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Development Overview

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Overview of Korea’s development experience

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Development Overview
Official Aid General

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General

ODA System

1. Implementation System Of Korea’s ODA

Korea’s ODA takes two forms: bilateral and multilateral aid. Bilateral aid consists of loans and grants. Of those, bilateral loans are the EDCF loans and bilateral grants include both grant aid and technical cooperation. Multilateral aid consists of grants, capital subscriptions, and concessional lending to multilateral agencies.

The Ministry of Strategy and Finance (MOSF) is primarily responsible for bilateral loans, capital subscriptions, and concessional lending to multilateral financial institutions including the World Bank Group, the IMF, and the ADB. The Ministry of Foreign Affairs and Trade (MOFAT) is primarily responsible for bilateral grants and grants to international development institutions such as the UN and related agencies.
 
Bilateral ODA

Bilateral loans
The Korean government established the EDCF as a bilateral ODA loan program in 1987 with the vision to support developing countries achieve industrial growth and improve economic stability. Since then, not only has the EDCF program allowed Korea to contribute to the growth of other countries, but also helped Korea to develop sound economic relations with other countries.

The EDCF also seeks to contribute to the prosperity of the global economic community by assuming responsibilities commensurate with Korea’s present international status. In this respect, its activities can be viewed as a means of sharing both its resources and accumulated experience with developing countries around the world.

As for the management of the EDCF, the Korean government regulates the principal policies, the MOSF supervises the overall management, and Korea Eximbank conducts all EDCF operations such as execution of loan agreements, comprehensive monitoring and evaluation of projects, and provision of advisory services in accordance with the government guidelines.
[Figure 1-1] Korea’s ODA Operation System
[Figure 1-1] Korea’s ODA Operation System

The responsibility for Korea’s bilateral grants and technical cooperation is shared among relevant government agencies. Specifically, KOICA, along with several central government ministries and local governments, is mainly responsible for the implementation of bilateral grants and technical cooperation under the authority of MOFAT.
 
Multilateral ODA

Korea’s multilateral ODA mainly consists of grants and capital subscriptions to multilateral organizations including UN agencies, the World Bank Group, and regional development banks. The MOSF is responsible for managing grants and capital subscriptions to international financial institutions including the World Bank Group and regional development banks. MOFAT and other government agencies manage contributions to various UN agencies.
 
2. Implementation System of the EDCF

Fund Management Council
The Fund Management Council was established as a top decision making body in line with the EDCF law. The 12-member council deliberates principal policies concerning the EDCF’s operation and management as well as the operational programs, and reviews financial statements. With the Minister of Strategy and Finance as Chairman, the council members include the Minister of Foreign Affairs and Trade, Minister for Food, Agriculture, Forestry and Fisheries, Minister of Knowledge and Economy, Minister for Health, Welfare and Family Affairs, Minister of Land, Transport and Maritime Affairs, Minister of Education, Science and Technology, Chief Economic Secretary of the Office of the President, Deputy Director of the National Intelligence Service, Minister of the Prime Minister’s Office, Chairman and President of the Export-Import Bank of Korea, and President of the Korea International Cooperation Agency.

Ministry of Strategy and Finance
The MOSF, as an operating body, drafts the EDCF’s operational programs and financial statements, prepares principal policies concerning operation and management, selects the projects to support, and approves loans.

Ministry of Foreign Affairs and Trade
MOFAT works as the official window of EDCF loans. It accepts loan requests, notifies assistance policies, and executes inter-governmental agreements on behalf of the Korean government.

The Export-Import Bank of Korea
Korea Eximbank has four departments under the Economic Development Cooperation Fund Group for the operation and management of the EDCF. It dispatches appraisal missions, prepares appraisal reports, executes loan agreements, collects the payment of principal and interest thereon, supervises projects, fulfills ex-post evaluations, and so on.
[Figure 2-1] EDCF Operational System
[Figure 2-1] EDCF Operational System

Source: The Export-Import Bank of Korea. 2008. EDCF Your development partner 1987-2007, History book. Seoul.