EDCF ANNUAL REPORT 2013 EDCF. Shaping the Future with EDCF ECONOMIC DEVELOPMENT COOPERATION FUND

Transcription

1 EDCF Shaping the Future with EDCF ECONOMIC DEVELOPMENT COOPERATION FUND

2 CONTENTS 3 Statistical and Financial Information History of EDCF EDCF at a glance Contribution to Countries Highlights 2013 Message from the Deputy Prime Minister Message from the Chairman and President Message from the Goodwill Ambassador Key Acronyms Statistical Information Financial Report Statistics of Korea's ODA EDCF in 2013 EDCF Loan Commitment and Disbursement KSP Achievements in ODA System of Korea EDCF Operational System EDCF Loan Procedure Chart Overseas Network 2 Shaping the Future with EDCF Korea Major Activities in 2013 New Projects Approved in 2013 Major Ex-post Evaluations in 2013 EDCF has contributed to the economic development and welfare of developing countries as well as expanding Korea s economic exchanges with developing countries by supporting social and economic infrastructure projects in sectors such as transportation, communication, power, environment, health, and education.

3 EDCF 2013 Annual report History of EDCF Establishment of the EDCF Conclusion of the First Loan Agreement : Passenger Coach Purchase Project, Nigeria First Disbursement of the EDCF Loan : Passenger Coach Purchase Project, Nigeria 1985 ~ ~ Approval of the EDCF s First Two-Step Loan : Industrial Equipment Leasing Project, Pakistan Conclusion of Co-financing Arrangement between the Ministry of Finance and the WB Conclusion of Co-financing Arrangement between the Ministry of Finance and the ADB Approval of the EDCF Loan for the First Cofinancing Project with the ADB : Mindanao Power Transmission Project, The Philippines Shaping the Future with EDCF Hosting of the First EDCF Workshop for Government Officials from Nine Partner Countries First Approval of Support linking ODA with Grants (KOICA) 02

4 History of EDCF Establishment of the EDCF Conclusion of the First Loan Agreement : Passenger Coach Purchase Project, Nigeria First Disbursement of the EDCF Loan : Passenger Coach Purchase Project, Nigeria Reaching over USD 1 billion of Cumulative Total EDCF Loan Commitments Conclusion of Framework Arrangement between Korea Eximbank and KOICA Reaching over USD 100 miilion of EDCF Loan Disbursements Approval of Co-financing with IDB Hosting of the First Joint Evaluation with Recipient Countries Hosting of the Busan 4th High Level Forum Establishment of the ODA Monitoring System Hosting of the 4th Ministerial Conference Appproval of First Commitment for a Program Loan Launch of the OECD DAC Peer Review 1985 ~ ~ ~ ~ ~ Approval of the EDCF s First Two-Step Loan : Industrial Equipment Leasing Project, Pakistan Conclusion of Co-financing Arrangement between the Ministry of Finance and the WB Conclusion of Co-financing Arrangement between the Ministry of Finance and the ADB Approval of the EDCF Loan for the First Cofinancing Project with the ADB : Mindanao Power Transmission Project, The Philippines Hosting of the First EDCF Workshop for Government Officials from Nine Partner Countries First Approval of Support linking ODA with Grants (KOICA) Conclusion of MOU between Korea Eximbank and the IDB Reaching over KRW 2 Trillion of Cumulative total EDCF Loan Commitment Conclusion of MOU between Korea Eximbank and the JBIC Introduction of the Compact Loan and Public Partnership Loan First External Ex-post Evaluation of EDCF Project: Thien-Tan Water Supply Project, Viet Nam Yearly Commitment Amount First Exceeding KRW 1 trillion Korea's Accession to the OECD DAC EDCF Development Finance Seminar The 2nd GOK-ADB High-level Consultation Co-hosting of EDCF-OECD International ODA Evaluation Seminar 02 03

5 EDCF at a glance EDCF Contributions (Unit : KRW billion) Shaping the Future E conomic D evelopment C ooperation F und The government of Korea has established the Economic Development Cooperation Fund (EDCF) on 1 June, 1987 as part of the Korean Official Development Assistance (ODA) with the purpose of promoting economic cooperation between Korea and developing countries. EDCF assists developing countries in achieving poverty reduction and economic development. The authority of EDCF operations and principal policy-making responsibilities rest with the Ministry of Strategy and Finance (MOSF). Entrusted by the MOSF, the Export-Import Bank of Korea conducts all EDCF operations such as project appraisal, loan agreement execution, loan disbursements and project evaluation etc. 52 Countries (26 Priority Support Countries), 311 projects (Cumulative Total at 2013) Total Commitments 10,152 Contribution to Countries (Unit : KRW billion) (Cumulative Total at 2013) Transportation Water Resources, Sanitation 22 Countries 81 Projects Commitments 3,277 Disbursements 1, Countries 51 Projects Commitments 780 Disbursements 561 Total Disbursements 4,436 Energy 16 Countries 32 Projects Commitments 1,058 Disbursements 459 with EDCF Since its foundation in 1987, EDCF has approved KRW 10.2 trillion for a total 311 projects in 52 countries and disbursed KRW 4.4 trillion. The annual approval of loans exceeded 1 KRW trillion for the first time in In an effort to pursue Korean government s goal of expanding ODA to developing countries, EDCF approved KRW 1.3 trillion for 21 new projects. Health 16 Countries 37 Projects Commitments 1,108 Communications 20 Countries 32 Projects Commitments 752 EDCF will strive to expand its aid volumes to help developing countries achieve Disbursements 481 Disbursements 474 economic development and sustainable growth with global citizenship and the experience of Korea s development

6 Contribution to Countries (Cumulative Total at 2013) Europe Asia 7Countries 7 Uzbekistan 16Countries Commitments KRW 424 billion Disbursements KRW 378 billion Middle East 2Countries Commitments KRW 6,642 billion Disbursements KRW 3,012 billion Commitments KRW 267 billion Disbursements KRW 131 billion 1 Honduras Myanmar 9 12 Philippines America 7Countries Africa Cameroon Rwanda Ethiopia 8 Sri Lanka Cambodia Vietnam 13 Indonesia Commitments KRW 637 billion Disbursements KRW 240 billion 19Countries 3 5 Mozambique Oceania Commitments KRW 2,165 billion Disbursements KRW 665 billion Zambia 1Country Commitments KRW 16 billion Disbursements KRW 8 billion 2013 Support (commitment) Projects 1 Honduras Renewable Energy Project for Sustainable Rural Development 2 Cameroon Garoua Referral Hospital Establishment Project 3 Zambia The Establishment of Public Safety Information System Project 4 Rwanda Rwanda University of Rwanda Infrastructure Development Project 8 Sri Lanka Deduru Oya Water Supply Project Ruwanwella Water Supply Project 9 Myanmar IT Infra-Network Expansion Project 500kV Taungoo-Kamanat Transmission Line Project 10 Cambodia Dauntri Dam Development Project 12 Philippines Integrated Disaster Risk Reduction and Climate Change Adaptation Measures in the Low Lying Areas of Pampanga Bay Project 13 Indonesia Development of Sewerage System in Batam Island Project Fast Patrol Boats for Indonesian National Police Project 13 Countries 21 Projects Total Commitments KRW 1,279 billion 5 Mozambique Construction of Waste Treatment Facility (Sanitary landfill) for Maputo and Matola City Nampula~Nametil City Section Road Improvement Project 6 Ethiopia Modjo-Hawassa Highway Project 7 Uzbekistan 21st Century Uzbekistan-Korea Friendship Children's Hospital Project 11 Vietnam Medical Equipment Supply to National ENT Hospital Project Developing Hanoi University of Pharmacy to become a National Specialized University Expansion of Thien Tan Water Plant Project - Phase II (supplementary) Support Program to Respond to Climate Change - Phase II Hung Ha Bridge Construction Project 08 09

