Ukrainian government confirms allocation of US$2 billion of soft loans from South Korea for reconstruction

The Ukrainian government has adopted a draft bill On the Ratification of Framework Agreement between the Ukrainian Government and the Government of the Republic of Korea on the Loans from the Economic Development and Cooperation Fund (EDCF) for 2024-2029 on 4 June.

Source: Ministry of Economy of Ukraine

Details: The adoption of this draft bill is necessary for the Framework Agreement on the EDCF loans for 2024-2029 in the amount of US$2.1 billion, signed on 19 April 2024 in Washington (US), to enter into force.

"These funds will be directed at the procurement of equipment and reconstruction projects which will be implemented by the state or state companies with the state guarantee granted, as well as at financing the state budget. Receiving long-term and low-interest loans will facilitate Ukraine's restoration of production potential and create new workplaces," explains Yuliia Svyrydenko, First Vice Prime Minister and Minister of Economy of Ukraine.

The framework agreement will enter into force the same day the parties receive through diplomatic channels the last written message about the finalisation of the domestic procedures necessary for the entry of this Framework Agreement into force.

The next stage will be the preparation for the implementation of the project, potentially selected by the Korean side, with a planned scope of funding of US$2 billion.

Separate agreements defining the amount, deadlines and conditions of providing soft loans will be signed for each separate project.

Under the agreement, such loans can be spent on equipment supply at the first stage. Infrastructure loans for rebuilding can be contracted starting 2025.

The agreement on the loans from EDCF was signed by Yuliia Svyrydenko, First Vice Prime Minister and Minister of Economy of Ukraine, and Kim Hyung Tae, South Korean Ambassador to Ukraine, on 13 September 2023.

The document was ratified by the Verkhovna Rada of Ukraine (the Ukrainian Parliament) on 21 December 2023.

Background: The Economic Development and Cooperation Fund was founded by the government of the Republic of Korea in order to facilitate the economic cooperation between Korea and developing countries. The fund provides partner states with financial aid for their industrial development and economic stability.

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