 136,312 1,127,843 63.6%

Equipment Loan 1,208 6,441 2,597 8,735 721 6,848 35,016 23,566 86,190 51,574 39,980 110,209 70,204 36,100 46,427 46,797 48,644 19,024 640,281 36.1%

Two-Step Loan 3,459 3,459 0.2%

Overseas Investment Credit 618 978 1,596 0.1%

Total 1,208 7,059 4,928 12,194 56,247 30,200 34,502 65,395 72,447 142,574 126,749 101,224 165,288 204,961 137,039 155,500 164,250 136,079 155,335 1,773,179 100.0%

Number Amounts 1 3 4 3 2 4 4 13 1 2 7 5 3 4 4 11 10 14 18 113 65.7% 8,051 10,930 15,723 44,393 43,011 129,717 67,836 84,646 17,066 113,385 29,505 41,200 63,602 45,460 72,766 53,127 69,254 909,672 28.5%

154

Appendix

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Share

9,839 23,157 39,902 54,893 50,540 36,346 63,025 172,945 26,854 23,156 162,331 129,376 85,009 103,879 100,248 192,127 224,107 287,005 484,970 2,269,709 71.2%

2 3,188,166

155

4. EDCF VOLUME BY REGION (COMMITMENTS)

(KRW Million)

5. EDCF VOLUME BY SECTOR (COMMITMENTS)

(KRW Million)

EDCF Loans Year Asia 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Share 9,839 14,778 32,605 10,827 11,072 74,339 75,364 277,780 67,836 16,114 162,859 173,014 114,514 116,618 126,546 158,368 152,721 231,195 393,131 2,219,520 69.6%
Appendix

EDCF Loans Eastern Europe 49,773 39,468 19,205 24,882 44,178 16,538 28,461 28,984 19,543 47,435 318,467 10.0% Africa 8,051 8,997 16,336 10,994 6,400 26,854 10,798 45,558 43,010 51,939 33,204 145,968 408,109 12.8% Latin America 11,467 36,712 24,189 2,320 16,666 44,778 75,733 15,125 226,990 7.1% Oceania 9,080 6,000 15,080 0.5% Total 17,890 23,775 58,021 71,594 50,540 80,739 106,036 302,662 94,690 107,802 179,397 242,761 114,514 145,079 163,850 237,587 296,873 340,132 554,224 3,188,166 100.0%

Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Share

Transport & storage 17,890 10,370 10,930 26,483 31,673 106,016 17,955 44,178 17,066 64,018 27,015 80,388 43,380 56,224 68,591 86,995 213,478 922,650 28.9%

Communication 3,790 5,406 43,899 39,468 8,249 24,505 77,087 16,114 35,099 35,259 32,075 23,717 32,169 23,717 400,554 12.6%

Energy Water supply & sanitation 11,072 31,497 66,696 17,903 14,044 934 74,936 28,984 42,691 288,757 9.1% 7,235 11,600 26,807 9,739 4,444 45,336 43,274 23,400 74,828 84,948 72,801 64,042 468,454 14.7%

Health Education 4,123 18,020 27,534 22,668 34,728 53,895 28,461 19,543 45,727 34,672 289,371 9.1% 18,181 10,994 8,110 39,251 36,230 25,615 40,226 71,132 57,986 307,725 9.7%

Government & civil society 8,171 6,983 26,350 2,320 46,766 40,771 77,035 23,717 232,113 7.3%

others 9,615 16,269 978 6,400 23,051 16,933 26,854 10,798 6,638 2,490 31,476 33,119 93,921 8.7%

Total 17,890 23,775 58,021 71,594 50,540 80,739 106,036 302,662 94,690 107,802 179,397 242,761 114,514 145,079 163,850 237,587 296,873 340,132 554,224 100.0%

278,542 3,188,166

156

157

6. EDCF FUNDING RESOURCES

(KRW Million)