7 Highlights 2013 Training Programs for SMEs to Make Entry into Overseas Markets Korea Eximbank has hosted hands-on training programs for SMEs in May and November in order to help them build presence in the international procurement market. EDCF administrators as well as Programs for Development Finance The share of ODA in total money inflows into developing countries has recently decreased to 10% from 70% in the 1960s. Given this development, there is a growing consensus in the international aid community about the need to diversify development funding besides traditional ODA. Responding to the changing needs, EDCF has been actively reviewing ways to transform itself into a development finance provider equipped with various aid portfolios using financial instruments such as guarantees, market loans, and mixed financing. EDCF is also making efforts to identify public-private partnerships (PPPs) and plans to provide financing packages that consist of a mix of EDCF loans, EDCF guarantees, development financing, and export financing to profitable large-scale projects in such sectors as power generation, transportation, and communications. former/current ADB officials delivered informative lectures on the overall procedures of EDCF projects such as the feasibility study, bidding, and consultant hiring. As a result, SMEs have learned useful information and know-how to participate in international projects. Korea Eximbank is planning to regularly provide more advanced and practical training programs for SMEs to successfully gain a foothold in the global procurement market. Integrated Disaster Risk Reduction and Climate Change Adaptation in Low Lying Areas of Pampanga Bay Project, the Philippines There has been a rising need in the international community to implement climate change response projects, due to the frequent outbreaks of natural disasters caused by global warming. The Philippines has been encountering frequent floods due to the sedimentation of large amounts of volcanic ash in the lowlands of nearby Pampanga, Tarlac since the eruption of Mt. Pinabuto in To address this, EDCF provided soft loans for dredging rivers, building dikes, repairing flood gates, rebuilding schools and playgrounds and installing well pumps. With the successful completion of the project, it is expected that the flood-prone areas will be significantly reduced, thus, improving prevention on water borne epidemics and contributing greatly to the improvement of the overall educational environment. EDCF plans to continue to identify and support climate change response projects, thereby taking the initiative to assist partner countries in establishing a firm foundation for preventing natural disasters and achieving sustainable economic growth. Strengthened EDCF PR Activities EDCF has conducted a variety of PR activities to enhance its public profile and raise public awareness of ODA activities has been a pivotal year for expanding EDCF's PR efforts; It newly introduced the EDCF Supporters and EDCF SNS while strengthening existing PR activities such as the EDCF Camp, Thesis Competition, and Campus Talk. Korea Eximbank plans to continuously create and carry out useful PR programs in an effort to raise the awareness of EDCF activities. EDCF-OECD International ODA Evaluation Seminar EDCF and the OECD Development Assistance Committee (DAC) co-hosted an international seminar on ODA evaluation on November 7, In order to reflect the recent shift in the international aid paradigm, EDCF proposed a new evaluation criterion be added to the existing OECD DAC's five evaluation criteria of relevance, efficiency, effectiveness, impact and sustainability. Moreover, the OECD DAC emphasized that developing countries as well as donor countries need to strengthen ownership by building their capacity to adequately evaluate ODA. DAC also mentioned that the newly emerging development issues such as the growing role of the private sector are needed to be thoroughly reviewed. EDCF will continue to share its knowledge on development evaluation and firmly establish networks with international donors as well as partner countries by hosting more seminars jointly with international aid institutions. Coordination between EDCF and Relevant Authorities EDCF has actively participated in various inter-ministerial coordination meetings such as the four-party meeting among the Ministry of Strategy and Finance (MOSF), the Ministry of Foreign Affairs (MOFA), KOICA and EDCF in an effort to improve whole-ofgovernment approaches to ODA projects. Through four working-level meetings and one regular-level meeting, EDCF and KOICA have provided a combined USD 980 million in coordinated aid as of December 2013, and agreed to harmonize support for six loan projects and follow up on 14 projects for further discussions on possible harmonization. Moreover, EDCF and KOICA agreed to enhance cooperation and information sharing through the exchange of personnel at the managerial level and share the same oversea offices in order to maximize aid effectiveness

8 Message from the Deputy Prime Minister Since its establishment in 1987, EDCF has effectively paved the way for economic growth and poverty reduction of developing countries. It has also allowed Korea, which achieved a miracle of assistance, to elevate its national status in the international community by sharing more resources and knowledge with partner countries. In 2013, EDCF approved USD 1.28 billion in concessional loans for 21 projects, with an aim to go further together with its partner countries rather than to go fast alone. As of last year, total commitments exceeded USD 9.6 billion. Along with this quantitative growth, 2013 marked a meaningful year in which we took big steps to achieve following institutional improvements: First, we have institutionalized coordination mechanism with domestic grant aid leaders by newly establishing four-party consultation meeting among the Ministry of Strategy and Finance(MOSF), Ministry of Foreign Affairs (MOFA), EDCF and KOICA, and identified various joint projects that can combine concessional loans and grants. Linkage between EDCF and KOICA projects has improved development effectiveness of Korea s ODA and also enabled consistent follow-up management. Moreover, EDCF has built stronger partnerships with the recipient countries, donor countries and international organizations. It has actively engaged in developing the Country Partnership Strategies (CPS) jointly with 26 priority partner countries. Furthermore, it has solidified its partnerships with leading donor agencies such as the AFD (France), KfW (Germany) and JICA (Japan) while increasing co-financing projects with multilateral development banks (MDBs) such as the Asian Development Bank (ADB) and African Development Bank (AfDB). Last year, EDCF took its first step to become the development finance architecture. In line with the increasing demand from the developing countries for large-scale infrastructure development, the Korean government adopted measures to promote development finance, revised the Export-Import Bank of Korea Act and introduced the EDCF Guarantee Program. Building on such institutional development, we will endeavor to generate tangible outcomes by fully implementing EDCF-related policies formulated in In addition, we will place our priority on enhancing development effectiveness by steadily making institutional improvements as follows: First of all, we will continue to promote ODA projects in a mutually beneficial way, and bring about substantial economic growth of partner countries by sharing our own development experiences. At the same time, we will also help Korean companies equipped with qualified technologies and expertise to advance into the overseas markets. In particular, we plan to improve Compact Loan programs to further open doors for more small and medium enterprises. We will encourage more SMEs to build consortiums with large companies with appropriate technology and experience in the overseas markets. Second, we will further enhance transparency, accountability and effectiveness of EDCF projects. To this end, we will disclose more information on the entire process of EDCF projects and develop measures to promote the social responsibility of its suppliers. Moreover, we will continue to step up coordination with other government agencies such as the Ministry of Land, Infrastructure and Transport (MOLIT) and Ministry of Health & Welfare (MOHW), in an effort to maximize development impact by successfully combining concessional loan and grant projects. We also plan to identify projects that are fully aligned with the development priorities, focus on key areas, and better reflect the local situations of the partner countries by reinforcing overseas workforce. Third, we will proactively join the international development discussions. Today, the international community is preparing to move beyond the Millennium Development Goals (MDGs) to usher in the Post-2015 era for a renewed development cooperation landscape. It is well recognized that Korea is the only country in the world that has transformed from a recipient to a donor. I think that our valuable experience will be very helpful to shape a new direction for international development cooperation and to streamline the path we should take and the task we should carry out. Taking this into account, I firmly believe that Korea is eligible to take on such crucial role in the years ahead. In 2014, We will remain committed to sharing the hope of economic development with the developing countries and helping them design their future vision. We will also ensure that Korea continues to provide sincere and hearty assistance to our partner countries by respecting their needs. I look forward to your constant support and encouragement for EDCF that will lead the world towards a better future. Oh-seok Hyun, Ph. D. Deputy Prime Minister (Minister of Strategy and Finance) 12 13

