South Korea Signs $2.1 Billion Loan Agreement with Ukraine, Pledges $2.3 Billion in Total Aid

South Korea pledges $2.3B in aid to Ukraine, including $2.1B in low-interest loans, to support economic recovery and development amid the ongoing conflict.

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South Korea Signs $2.1 Billion Loan Agreement with Ukraine, Pledges $2.3 Billion in Total Aid

South Korea Signs $2.1 Billion Loan Agreement with Ukraine, Pledges $2.3 Billion in Total Aid

On April 21, 2024, South Korea signed a framework agreement with Ukraine to provide $2.1 billion in low-interest loans through the Economic Development Cooperation Fund (EDCF) starting in 2025. The agreement is part of Seoul's pledge to supply a total of $2.3 billion in aid to the war-torn country.

The agreement was signed by South Korean Finance Minister Choi Sang-mok and his Ukrainian counterpart, Sergii Marchenko, in Washington. The financial assistance is intended to support Ukraine's economic recovery and development efforts as the country continues to confront the ongoing conflict.

South Korea's aid package, unveiled on August 29, 2023, includes 130 billion won for reconstruction, 260 billion won in humanitarian aid, and another 130 billion won through international organizations, according to South Korea's 2024 budget. This represents an eightfold increase in the amount of aid pledged for 2023.

During his visit to Washington, Finance Minister Choi also attended meetings with the World Bank and the International Monetary Fund (IMF). He proposed the expansion of the World Bank's co-financing platforms and the holding of an International Development Association (IDA) replenishment meeting in South Korea in December 2023.

Additionally, Choi signed a $55.96 million grant agreement with the IMF for its Poverty Reduction and Growth Trust (PRGT) program, which provides zero-interest loans to low-income countries.

Why this matters: South Korea's substantial financial commitment to Ukraine underscores the international community's ongoing support for the country as it faces the challenges of reconstruction and economic recovery amidst the prolonged conflict. The aid package not only provides much-needed resources for Ukraine but also demonstrates South Korea's growing role in global humanitarian and development efforts.

South Korean Prime Minister Han Duck-soo stated that while Seoul is not ready to send weapons to Ukraine, the country remains committed to providing humanitarian aid and non-military equipment. Finance Minister Choi expressed hope for strengthening economic cooperation with Ukraine and called for assistance to enable South Korean companies to actively participate in the reconstruction of the Eastern European nation.

Key Takeaways

  • South Korea to provide $2.1B in low-interest loans to Ukraine starting 2025.
  • Aid package includes $2.3B for reconstruction, humanitarian aid, and international orgs.
  • South Korea proposes expanding World Bank co-financing and IDA replenishment in Seoul.
  • South Korea signs $55.96M grant agreement with IMF for Poverty Reduction and Growth Trust.
  • Aid demonstrates South Korea's growing role in global humanitarian and development efforts.