After receiving the loan request, MOEF makes a preliminary decision on whether to extend the EDCF loan, based on its review of the project’s contribution to industrial development or economic stabilization of the partner country. If the project is deemed suitable, MOEF then requests that Korea Eximbank conducts project appraisal.
An appraisal involves a detailed review of the feasibility studies related to the project. It is through this appraisal process that Korea Eximbank judges whether the project is consistent with Korea Eximbank’s operational policies and programs, and whether the project 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 partner country.
Korean Government Decision on EDCF Loans
Korea Eximbank completes the appraisal report and submits it along with its opinion to MOEF. Then, MOEF confirms the
economic, financial, and technical soundness of the project based on Korea Eximbank’s appraisal report. After consulting
with the ministries concerned, MOEF makes a final decision on the loan request and notifies the partner country through
MOFA.
Agreement and Arrangement between Governments
An Agreement is concluded between the Korean government and the partner country’s government, introducing the basic framework of the EDCF loan and outlining their responsibilities. Once signed by both parties, this Agreement remains in force for a minimum of ten 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 a Framework Arrangement, they are allowed to omit an Arrangement for an individual project. The Agreement and Arrangement are promises by the Korean government that it will take all means in its power to realize the loan.
Loan Agreement
Prior to drafting a Loan Agreement, Korea Eximbank sends the partner 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 authorized 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 partner country. The Loan Agreement becomes effective as soon as condition-precedent documents such as evidence of authority, specimen signatures, and legal opinions are submitted by the partner country and accepted by Korea Eximbank.
