The government is going to sign soon Framework Arrangement for US$500million worth of credits from Korea to finance development projects.
Officials said the loan, packaged as EDCF or Economic Development Cooperation Fund, will be used for various development projects from 2017 to 2020.
An inter-ministerial meeting will be held sometime next week in the Economic Relations Division (ERD) to finalise the Framework Arrangement, they said.
EDCF is a kind of concessional loan like ODA that is operated by Korea Exim bank on behalf of the government of the Republic of Korea (RoK).
The rate of interest is 0.01 per cent per annum with 40 years of reimbursement period and 15 years of grace period.
"The government will submit a list of prospective projects to be financed under this arrangement to the Korean government," a high official said.
Details of each individual project and loan amount for it will be set out in and made available through a loan agreement to be concluded between the Exim bank of Korea and the Bangladesh government.
The unpaid amount will bear an overdue charge at the rate of 2.0 per cent per annum in addition to the interest rate specified in the loan agreement if the government fails to make payment of all or any portion of the principal of loan or any other amount due under the arrangements, according to the framework.
The source countries for the procurement of goods and services, including consulting services, to be financed out of the loan will be Korea for foreign-currency portion and Bangladesh for the local- currency portion.
The suppliers of goods and services necessary for the implementation of the project will be selected through competitive bidding among Korean firms, the framework mentioned.
The Korean government supports Bangladesh through a variety of ODA instruments like Korea International Cooperation Agency (KOICA) and EDCF.
The Framework Arrangement between Bangladesh and Korea concerning loans from the EDCF for the years 2015 through 2017 signed on November 19, 2015 will be terminated on the date when this arrangement enters into force and be replaced by this arrangement.
"An inter-ministerial meeting will be held next week on Framework Arrangement of EDCF," Deputy Secretary of ERD A.S.M. Mustafizur Rahman told the FE.
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