7. CHRONOLOGY

Year
Appendix

Contributions from Borrowings from Government Government 40,000 50,000 10,000 10,000 20,000 70,000 70,000 35,000 305,000 30,000 20,000 50,000 10,000 10,000 19,870 85,000 120,000 130,000 55,000 80,000 70,000 100,000 150,000 170,000 1,099,870

Repayments 2,670 4,002 6,000 6,670 7,336 8,668 13,336 18,002 20,334 20,332 20,332 20,332 20,332 168,344

Reserves 866 4,771 9,263 25,728 39,476 64,102 33,220 33,629 43,903 62,784 85,088 109,679 51,735 56,670 47,227 36,614 32,787 35,400 28,499 35,520 43,365 880,327

Total 30,866 24,771 99,263 35,728 99,476 74,102 63,090 138,629 231,233 258,783 169,088 103,009 44,399 48,002 33,891 18,611 92,454 85,069 108,168 165,189 193,034 2,116,853

September 1986 December 1986 May June July 1987 1987 1987

Inauguration of the EDCF Research Group Promulgation of the EDCF Act (Law No. 3863) First Session of the Fund Management Council Establishment of the EDCF Initial Contribution from Korean Government (KRW 15 billion) Approval of the first EDCF Loan : Padang By-Pass Project, Indonesia & Passenger Coach Purchase Project, Nigeria Conclusion of the first Agreement and Arrangement : Padang By-Pass Project, Indonesia Conclusion of the first Loan Agreement : Passenger Coach Purchase Project, Nigeria Conclusion of the first Procurement Contract financed by the EDCF : Passenger Coach Purchase Project, Nigeria First Disbursement of the EDCF Loan : Passenger Coach Purchase Project, Nigeria Approval of the EDCFs first Overseas Investment Credits to Korean Firm : Sericulture and Raw Silk Manufacturing Investment Project, The Philippines Approval of the EDCFs first Two-Step Loan : Industrial Equipment Leasing Project, Pakistan First Completion of the EDCF Project : Misamis Oriental Telephone Expansion and Modernization Project, the Philippines Conclusion of Co-financing Arrangement between the Ministry of Finance and the ADB Approval of the EDCF loan for the first Co-financing Project with the ADB : Mindanao Power Transmission Project, The Philippines First Issuance of the EDCF Annual Report Hosting of the first EDCF Workshop for Government Officials from Nine Partner Countries Koreas Joining the Organisation for Economic Cooperation and Development Approval of the EDCF Loan for the first Mixed-Credit Loan (EDCF, Nordic Investment Bank, Korea Eximbank) : Laguindingan Airport Development Project, The Philippines Reaching over KRW 1 trillion of Cumulative total EDCF Loan Commitments Conclusion of Framework Arrangement between Korea Eximbank and KOICA Reaching over KRW 1 trillion of Cumulative total EDCF Loan Disbursements Approval of the first EDCF Supplementary Loan : Cogeneration Power Plant Construction Project, Mongolia Introduction of the Special Supporting Program on a Grant Basis First Grant Assistance for the Ex-post Assistance : The 2nd Misamis Oriental Telephone Expansion and Modernization Project, The Philippines Conclusion of MOU between Korea Eximbank and the IDB Conclusion of MOU between Korea Eximbank and the AfDB Cooperation Agreement Signing with the Ministry of Finance and Economy for the Operation and Management of the MDB Trust Fund Launching the International Development Consulting Center Introduction of the Country Cooperation Strategy and Program for Indonesia and Viet Nam First Implementation of the Midium-Term EDCF Strategic Management Plan Conclusion of MOU between Korea Eximbank and the JBIC First Grant Assistance for the Feasibility Study : Medical Equipment Supply to Dak Nong Provincial General Hospital Project, Viet Nam Hosting of the EDCF International Conference in Commemoration of its 20th Anniversary Issuance of the EDCFs 20-year History Book Introduction of the Compact Loan and Public Partnership Loan Approval of the first Untied Loan : Toliara Province Road No.35 Rehabilitation Project, Madagascar

