The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Kim Yong-hwan, “Korea Eximbank”) and Korea International Cooperation Agency (President Kim Young-mok, “KOICA”), the two principal agencies responsible for Korean official development assistance (ODA), signed a Memorandum of Understanding (MOU) on July 24 to enhance aid effectiveness by combining loan programs with grants.

Korea Eximbank has been entrusted with the day-to-day operation of the Economic Development Cooperation Fund (EDCF)* by the Ministry of Strategy and Finance, which include functions such as the evaluation of loans for EDCF projects, the signing of loan agreements, and the disbursement of loans.

* The Economic Development Cooperation Fund (EDCF) was established by the Korean government in 1987 to promote economic exchanges and to assist developing countries in achieving industrialization and economic stability through the provision of long-term, low-interest credit.

Chairman Kim of Korea Eximbank and President Kim of KOICA met at the Yeouido Headquarters of Korea Eximbank to sign the MOU committing the two agencies to expand mutual exchanges and cooperation.

The MOU came as the first initiative to be launched by the four-party consultative group comprising the Ministry of Strategy and Finance, Ministry of foreign Affairs, Korea Eximbank and KOICA formed early this month. Reflecting the government’s emphasis on improving inter-agency cooperation and development effectiveness, the MOU is aimed at linking loans with grants more extensively throughout the life cycle of ODA programs, from design to execution.

Collaboration between the two agencies would create synergies at every step in the process of delivering aid to a developing country, from formulating the Country Partnership Strategy (CPS) to identifying, executing, and managing development projects in that country.

To that end, KOICA and EDCF will work to develop an effective model for tying the former’s various grant programs to the latter’s loans.

The two agencies also agreed to meet six times a year, for two high-level meetings and four working-level meetings, to jointly organize and promote ODA-related events including seminars and workshops.

A Korea Eximbank official remarked, “Our MOU with KOICA will take us further in the direction of strengthening the linkage between loans and grants to support our partner countries’ formulation and implementation of national development plans. To that end, our two agencies will cooperate more closely by jointly conducting such activities as research, evaluation, and investigation.”

Thus far, EDCF and KOICA have jointly executed 24 development projects that combine loans and grants in 16 countries.