9 Message from the Chairman and President As the international community grows more conscious of the limitations of 'traditional' aid driven by humanitarian goals, active debates are taking place on how to conceive new aid models that can help eradicate poverty by promoting the self-reliant and sustainable development of recipient countries. Despite daunting fiscal challenges, EDCF continuously expanded it volume of development aid in 2013 in order to address the rapidly increasing development needs developing countries. Furthermore, EDCF diversified development resources and delivery mechanisms, devised strategies at regional and national levels, and strengthened inter-agency coordination on ODA in order to enhance development effectiveness. EDCF, in accordance with the Korean government's ODA expansion target, made loan commitments totaling KRW 1.3 trillion and disbursed KRW 615 billion in During this year, EDCF loans were focused on large-scale infrastructure projects in order to enhance the economic growth potential of partner countries. The regions and sectors targeted for aid were also diversified. By region, while Asia remained the focus area, EDCF expanded aid to Africa and Central and South America. By sector, EDCF contributed to the attainment of the MDGs by increasing aid to social infrastructure sectors (e.g. public administration, water and sanitation, health) in addition to supporting economic infrastructure sectors (e.g. transport, energy, communication). But EDCF also recognizes that meeting the demand for large-scale infrastructure projects that would enable the sustained growth of developing countries requires more than simply increasing the volume of ODA. Hence, EDCF has revamped its system of aid in such a way as to expand development resources and facilitate private investment. For example, the EDCF Guarantee was introduced as a means of bolstering the investment climate of developing countries and mitigating the risk assumed by financial institutions investing in high-risk countries. EDCF also established a portfolio of development finance tools such as co-financing with MDBs and Public-Private Partnerships (PPPs) in order to meet various needs of partner countries. In addition, EDCF formulated Country Partnership Strategies for 26 priority partner countries and selected priority support sectors, reflecting the specific needs of each partner country in terms of infrastructure development. Large infrastructure projects may cause environmental degradation and resettlement of residents. Safeguards were set up in order to minimize such negative impact. EDCF consulted partner countries on such measures in detail from the very inception of projects. EDCF also established a guideline for supporting fragile states, taking into account the country's economic condition, government finances, and other factors. Last but not least, EDCF co-hosted an international evaluation seminar with OECD DAC. EDCF developed a new evaluation criteria that accurately captures the aspect of development effectiveness, in addition to the DAC's original five evaluation criteria. The new evaluation criteria is expected to better reflect the paradigm shift in development aid than the conventional criteria. Furthermore, EDCF contributed to the consolidation of a global partnership in the field of climate finance by holding a global forum on climate finance with UNDP and OECD. As the aid paradigm moves beyond aid effectiveness toward development effectiveness, developing countries are seeing increased demand for major infrastructure projects. These changes necessitate new approaches to overcome the constraints posed by the relatively limited ODA resources. Accordingly, EDCF in 2014 will seek to combine diverse financial mechanisms including PPPs with increased ODA volume to strengthen aid that reflects the priority development needs of partner countries. Through such effort, EDCF will act as a catalyst for the inclusive growth of partner countries whereby every member of society can enjoy the fruits of economic growth. As a member of the international aid community, EDCF will actively engage in discussions that shape the aid paradigm such as those relating to Post-MDGs and Global Partnership. EDCF's goal extends far beyond simply reducing poverty. Bringing to bear Korea's unique experience of transitioning from a least developed country to a donor of aid within half a century, EDCF will continue to live up to the expectations of the international aid community by promoting the sustainable development and inclusive growth of developing countries. We sincerely look forward to your continued support and encouragement. Duk-hun Lee, Ph. D. Chairman and President the Export-Import Bank of Korea 14 15

10 Message from the Goodwill Ambassador 2013 was a momentous year for me. Despite my back injury, I won my second consecutive World Championship gold medal in gymnastics. I was also granted the honor and opportunity to spread my message of hope to the entire world as an Honorary Ambassador of EDCF. I grew up in a poor family, but I was able to overcome all odds and win two consecutive World Championship gold medals because I never gave up on my dream. Having a dream is something everybody is entitled to. It enriches your life and soul. However, at this very moment, too many people in the world are unable even to afford the luxury of a dream, having to live from hand to mouth every day. Life for Koreans was no different only half a century ago, but we achieved the stunning transformation from a least developed country to a donor of aid for the first time in the world, thanks to the unwavering dedication and tireless effort of our entire nation. In tandem with the rise of Korea s international status, EDCF has built a significant foundation for Korea to assist and grow together with other countries as a donor country in the international community. In other words, it has served as a stepping stone for developing countries to realize their hopes and dreams by taking off in their trajectory of economic growth in the same way I launch into my somersault with my full force and energy. EDCF will not hesitate to brighten the future of developing countries in need by tapping into Korea s unique strengths and economic development experience. As the Honorary Ambassador of EDCF, I would like to contribute in however small a way to the efforts of developing countries to emulate Korea s brilliant success story, which I am certain they are capable of achieving by harnessing the indomitable will and determination of their peoples. I am tremendously grateful for this opportunity to serve the global community on behalf of my country, and promise to do my utmost to elevate EDCF s public profile as well as to live up to the public s expectations for me as an athlete. Thank you once again. Hak-seon Yang Gymnast and 2012 London Olympic Gold Medalist Republic of Korea 16 17

11 Key Acronyms A to J ADB EDCF K to Z KOAFEC ODA Asian Development Bank Economic Development Cooperation Fund Korea-Africa Economic Cooperation Official Development Assistance ADF EU KOFIH OECD Asia Development Forum European Union Korea Foundation for International Health Organization for Economic Cooperation and Development AFD F/S KOICA PBA Agence Française de Développement Feasibility Study Korea International Cooperation Agency Program-based Approach AfDB GCF KfW PCR African Development Bank Green Climate Fund Kreditanstalt für Wiederaufbau Project Completion Report AusAID GIDF KSP PPCR Australian Agency for International Development Global Infrastructure Development Forum Knowledge Sharing Program Pilot Program for Climate Resilience CAF GP L/A PPP Corporatcion Anida de Fomentolatin Global Partnership Loan Agreement Public Private Partnership CIDA HLF-4 MDBs SOC Canadian International Development Agency The 4th High Level Forum Multilateral Development Banks Social Overhead Capital CIDC ICT MDGs WB Committee for International Development Cooperation Information Communication & Technology Millennium Development Goals World Bank CPS IDB MOU Country Partnership Strategy Inter-American Development Bank Memorandum of Understanding DAC JICA NDF Development Assistance Committee Japan International Cooperation Agency Nordic Development Fund 18 19

12 1 Policies and Status EDCF defined its basic policy direction as supporting the building of socio-economic infrastructure in developing countries, and laid the foundations for a move toward a development finance regime that enhances the self-reliance of partner countries. 22 EDCF Policies and status in EDCF Loan commitment and Disbursement 28 KSP Achievements in 2013

