Over the Next 3 Years, 10.8 Trillion Won in Aid to Emerging Countries... Up to 70% Support to Asia

Ministry of Economy and Finance, Post-Corona EDCF Operation Strategy

EDCF Promotion Goals and Strategies by Sector.

[Sejong=Asia Economy Reporter Joo Sang-don] The government plans to approve 10.8 trillion KRW of the Economic Development Cooperation Fund (EDCF) over the next three years until 2023 to support the economic development of emerging countries. It will increase the scale of EDCF support for green, digital, and health sectors and also promote the expansion of public-private partnership (PPP) projects. Additionally, considering the strengthening of the New Southern and Northern policies and the latent infrastructure demand within the region, the share of support for Asia will be increased to 60-70%.

On the 11th, the Ministry of Economy and Finance held the "Ministerial Meeting on External Economic Affairs and EDCF Management Committee Meeting" and announced the "Post-COVID-19 EDCF Operation Strategy" containing these details.

An official from the Ministry of Economy and Finance explained, "Based on our experience and capabilities related to COVID-19, the necessity to contribute to resolving economic and health crises in the post-COVID-19 era has increased," adding, "The purpose is to actively utilize our COVID-19 response experience in global infectious disease management while expanding economic cooperation based on the Green and Digital New Deal."

First, the government plans to systematically and intensively support EDCF in sectors where development demand has increased due to global economic and health crises. The aim is to contribute to sustainable development of the international community as a global leader during difficult times domestically and internationally, and to create economic outcomes that enhance the nation's status.

Considering the time lag between approval and execution, the government will push for approval of a total of 10.8 trillion KRW in EDCF: 3.4 trillion KRW in 2021, 3.6 trillion KRW in 2022, and 3.8 trillion KRW in 2023, to contribute to achieving the goal of expanding Official Development Assistance (ODA) scale. Afterward, the scale will be gradually increased annually, aiming to approve 4.5 trillion KRW by 2030.

The key support areas are green and digital sectors. The green EDCF support scale will expand from 200 million USD in 2020 to 600 million USD by 2025 (based on approval). Priority will be given to sectors where Korean companies have strong competitiveness, such as renewable energy, water resources and sanitation, and transmission and distribution efficiency, to support sustainable economic growth in recipient countries.

The digital EDCF support scale, which was 300 million USD last year, is planned to increase to 800 million USD by 2025. Through this, large-scale and signature projects will be prioritized mainly in middle-income countries in the New Southern and New Northern regions, where demand for smart city-related projects is abundant. Also, based on Korea’s accumulated COVID-19 response experience, the health sector EDCF support scale suitable for recipient countries’ environments will be significantly expanded from 400 million USD (2020) to 1 billion USD by 2025.

The government also aims to diversify support methods. To expand PPP projects, it plans to approve five projects by 2025. Cooperation with international organizations such as multilateral development banks (MDBs) through co-financing will also be promoted. In terms of improving the operational system, video conferencing infrastructure and a "non-face-to-face work system" will be established step-by-step to enable continuous remote consultations between the Korean government and recipient countries. Additionally, the functions of EDCF local offices will be strengthened, and the basic agreement will be expanded for large-scale projects.

To effectively utilize the limited EDCF resources, the government decided to focus support regionally, considering external economic policies, priority partner countries, and changes in the business environment. For the Asia region, the share of support will be expanded to 60-70% in consideration of the strengthening of the New Southern and Northern policy directions and latent infrastructure demand. Specifically, cooperation projects will be discovered and supported focusing on the region’s poorest countries such as Myanmar and Cambodia, where there is high demand for cooperation based on Korea’s technology and experience. For New Northern countries, additional target countries beyond existing supported countries (Mongolia and Uzbekistan) will be identified.

For the Africa region, 20% of the resources will be supported focusing on politically and economically stable regional hub countries with high project demand such as Egypt, Ethiopia, and Kenya. For Latin America, 10-20% of the total will be allocated, aiming to overcome the limitations of non-binding aid and diversify support forms through MDB co-financing.

This content was produced with the assistance of AI translation services.