South Korea provides $180m in soft loans

Funds to be utilised in infrastructure, health, education and energy among other sectors.

ISLAMABAD: Pakistan and South Korea have signed a framework agreement for the provision of $180 million in soft loans over three years.

Under the agreement, Pakistan will avail the loans from 2010 to 2012. The agreement was signed by Economic Affairs Division Secretary Sibtain Fazal Halim and Korean Ambassador to Pakistan Choong Joo Choi here on Thursday.

The loan will be utilised in areas of infrastructure development, health, education, environment, renewable energy and vocational training.

The South Korean government has initially shown interest in financing the construction of Malakand tunnel and conversion of municipal solid waste into energy and fertiliser, said Halim.

The South Korean government is currently financing three projects in Pakistan. The total cost of these projects is $63.8 million.

“At this time of economic hardship in Pakistan due to the recent disastrous flood, ongoing war on terrorism and energy shortage, Korea has come forward to play its role in softening the situation,” said Choi.

The loan will be administered by the Korean Economic Development Cooperation Fund and the Korean Exim bank. Pakistan will return the loan in 30 years and pay one per cent per annum in interest.

The country’s total external debt has already reached over $58 billion (Rs5 trillion). Domestic debt has also touched Rs5 trillion and the government is paying over Rs900 billion in interest on external and domestic debts this year.

Published in The Express Tribune, December 10^th, 2010.