13 EDCF Policies and status in 2013 International Trends in Development Cooperation Recent international forums such as G20, HLF-4 and Post-MDG discussion indicate that the international aid paradigm is shifting towards stressing development effectiveness over aid effectiveness as the ultimate objective of development cooperation. In particular, the importance Main Achievements of EDCF in 2013 According to its plans to advance international development cooperation efforts, EDCF has identified and supported socio-economic infrastructure projects in developing countries in which it has a comparative advantage, made improvements to its aid system, and strengthened global of effective financing for development in helping developing countries achieve self-sustaining cooperation. By doing so, EDCF achieved both quantitative and qualitative growth in growth has been steadily emphasized in international development cooperation because relying solely on traditional ODA is not sufficient enough to raise funds for development today. This is also a relevant topic to the UN Millennium Development Goals (MDGs) and post-2015 development agenda that discuss the need to raise funding for sustainable development. Total Approvement in 2013 Increased Support for Strategic Projects 1 ODA volume growth & strategic allocation of resources It is pointed out that increasing not only traditional ODA but development-related financing itself to flow into the developing countries is important to implement effective development cooperation and that such development financing must play a key role in promoting the developing country s growth. This is more so given that donor countries are facing long-term economic recessions caused by the global financial crisis as well as limited aid resources due to fiscal deteriorations. In this context, the role of development finance will increasingly be stressed in overcoming the limits of ODA by utilizing private partnerships and various financial tools. KRW 1,279billion Total Disbursements in 2013 (Unit: KRW billion) 2013 In 2013, EDCF made commitments of KRW 1.3 trillion (USD 1.2 billion) in total for 21 new projects that are mostly large-scale infrastructure projects. Total disbursements in 2013 reached KRW 615 billion, a 6.4% increase year-on-year. These figures indicate that EDCF is in line with the government s goal to increase the ODA volume. Taking into account the potential for economic cooperation and degree of poverty, EDCF maintained its focus on Asian countries while diversifying regional support to Africa and Latin America at the same time. By completing the country partnership strategies (CPS) that unify strategies for loans and grants for 12 countries such as Laos and Mozambique in 2013, EDCF has Established the country partnership strategies for 26 priority partner + 37 countries and strengthened cooperation with them by holding policy dialogues. EDCF Policies and Directions Implementation of large-scale infrastructure projects, public-private partnerships Successfully carried out major tasks to enhance development effectiveness, meeting the rapidly increasing development demands of the developing countries Despite the global fiscal difficulties, EDCF has steadily continued to increase its ODA and successfully carried out major tasks to enhance development effectiveness. By doing so, it aims at meeting the rapidly growing development demands of the developing countries in alignment with the recent international discussions on development that stress the importance of eradicating poverty through economic growth. According to its objective of promoting the economic development of partner countries and building mutual cooperation, EDCF is dedicated to providing support for developing countries to build infrastructure to achieve sustainable growth. To be more effective in its efforts, EDCF has been diversifying development resources and support programs. In particular, it has developed support plans by region/country to enhance aid efficiency and implement tailor-made support programs. It also seeks to enhance development effectiveness based on coordinated efforts with (PPP), and EDCF Guarantee Program EDCF provides support when there is demand for development from a recipient country. The recent trends indicate that requests for large-scale infrastructure projects such as transportation and water resource development have been on the rise in line with the economic development phase of a developing country. In 2013, EDCF made loan commitments for four projects worth more than USD 100 million each: the Hung Ha Bridge Construction Project in Vietnam, 21st Century Uzbekistan-Korea Friendship Children's Hospital Project in the Uzbekistan, Modjo- Hawassa Highway Project in Ethiopia, and 500kV Taungoo-Kamanat Transmission Line Project in Myanmar. Moreover, to efficiently implement large-scale projects, EDCF has identified and launched development projects to be financed through public-private partnerships (PPP) and EDCF Guarantee Program. other Korean and international aid institutions while increasingly taking a leading role in international development cooperation. EDCF Development Finance Seminar Hung Ha Bridge Construction Project 22 23

14 3 Resumption of ODA to Myanmar In 2005, EDCF suspended its ODA to Myanmar according to the international community s sanctions against the country in the wake of a military coup. However, as the military rule has ended in Myanmar and democratic reforms have been steadily taking place, EDCF decided to resume its ODA to Myanmar in As a result, in 2013, EDCF made loan commitments for two projects in Myanmar: IT Infra-Network Expansion Project and 500kV Taungoo-Kamanat Transmission Line Project. Due to the economic sanctions and reign of the military government, Myanmar has been suffering from the lack of infrastructure such as electric power, transportation and communications. Taking into account Myanmar s development demand and potential for economic cooperation, EDCF plans to finance USD 500 million to Myanmar for five years from 2013 to Promoting joint projects with relevant agencies Along with the individual EDCF projects, EDCF has proactively engaged in seeking joint projects that combine concessional loans and grants by participating in inter-agency coordination meetings with relevant aid authorities. Furthermore, EDCF has been making efforts to use the limited ODA resources in an efficient way by enhancing coordination with other Korean and international aid agencies. For example, it supported the second Support Program to Respond to Climate Change (SP-RCC) in Vietnam by co-financing it with the WB and JICA. Likewise, EDCF plans to co-finance road development projects in Ethiopia and Cambodia with the AfDB and ADB. 3 Upgrading the EDCF evaluation process and increasing SME participation Since the OECD DAC recommended that joint evaluations by donors and partner countries be conducted, EDCF has carried out a total of eight joint evaluations with KOICA and partner countries such as Vietnam and the Philippines in order to improve transparency and objectivity of the evaluation results. EDCF also established a systematic evaluation feedback process to provide donors and partner countries with constructive advice on development policy directions. Moreover, EDCF has relaxed the small loan scheme, revised the bidding qualifications, and provided detailed project information to open doors for small and medium enterprises (SMEs) to participate in EDCF projects. 4 Country programming and diversification of sectoral support The newly established Program Team in EDCF became in charge of developing country programs in Accordingly, the Program Team has developed mid-term country strategies to support developing countries in an efficient way with limited resources. More specifically, it developed optimal mid-term rolling plans for the partner countries and set up strategic portfolios that meet EDCF policy objectives, bringing about synergy and improved coordination for projects. For example, the Program Team sent country program missions to the Philippines, Myanmar, and Colombia in 2013, whereby it preemptively identified mid-term candidate projects that meet the partner country s development priorities and help facilitate bilateral economic cooperation. Furthermore, EDCF provided support for various other sectors such as public administration, green growth and renewable energy, contributing to building a stronger foundation for the partner countries to achieve sustainable growth. In order to support the infrastructure development of a partner country in an efficient way, EDCF is working on providing custom-made financial support utilizing loans, guarantees, and quasicommercial loans to meet the partner country s demand. IMPROVED EDCF Support System 1 Overhauling the development finance mechanism There is a rising need to diversify development resources to meet the growing demands for infrastructure investment by developing countries and transfer Korea s development experiences. Hence, EDCF is working on providing custom-made financial support utilizing loans, guarantees, and quasi-commercial loans to meet the partner country s demand in an effort to efficiently support the infrastructure development of a partner country. In particular, EDCF has revamped its regulations to introduce the EDCF Guarantee Program, paving the way for identifying new projects that can utilize development finance. EDCF has also developed strategies to facilitate development finance to enhance economic cooperation with developing countries. This forum kicked off the international discussion on using climate finance to tackle climate change in full fledge Strengthened Global Collaboration 1 Global forum on climate finance hosted in Incheon The Global Forum on Using Country Systems to Manage Climate Change Finance was cohosted by EDCF, the Ministry of Strategy and Finance of Korea (MOSF), UNDP, OECD and CSO Partnership for Development Effectiveness during the Climate Finance Week, coinciding with the launch of the Green Climate Fund (GCF) headquarters in Songdo, Incheon. 150 participants representing governments, the EU, WB, international organizations and civil society took part in this forum, discussing ways to effectively manage climate finance. It is notable that this forum kicked off the international discussion on using climate finance to tackle climate change in support of the GCF s global climate efforts. 2 Partnerships with other donor institutions EDCF co-hosted the 3rd Four Parties Meeting with China, Japan and Thailand on August 26, 2013 to discuss cooperation on financing for development such as providing development finance to support development projects in the Asian region. Moreover, EDCF hosted the international seminar on evaluating development effectiveness jointly with the OECD, introducing a new evaluation criterion in addition to the DAC s five evaluation criteria for the first time by a DAC member country. EDCF also established regular consultation channels with the ODA agencies of major donor countries such as Japan (JICA), France (AFD), and Germany (KfW) to further strengthen its global networks. 500kV Transmission Network Extension Project in Taungoo-Kamanat, Myanmar Co-financing Project(Rural Road Improvement Project in Cambodia) 24 25