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total

December 1987 November 1988 May July 1989 1989

November 1989 June June February June July July October October 1990 1991 1992 1993 1994 1995 1995 1996

December 1996 December 1996 July 1997 December 1998 November 1999 January 2004 December 2004 February 2005

November 2005 December 2005 December 2005 December 2005 January October 2006 2006

December 2006 July July August 2007 2007 2007

158

December 2007

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OVERSEAS NETWORK OF KOREA EXIMBANK

ASIA TOKYO REPRESENTATIVE OFFICE Rm.1904,19F Hibiya Daibiru, 1-2-2 Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011, Japan TEL : (81-3) 3580-8702/3 FAX : (81-3) 3580-8705 E-MAIL : extokyo@hotmail.com

QINGDAO LIAISON OFFICER Room AHG, 15th Floor, Qijian Tower No. 40 Hong Kong Middle Rd., Qingdao, 266071, China TEL : (86-532) 8309-5896 FAX : (86-532) 8309-5897 E-MAIL : jhwoo@koreaexim.go.kr

SAO PAULO REPRESENTATIVE OFFICE Av. Paulista, 1439 cj. 142, CEP 01311-200, C,Cesar - Sao Paulo, Brasil TEL : (55-11) 3283-3021 FAX : (55-11) 3287-0548 E-MAIL : exspaulo@dialdata.com.br WASHINGTON REPRESENTATIVE OFFICE

POLAND LIAISON OFFICER Korea Trade Center, 21th Fl. Warsaw Financial Center ul. Emilii Plater 53, 00-113 Warszawa, Poland TEL : (48-22) 520-6248 FAX : (48-22) 520-6249 E-MAIL : bcwon@hotmail.com

KEXIM AISA LIMITED BEIJING REPRESENTATIVE OFFICE Office C-716, Beijing Lufthansa Centre, 50 Liangmaqiao Road,Chaoyang District, Beijing 100016, China TEL : (86-10) 6465-3371 FAX : (86-10) 6463-7116 E-MAIL : seryoung@koreaexim.go.kr NEW DELHI REPRESENTATIVE OFFICE 901, 9th Floor, Eros Corporate Tower, Nehru Place, New Delhi-110019, India TEL : (91-11) 4168-8720 FAX : (91-11) 4168-8723 E-MAIL : pks1041@koreaexim.go.kr PT. KOEXIM MANDIRI FINANCE SHANGHAI REPRESENTATIVE OFFICE 19E, PUFA Building, No. 588 Pudong Road(S), Shanghai, China TEL : (86-21) 5876-8575/7748 FAX : (86-21) 5876-1782 E-MAIL : exim1118@koreaexim.go.kr DUBAI REPRESENTATIVE OFFICE P.O.Box 120288, The Gate, 4th Floor, West, Tenancy A2 Dubai, UAE TEL : (971-4) 362-0852 FAX : (971-4) 362-0851 E-MAIL : keximdubai@hotmail.com IRAN LIAISON OFFICER Embassy of the Republic of Korea No.18,West Daneshvar St. Sheikhbahai Ave. Vanak Squ. Tehran, Iran P.O.Box : 11365/3581 TEL : (98-21) 8806-5301 FAX : (98-21) 8805-4899 E-MAIL : changrr@koreaexim.go.kr NEW YORK REPRESENTATIVE OFFICE 460 Park Ave. 8th Fl., New York, NY 10022, U.S.A. TEL : (1-212) 355-7280 FAX : (1-212) 308-6106 E-MAIL : 20hee@koreaexim.go.kr AMERICA MEXICO CITY REPRESENTATIVE OFFICE Paseo de la Reforma #350 Edif. Torre del Angel, Piso 8, Col. Juarez Del. Cuauhtemoc Mexico D.F. Mexico. C.P. 06600 TEL : (52-55) 5511-8445 FAX : (52-55) 5511-8472 E-MAIL : mexchoi2003@yahoo.co.kr Menara Mulia Tower Suite 2007 JL, Jend Gatot Subroto Kav. 9-11, Jakarta 12930, Indonesia TEL : (62-21) 525-7261 FAX : (62-21) 525-7260 E-MAIL : jakarta@koreaexim.go.kr KEXIM VIET NAM LEASING CO., LTD. 9th Floor, Diamond Plaza Bldg., 34 Le Duan Street, Dist. 1, Ho Chi Minh City, Viet Nam TEL : (84-8) 825-7000 FAX : (84-8) 823-0854 E-MAIL : keximvt@hcm.vnn.vn Suite 3501, 35/F, Jardine House, 1 Connaught Place, Central, Hong Kong TEL : (852) 2810-0182 FAX : (852) 2810-4460 E-MAIL : webmaster@keximasia.com.hk

