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Government approves draft law on ratification of the Framework Agreement for obtaining soft loans worth USD 2.1 billion from the Korean Economic Development Cooperation Fund

The Cabinet of Ministers has approved the Draft Law of Ukraine On Ratification of the Framework Agreement between the Government of Ukraine and the Government of the Republic of Korea on Loans from the Economic Development Cooperation Fund (EDCF) for 2024-2029. The adoption of this bill is necessary for the entry into force of the Framework Agreement on EDCF Loans for 2024-2029 in the amount of USD 2.1 billion, signed on 19 April 2024 in Washington, DC. The Cabinet of Ministers of Ukraine endorsed the decision at its session on 4 June 2024.

“We have taken another step to finalise the necessary internal procedures and start providing soft loans of the equivalent of USD 2.1 billion from the Korean Economic Development Cooperation Fund (EDCF) over the next five years. These funds will be used to purchase equipment and for rehabilitation projects to be implemented by the state or state-owned companies with a state guarantee, as well as to finance the state budget. Ukraine’s access to long-term, low-cost loans will help restore production capacity and create new jobs. This should accelerate the country's recovery and the implementation of a number of economic projects without waiting for the end of the war,” Yuliia Svyrydenko, First Deputy Prime Minister of Ukraine - Minister of Economy of Ukraine, explained.

The Framework Agreement shall enter into force on the date of receipt by the parties through diplomatic channels of the last written notification of the completion of domestic procedures necessary for the entry into force of this Framework Agreement.

The next step will be to prepare for the implementation of projects potentially selected by the Korean side with a planned funding of USD 2.1 billion. For each particular project separate agreements will be concluded to determine the amount, terms and conditions of concessional loans.

According to the Agreement, at the first stage, such loans may be used to supply equipment. Starting from 2025, it will be possible to attract infrastructure loans for reconstruction.

It is worth reminding that the EDCF Loan Agreement was signed by First Deputy Prime Minister of Ukraine - Minister of Economy of Ukraine Yuliia Svyrydenko and Ambassador of Korea to Ukraine Kim Hyung on 13 September 2023 in the presence of President of Ukraine Volodymyr Zelenskyy and Minister of Land, Infrastructure and Transport of Korea Won Hee-ryong. The document was ratified by the Verkhovna Rada of Ukraine on 21 December 2023. According to the Agreement, the borrower may be the state of Ukraine, represented by the Minister of Finance of Ukraine, or a business entity - a resident of Ukraine, which attracts a loan under the state guarantee.

Background information:

The Economic Development Cooperation Fund (EDCF) was established by the Government of the Republic of Korea to promote economic cooperation between Korea and developing countries. The Fund provides financial support to partner countries for their industrial development and economic stability.

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