15 EDCF Loan commitment and Disbursement 02 Figures of new loans in 2013 (Unit : projects) (Unit: KRW billion) Countries 21 Commitments in 2013 Cumulative Total 52 Countries 311 Cumulative Total Loan Commitment IN 2013 In 2013, EDCF made commitments of KRW 1.3 trillion (USD 1.2 billion) in loans to 21 new projects in 13 countries. As of the end of 2013, cumulative EDCF commitments reached KRW 10.2 trillion (USD 9.4 billion) for 311 projects across 51 countries. Commitment by Region Asia took up the largest share in new commitments in 2013, reflecting Korea s close economic and diplomatic ties with many Asian countries. Loan commitments to Asian countries accounted for 65.1% of total new loans for the year, with two of the top three partner countries being Asian countries. By country, Vietnam remained the largest recipient for seven consecutive years with total new commitments reaching KRW 2.1 trillion. The Philippines ranked second with KRW 769 billion in new commitments, and Bangladesh third with KRW 649 billion in commitments. Reflecting EDCF efforts to increase support for African countries, Africa became the second largest region to benefit from EDCF support by taking up 31.2% of new commitments in Commitment by Sector Showing different trends from 2012, new commitments for social infrastructure projects in sectors such as water supply and sanitation (27.9%), public health (14.9%), and public administration (6.4%) accounted for 49.2% of total commitments in 2013, taking up more share than economic infrastructure projects such as transportation (24.4%), energy (12.1%), and communications (4.7%). EDCF loans, however, were not allocated to the agriculture, forestry, and fishing sectors this year since loan applications by partner countries for water supply and sewerage facility and hospital establishment projects increased from the previous year. LOAN DISBURSEMENT IN 2013 In 2013, loan disbursements totaled KRW 615 billion for 88 projects in 28 countries, recording a 6.4% increase year-on-year. Disbursements are expected to continue to increase over the years as a result of the recent surge in new commitments. Cumulative EDCF loan disbursements totaled KRW 4.4 trillion for 253 of 311 EDCF-approved projects, reaching 43.7% of total cumulative commitments. As of the end of 2013, the outstanding balance of EDCF loans totaled KRW 3.8 trillion, representing a 16.4% increase from KRW 3.3 trillion in Disbursement by Region By region, Asia & Middle East (67.3%) was the largest recipient of the year, followed by Africa (24.5%) and Latin America (5.7%). By country, Vietnam was the largest recipient with KRW 226 billion in disbursements, followed by Mozambique, Tanzania and Sri Lanka. Disbursement by Sector In 2013, the transportation sector accounted for 43.1% of total loan disbursements, followed by energy (16.3%), water supply & sanitation (13.9%), and public health (11.7%). With the timely loan disbursements, EDCF has contributed to the economic development and improved quality of life in the partner countries. Commitments Disbursements ,279 10,152 Commitments by Region (Unit : %) Disbursements by Region Europe 0.4 (Unit : %) Central and South America 3.7 Africa 31.2 EDCF Asia 65.1 Central and South America 5.7 Africa 24.5 Middle East 2.2 EDCF Asia 67.3 Commitments by Sector (Unit : %) Disbursements by Sector 43.1 (Unit : %) Water Supply, Sanitation Transportation Public Health Energy Education Public Administration Communications Environmental Protection Transportation Energy Water Supply, Sanitation Public Health Education Environmental Protection Communications Agriculture, Public Forestry, Fishing Administration 26 27

16 KSP Achievements IN KSP Budget (Unit: KRW billion) Joint Consulting in 2013 (5 IOs, 13 projects) System Consulting in 2013 (4 systems, 5 countries) KRW 4.2 billion KRW1.5 billion Korea is seen as a role model of successful socio-economic development, emerging out of the ashes of the Korean War in a short period of time. There has been a growing demand from developing countries for Korea to share its secret of economic development that resulted in the so-called "Miracle of the Han River." In response the Ministry of Strategy and Finance of Korea (MOSF) has been carrying out the Knowledge Sharing Program (KSP) since 2004 in which policy consultations, development programs and projects, and capacity building training all based on Korea's development experiences are provided to the partner countries. The Knowledge Sharing Program consists of four pillars: policy consultations, joint consulting with international organizations (IOs), system consulting, and development modularization projects. Of the four, Korea Eximbank oversees joint consulting and system consulting projects. Joint consulting, also known as multilateral KSP, applies the lessons learned from Korea's development experiences to the development cooperation projects of IOs. Through close cooperation with IOs, the Korean government aims at improving the development effectiveness of KSP and global knowledge-sharing activities. By carrying out joint consulting with IOs, KSP combines the Korean development experiences with the regional expertise and networks of IOs so as to provide customized consultations to each partner country. MOSF has signed MOUs on knowledge sharing with seven international organizations (AfDB, IDB, EBRD, ADB, WB, and CAF) in order to build closer cooperation. Since the launch of joint consulting in 2011, a total of 37 joint consulting projects have been implemented. And in 2013 alone, 13 joint consulting projects engaging five IOs such as the ADB, IDB and WB were carried out. Launched in 2013, system consulting is provided for systemizing specific sectors in which Korea has a competitive advantage such as the macro-economy, finance, and public infrastructure. In 2013, four system consulting projects were conducted in five different countries. System consulting aims at sharing Korea's knowledge and experience in systemizing sectors with partner countries and provides comprehensive solutions on policy consultations, regulation revision, capacity building, financing plans required to establish and manage the newly improved systems. In July 2013, the KSP Dissemination Seminar co-hosted by Korea Eximbank and KDI was held to celebrate the 10th anniversary of KSP and share the main activities and achievements of KSP made in Development cooperation experts including the Director of OECD Development Centre and the Operations Director of the World Bank Institute participated in the seminar to share their opinions on the outcomes and future prospects of KSP. KSP has been steadily growing in size in response to the increasing demand of partner countries to learn about Korea's development experiences. KSP budget managed by Korea Eximbank was KRW 5.7 billion in 2013 (KRW 4.2 billion for joint consulting projects, KRW 1.5 billion for system consulting projects), a 2.8-fold increase from KRW 2 billion in Given the growing international consensus on the importance of knowledge sharing highlighted at global events such as the Korea-WB High Level Knowledge Forum in 2012 and the Korea-OECD Knowledge Sharing Alliance in 2013, Korea Eximbank as the executing agency of KSP is expected to take on a larger role in international knowledge sharing activities KSP-IO Joint Consulting Project List (Unit: USD thousand) IO Project Title Budget ADB IDB WB Strengthening Support for the Asia-Pacific Economic Cooperation Financial Regulators Training Initiative Support for Implementing Public Bicycle Sharing System in Asia and the Pacific 300 Policies to Meet Global Economic Challenge - Asia's Perspective (Phase 2) 200 Support for Digital Land Registration System in Bangladesh 300 Design for the Integrated Operating Control Center for City Management in Montego Bay, Jamaica National Policies for Fostering Broadband-Applied Services for Inclusive Economic and Social Development in Nicaragua Smart Grid Studies in Ecuador 250 Support for Public-Private Partnership Infrastructure in Colombia 250 New Advances in Identity Management System in Chile 250 Development of an Incremental and Affordable Housing Policy Toolkit and Pilot City Case Studies AfDB Support for Developing e-government Information Portal for Africa 280 Support for Road Design Optimization in Africa 300 CAF Technical and Vocational Education and Training (TVET) in Latin America 200 Total 5 IOs, 13 Projects 3, KSP System Consulting Project List (Unit: USD thousand) System Project Title Budget e-procurement Support for e-procurement System in Honduras 200 Intellectual Property Rights National Asset Management Transportation Support for Intellectual Property Rights System in Angola and Vietnam 230 Support Building Cadastral Information Management System of Chile 200 Consulting and Feasibility Study for Establishing Railway Electronic Interlocking System for Egypt Total 4 Systems, 5 Countries KSP Dissemination Seminar KSP 2013 Colombia Workshop for Capacity Building 28 29