1300 L St. N.W. Suite 825, Washington D.C. 20005, U.S.A. TEL : (1-202) 408-8838/9 FAX : (1-202) 408-7858 E-MAIL : whitehand@koreaexim.go.kr

KEXIM BANK (UK) LIMITED Boston House 63-64 New Broad Street London, EC2M 1JJ, United Kingdom TEL : (44-20) 7562-5500 FAX : (44-20) 7588-3642 E-MAIL : london@koreaexim.go.kr

EUROPE FRANKFURT REPRESENTATIVE OFFICE Zeppelinallee 65-67, (Ecke Blanchardstrasse.), 60487 Frankfurt am Main, Germany TEL : (49-69) 97-78-320 FAX : (49-69) 97-78-316 E-MAIL : frankfurt@koreaexim.go.kr MOSCOW REPRESENTATIVE OFFICE Office Building 1704 A,World Trade Center12 Krasnopresnenskaya Nab.,123610, Moscow, Russia TEL : (7-495) 258-2366 FAX : (7-095) 258-2368 E-MAIL : keximmos@sovintel.ru PARIS REPRESENTATIVE OFFICE 36 Avenue Hoche, 75008 Paris, France TEL : (33-1) 4421-8314 FAX : (33-1) 4421-8315 E-MAIL : eximparis@yahoo.com TASHKENT REPRESENTATIVE OFFICE 14C-04, International Business Center,107-B, Amir Temur Street, Tashkent 100084, Uzbekistan TEL : (998-71) 138-9288 FAX : (998-71) 138-9218 E-MAIL : exim@dostlink.net EDCF TANZANIA COUNTRY DIRECTOR Embassy of the Republic of Korea P.O.Box 1154 Dar es Salaam, Tanzania TEL : (255-22) 266-8788 FAX : (255-22) 266-7509 E-MAIL : hyekyung@koreaexim.go.kr EDCF PHILIPPINES COUNTRY DIRECTOR 5/F Pacific Star Building, Sen, Gil J. Puyat Avenue Corner Makati Avenue, Makati City, The Philippines TEL : (63-2) 864-0624 FAX : (63-2) 864-0625 E-MAIL : mhpark@koreaexim.go.kr EDCF INDONESIA COUNTRY DIRECTOR Manara Mulia Tower Suite 2007 JL, Jend Gatot Subroto Kav. 9-11, Jakarta 12930, Indonesia TEL : (62-21) 525-7261 FAX : (62-21) 525-7260 E-MAIL : junsd@koreaexim.go.kr EDCF COUNTRY RESIDENT MISSION EDCF VIET NAM COUNTRY DIRECTOR 8th Floor, Daeha Business Center, 360 Kim Ma Str., Ba Dinh Dist.,Hanoi, Viet Nam TEL : (84-4) 771-7009 FAX : (84-4) 771-7010 E-MAIL : changyh@koreaexim.go.kr