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answer It has not been a long time for Korea to become a donor country from a recipient country.
Korea received grant aid until the 1960s after the Korean war, when the economy has not been developed yet. Afterwards, the ratio of concessional loans had gone up in line with the large scale of SOC projects. The 20% of concessional loans in the early 1960s increased to the above of 90% after the 1970s. With the support of concessional loans, Korea had been able to source for the investment in facilities and arranged the production base for the economic growth.
As the major institution for the concessional loans, EDCF experienced the necessity and utility in the period of economic development.
answer The appraisal starts with a careful examination of the Feasibility Study and the implementation plan to confirm, inter alia, but not limited to the following points:
(1) Whether the country is eligible for EDCF loan support
(2) Economic and political conditions of the country
(3) The outline, context and goals of the project
(4) Whether the terms and conditions are appropriate for the requested project
(5) The project's priority in the overall economic development plan of the recipient country
(6) Legal issues related to introducing a loan
(7) Commerciality of the requested project
(8) Economic, financial, technical and environmental feasibilities of the requested project
(9) Capability of the project executing agency and employment of consultants
(10) Identification of the risks throughout the project implementation process
(11) Viability of funding requirements, and operation and management plan
(12) Cooperation impact of the project to Korea and the recipient country
(13) The debt sustainability of the recipient country
answer In principle, EDCF extends a loan without support limit for local currency cost necessary for project implementation. When it comes to Korean consultant fees, EDCF can assist covering the local currency cost with a maximum of 50% of the total loan amount.

Different from grants, which mainly support for the technical co-operation and humanitarian aid, concessional loans usually support for the economic infrastructure, such as roads, railways, port, airport, communication, electricity etc. which require large scale of financial resources.
As of 2015, EDCF has made commitments of KRW 13.3 trillion in loans, 352 projects in 53 countries since its establishment in 1987. Among those, the economic infrastructure has been committed mainly, such as transportation, communication and energy sector, and the support for the social infrastructure, such as health, education and environment, has been gradually increased.


First, whether the country is eligible for the EDCF loan should be verified. According the OECD Guideline, countries with per Capita GNI of U$ 4,095(WB, 2020) or more, and commercially viable projects are not eligible for tied-aid loan. Also, countries with high risks of default (e.g. HIPC countries yet to reach the decision point and countries with their EDCF principal repayment overdue) may not be able to get support, or at least, the support will be delayed until the risk subdues, even if a project has been sought.

Second, priority and preparation of the recipient government on the listed project should be confirmed. The project should be listed as one of the top priorities in the recipient country’s national development plan. It is preferred that a feasibility study(F/S) has been completed by an official organization or expected to be completed. As for the equipment loan, price estimation should be grounded on the information provided by an official organization, or should be reasonable, i.e. similar to the international price quote.

Third, the scope of the project should be reviewed if it is feasible, considering the limited financial resource. Average amount of the loans are between U$30 and U$60 million. Therefore, if the project cost exceeds the range, it is recommended for the borrower to discuss the details of loan extension with the Ministry of Finance and Economy prior to the seeking a project, or to have the recipient government to bear exceeding amount.

Forth, whether the project conforms to the OECD Guidelines or to the EDCF Guidelines should be checked. Since the OECD Guidelines do not allow tied loan to commercially viable projects, it is a good idea to review the commerciality of the project in the communications, electricity or manufacturing businesses. For the LDCs, commerciality may not be the issue. Instead, we review the possibility of debt relief or debt-rescheduling for the fragile states and HIPCs.