17 2 Activities and Achievements Although many donors are reducing their ODA commitments due to the global economic crisis in 2013 EDCF has increased its ODA volume and has made qualitative improvements in its aid system to promote development cooperation with partner countries more effectively. 32 Major Activities in New Projects Approved in Major Ex-post Evaluations in 2013

18 Discussion on development finance Major Activities in 2013 The EDCF Development Finance Seminar was held in May 2013 with the theme titled The Next Chapter of Development Cooperation: Challenges and Choices to introduce the concept of development finance to the members from KfW of Germany, AFD of France, the World Bank and Asian Development Bank. Diversification of Support System 01 Programs for Development Finance The international donor community is shifting its focus from reducing poverty to eradicating poverty through economic growth in the developing world as demonstrated in the declaration of G20 Seoul Development Consensus and the Fourth High Level Forum on Aid Effectiveness (HLF-4). Securing funding sources for infrastructure investment is gaining increasing attention in the discussion on development cooperation since building economic and social infrastructure is essential to achieving visible economic development. Government funding in the form of ODA, however, is no longer sufficient to meet the development needs of the recipient countries. The share of ODA in total money inflows into developing countries has recently decreased to 10% from 70% in the 1960s. Responding to the changing needs, EDCF has been actively reviewing ways to transform itself into a development finance provider equipped with various aid portfolios using financial instruments such as guarantees, market loans, and mixed financing while continuing to grow the volume of concessional loans at the same time. EDCF is making efforts to identify public-private partnership (PPP) projects in which both development financing and export financing can be utilized in order to promote private finance for development projects Similarly, EDCF conducted a research jointly with the KDI School of Public Policy and Management on the direction Korea s development cooperation should take after the introduction of development finance in The main purpose of this study was to analyze the best practices of development finance programs offered by advanced donor agencies and review the impact of introducing development finance. The research also aimed at developing optimal financial portfolios and financing plans. Plans for promoting development finance The Ministerial Meeting on International Economic Affairs was held in November 2013 to adopt a development finance plan to strengthen economic cooperation with developing countries. The plan mandates that Korea Eximbank entrusted with the management of EDCF become the primary agency to be in charge of managing development finance that utilizes market resources since it has the expertise in global development cooperation. According to the plan, the development finance framework will enable EDCF to provide tailormade financing support that meets the different financing needs of developing countries to conduct development projects. In Addition, the financing portfolios will consist of various financial instruments including EDCF loans and guarantees. The development finance mechanism will enable providing effective financing support for building new growth engines in the developing countries without heavily relying on government funding. As follow-up measures to the plan, EDCF is planning to revise relevant regulations and policies to implement development finance in After that, it will identify target projects among the existing EDCF candidate projects that can be provided EDCF guarantees and development financing. Plans for PPP projects EDCF is making efforts to identify public-private partnership (PPP) projects in which both development financing and export financing can be utilized to promote private finance for development projects. It plans to provide financing packages that consist of a mix of EDCF loans, EDCF guarantees, development financing, and export financing to profitable large-scale projects in such sectors as power generation, transportation, and communications. As part of the effort to promote PPP, EDCF has set up a working-level consultative group called the Consultative Group on SOC Projects in the Philippines and Vietnam in Follow-up sessions with Indonesia were held for discussing with relevant authorities on how to empower the Consultative Group to identify future PPP projects. The consultative body where EDCF is a member aims to become a permanent channel for information sharing with each partner country and provide effective financial aid packages to promising PPP projects. EDCF Development Finance Seminar 32 33

19 The program is expected to help meet the growing demands from the developing countries as a result of improving the investment environment of the recipient countries by supplementing ODA with private financing. EDCF Guarantee Program and Establishment of Procedures EDCF introduced the so-called EDCF Guarantee Program in 2012 and subsequently established specific procedures to launch it in 2013 to complement the shortfall in resources for the development projects of the partner countries and to effectively support public-private partnership (PPP) projects. EDCF is being widely recognized for having a comparative advantage in coping with and mitigating the country risk of a developing country with over 25 years of experience in providing soft loans and technical advisory services to the partner countries. The EDCF Guarantee Program aims at providing guarantees against the political risk of a partner country to ensure that the development projects that contribute to the economic and social development of a developing country are successfully completed. The program is expected to bet- Strengthening Global Partnership 02 EDCF has organized various international events in 2013 to seek effective development aid measures with donor agencies and international organizations: the 4th Asian Development Forum was held in Indonesia in March; the 17 th EDCF Workshop in June; the 4 th CEXIM-EDCF- JICA-NEDA Seminar and 6 th EDCF-JICA Bilateral Meeting in August; and the Global Forum on Climate Finance in December. Global Forum for Climate Finance EDCF played a key role at the Global Partnership for Climate Finance and Effective Development Cooperation established in 2011 to discuss ways to effectively use climate finance resources. The Global Partnership for Climate Finance and Effective Development Cooperation is a multi-party global alliance in which EDCF has been actively involved since the 2011 Busan HLF-4. ter meet the growing demands of the developing countries by supplementing ODA with private financing which will improve the investment environment of the recipient countries. In particular, EDCF received wide recognition for playing a leading role in the international discussion on climate finance by hosting the Global Forum for Climate Finance in December With the launch of the EDCF Guarantee Program, EDCF plans to take a big step forward in ad- Coinciding with the opening of the Green Climate Fund (GCF) Secretariat, the Forum was held to vancing international development cooperation. It will also look into more ways of utilizing a wide discuss measures to effectively use climate finance based on country systems (see diagram below) range of financial instruments to provide practical assistance for partner countries to achieve economic growth. EDCF received wide recognition for playing a leading role in the international discussion on climate finance by hosting the Global Forum for Climate Finance and concluded by reaching an agreement to proceed with a side-event to deliver the Forum results to the Global Partnership Ministerial Meeting to be held in Mexico in April More than 150 participants including the executive director of GCF, government officials from 27 countries, members of IOs and aid agencies, and NGOs attended the Forum, representing high global attention to addressing climate change. EDCF plans to further engage in the global alliance on climate change issues by regularly participating in the Partnership meetings. Basic Structure of EDCF Guarantee Program Country System for Climate Finance* EDCF Host Country Planning External financing integrated in plans and budget requests Budget External financing reported in budget documentation Parliament External financing included in apporapriations approved by Parliament Treasury External financing disbursed into main Treasury account and menaged through government sysetm I/A Reporting Externally financing included in ex-post reports Auditing Audit by SAI on external financing Accounting Externally financing recorded and accounted for in government accounting system Procurement Externally-financed procurement follows government standards and procedures * An integrated system of a country for managing climate finance from planning and financing to disbursement and monitoring G/A I /A : Indemnity Agreement G/A : Guarantee Agreement Project Approval Financial Institution Loan Project Executing Agency Global Forum for Climate Finance 34 35

20 EDCF-OECD International ODA Evaluation Seminar EDCF Workshop for Government Officials and International Cooperation Activities EDCF and the OECD Development Assistance Committee (DAC) co-hosted an international seminar on ODA evaluation on November 7, Over 100 government officials, scholars, and experts from major aid agencies including the KfW, Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) participated in the seminar. By proposing to make improvements to the globally accepted DAC evaluation criteria for the first time by a donor, EDCF hoped to represent the Asian voice in development cooperation discussions In order to reflect the recent shift in the international aid paradigm, EDCF proposed that significance be added as a new evaluation criterion to the OECD DAC s existing five evaluation criteria of relevance, efficiency, effectiveness, impact and sustainability. The proposed new criterion includes indicators required for ensuring the sustainable growth of a developing country such as private sector cooperation, job creation, and trade & investment environment. EDCF explained that significance measures whether the size and type of aid had a significant impact on the development of a recipient country, more accurately assessing development effectiveness. They had the opportunity to experience firsthand the economic success of Korea, enhance their understanding of the EDCF operation procedures, network with EDCF staff. EDCF participated in other various international cooperation activities as well. At the EDCF Workshop, which celebrated its 17 th year anniversary in 2013, 16 government officials in charge of development assistance from 14 countries including Mozambique, Nicaragua, Myanmar, and Laos participated. They had the opportunity to experience firsthand the economic success of Korea, enhance their understanding of the EDCF operation procedures, network with EDCF staff and learn about the Korean culture. The EDCF-JICA Bilateral Meeting marking its 6 th year anniversary in 2013 was held in Seoul. The two institutions discussed Post-2015 development agenda, innovative development financing, and cooperation on development projects between Korean and Japanese private companies, among other things. The 3 rd KEXIM-EDCF-JICA-NEDA Seminar was held in Seoul under the theme Ways for Financial Cooperation among Four Parties on the Development Projects in Asia where the four institutions shared best practices and cases of practical cooperation among aid agencies. In this context, they discussed several options for pursuing financial cooperation on the Dawei Special Economic Zone Project, a mega-sized infrastructure project that will connect through Myanmar, China, Thailand, Vietnam, and Laos. The OECD DAC emphasized that developing countries as well as donor countries need to strengthen ownership by building their capacity for adequately evaluating ODA. During the seminar, the Ministry of Planning and Investment of Vietnam (MPI) representing the recipient countries presented a case study on joint evaluation conducted by Vietnam and JICA. Evaluation experts from the ADB, JICA and KfW also took part in the discussions by making presentations about the latest case studies and explaining the evaluation criteria of their institutions. By proposing to make improvements to the globally accepted DAC evaluation criteria for the first time by a donor, EDCF hoped to represent the Asian voice in development cooperation discussions. Going forward, EDCF will continue to share its knowledge on development evaluation and firmly establish networks with international donors as well as partner countries by hosting more joint seminars with international aid institutions. the 4 th Asian Development Forum Marking its 4 th anniversary in 2013, the Asian Development Forum (ADF) was held under the theme Asian Input toward Post-2015 Development Agenda and the Post-Busan Global Partnership from March 13 to 14 in Jakarta, Indonesia. ADF was first initiated by Korea in 2010 with the purpose of offering Asian countries perspectives on development aid to the international donor community. EDCF stressed the importance of public-private partnerships (PPP) in achieving the Post-2015 development goals and made a presentation on EDCF measures to strategically facilitate PPPs. In particular, EDCF put a special emphasis on the importance of ODA as a catalyst in attracting private financing flows into the developing countries to build most needed infrastructure. EDCF also laid out its plans to provide comprehensive development finance by diversifying financing instruments such as increasing PPPs and introducing the guarantee program. There are two main achievements of the 4 th ADF: linking the regional development forum with global development agenda by delivering the Forum results to the Global Partnership High Level Panel, and the launch of Friends of ADF consisting of previous host countries of the Forum, which is an advisory group to assist the next host country to ensure the stability of forum operation. Going forward, ADF will seek to become an effective venue for global development discussions in cooperation with the Global Partnership and G20 while establishing itself as the representative regional development cooperation forum in Asia. EDCF-OECD International ODA Evaluation Seminar The 4 th Asian Development Forum (ADF) 36 37

21 Reinforcing Inter-Agency Coordination 03 Reinforcing Inter-Agency Coordination on ODA Coordination between EDCF and Relevant Authorities EDCF has actively participated in the identification of year n-2 projects at various inter-ministerial coordination meetings on ODA hosted by the CIDC in an effort to improve whole-ofgovernment approaches to ODA projects. Moreover, EDCF has been sharing project information through its integrated monitoring system that contains information on the entire project cycles of Korean agencies, promoting inter-agency coordination. the 2 nd GOK-ADB High-Level Consultation has resulted in enhanced mutual understanding and increased cooperation channels between Korea and ADB The 2 nd GOK-ADB High-Level Consultation To strengthen mutual cooperation and improve the strategic partnership between the government of Korea (GOK) and Asia Development Bank (ADB), the 2nd GOK-ADB High-Level Consultation was held at the head office of the Export-Import Bank of Korea on Oct 29, Since the first meeting in Manila, the Philippines, the GOK-ADB High-Level Consultation, to be held in rotation, was held in Korea in In the agenda discussed were ADB-related activities such as Strategy 2020 mid-term review, improvement of development effectiveness, overview of priority development sectors and Future Carbon Fund. Korea s agenda were also discussed such as the Knowledge Sharing Program (KSP) and increasing use of trust funds and co-financing. As of December 2013, 32 EDCF- approved projects have received USD 1.3 billion in coordinated aid as a result of regular project information sharing and working-level dialogues among relevant authorities. Going forward, EDCF plans to further cement its networks with relevant authorities by setting up a permanent council to identify joint projects, establish coordinated project models, and develop best practices. GOK-ADB High Level Consultation To promote EDCF-ADB co-financing projects, a key interest of the two parties, Korea and the ADB have reached a consensus on the need to identify co-financing projects, improve the support process, and hold annual EDCF-ADB policy dialogues. They have also agreed to hold the first policy dialogue in the near future. In a separate session after the high-level consultation, project managers from the EDCF and ADB discussed ways to cooperate more specifically on regional and sectoral projects. By exchanging detailed information on each other s interested sectors and projects, the session became a venue to further strengthen working-level partnership between EDCF and the ADB. Cumulative Coordinated Aid (32 Projects) Coordinated Aid in 2013 USD1,300million USD 267million EDCF-KOICA Council Marking its 4th anniversary in 2013, the Asian Development Forum (ADF) was held under the theme Asian Input toward Post-2015 Development Agenda and the Post-Busan Global Partnership from March 13 to 14 in Jakarta, Indonesia. ADF was first initiated by Korea in 2010 with the purpose of offering Asian countries perspectives on development aid to the international donor community. EDCF stressed the importance of public-private partnerships (PPP) in achieving the Post-2015 development goals and made a presentation on EDCF measures to strategically facilitate PPPs. In particular, EDCF put a special emphasis on the importance of ODA as a catalyst in attracting private financing flows into the developing countries to build most needed infrastructure. EDCF also laid out its plans to provide comprehensive development finance by diversifying financing instruments such as increasing PPPs and introducing the guarantee program. Holding the 2nd GOK-ADB High-Level Consultation has resulted in enhanced mutual understanding and increased cooperation channels between Korea and the ADB. Building upon the success of the Consultation, we expect to see more joint projects being created and effectiveness of Korea s ODA further enhanced. There are two main achievements of the 4th ADF: linking the regional development forum with global development agenda by delivering the Forum results to the Global Partnership High Level Panel, and the launch of Friends of ADF consisting of previous host countries of the Forum, which is an advisory group to assist the next host country to ensure the stability of forum operation. Going forward, ADF will seek to become an effective venue for global development discussions in cooperation with the Global Partnership and G20 while establishing itself as the representative regional development cooperation forum in Asia. Current Status and Challenges of ODA Monitoring System Management The ODA monitoring system was established to improve the efficiency in using the limited ODA resources and advance Korea's ODA by strengthening ties with other ODA agencies, avoiding project overlaps, and improving feedback based on the ODA project database. In 2013, EDCF placed an emphasis on improving the ODA monitoring system based on the trial results of the previous year. More specifically, at the 16th International Development Cooperation Committee held in August 2013, members evaluated the result of the testing of ODA monitoring system and set forth the direction for improving the system. Accordingly, EDCF has carried out system improvements by setting up user-friendly inquiry screens and budget information input windows. In particular, the Office for Government Policy Coordination introduced a preliminary review scheme in the second half of 2013 to be conducted two years prior to a project initiation to avoid project duplications and develop ways to link up projects. Hence, EDCF set up the preliminary project input window in the monitoring system. As a result, the ODA monitoring system is enabled to conduct monitoring on the entire stages of ODA project information from candidate projects to completed ones. The improved system is expected to better identify joint ODA projects and prevent project duplications, thereby significantly contributing to enhancing inter-agency coordination on aid. Conclusion of MOU between EDCF and KOICA 38 39

22 Establishment of Country support Strategies 04 EDCF set up a country program team in 2013 to develop and monitor the country partnership strategies, develop mid-term resource allocation plans, and roll pipelines for partner countries by sending country program missions. Development of the Country Partnership Strategies(CPS) Development of Country Partnership Strategies In October 2010, the Committee for International Development Co-operation (CIDC) set out the regional aid policy that unifies strategies for grants and concessional loans in order to establish an advanced international aid framework. In this context, the regional aid policy aims at fully reflecting Korea s comparative advantage and the development plans of the partner country in the development projects. The CIDC confirmed to focus its support on 26 priority partner countries for which over 70% of bilateral aid will be allocated. As a result, Korea has been developing the country partnership strategies (CPS) for priority partner countries since In 2013, the CIDC approved the country partnership strategies for 12 countries, resulting in the completion of country partnership strategies for all 26 priority partner countries. CPS improved the aid effectiveness through enhanced inter-agency coordination, improved role distribution among Korean aid agencies and closer cooperation with other donor countries. Country Programming As the ODA volume has been steadily increasing, there is a rising need to enhance development effectiveness by stepping away from stand-alone projects and moving towards implementing strategic resource allocation by region/country and by developing rolling pipelines. To achieve this, EDCF set up a country program team in 2013 to develop and monitor the country partnership strategies. This has helped to effectively establish strategic portfolios and meet the various policy objectives such as better alignments between mid-term budgets and resource allocations by country, increased joint ODA projects, improved untied projects, and more SME wparticipation. From the partner countries perspectives, they are enabled to enhance development effectiveness by moving away from stand-alone projects and taking a program-based approach in which multi-year rolling pipelines are developed in alignment with their national development strategies and sectoral plans. Moreover, an environment has been created where various aid tools can be comprehensively utilized to maximize the impact of development projects by linking the Knowledge Sharing Programs (KPS) with technical assistance (T/A) projects. In 2013, EDCF conducted country program missions and developed mid-term operation plans for the Philippines, Myanmar and Colombia. Follow-up measures are now being taken for individual projects and the rolling pipelines developed. EDCF PR Activities 05 Broadening EDCF s PR efforts by hosting EDCF camp, international development competition and so on. Reaching out to People As Korea s principal agency in charge of official development assistance (ODA) loans, the Economic Development Cooperation Fund (EDCF) has initiated a variety of PR activities to draw public support for the increasing ODA commitments of the Korean government and to raise the awareness of EDCF activities marked a pivotal year for expanding EDCF s PR efforts and enriching existing PR programs such as the EDCF Camp for University Students (targeting graduates and undergraduates), EDCF Campus Talks and the EDCF International Development Competition while introducing new programs such as the EDCF Supporters and EDCF Social Network Service. EDCF Camp for University Students The biannual EDCF Camp for University Students launched in 2010 has, over the years, earned a reputation as a prime networking opportunity for young people aspiring to work in the field of development cooperation. Held in February and August, the Camp featured riveting lectures and lively debates on the role of EDCF, development case studies, and many other topics, offering students an insider s view of the ODA world and an opportunity to further deepen their knowledge. EDCF International Development Competition Since its launch in 2012, the EDCF International Development Competition is being held annually to encourage young people to come up with creative ideas to shape the future of Korean ODA. The winning team (named LTE) not only won a cash prize but also a tour of the EDCF project site in Sri Lanka, matching their presentation subject Cooperation Model through Public-Private Partnership in Information Technology between Korea and Developing Countries. A meeting with Korean staff and local government officials working on the project was arranged for the team members, offering them a first-hand experience on observing the development effectiveness of EDCF projects. Supporting project identification & preparative T/A Development Project Policy Institution Upstream Concept Clear Downstream F/S EPC Operation Knowledge Sharing Program(KSP), EDCF s Investment Related Technical Cooperation(eg. F/S), etc. Utilizing networks of the government of the developing country(soc council) Packaged Financing EDCF Loan Investment Credit Guarantee MDB Co-financing EDCF Camp for University Students, EDCF Campus Talk, EDCF International Development Competition (clockwise from the top left) 40 41

23 EDCF Campus Talk EDCF visited two campuses in 2013 to hold Campus Talks featuring a primer on ODA and EDCF and discussions on many development aid-related issues. The Campus Talks were highly popular among university students for the lively contributions and debates from the floor they generated, unlike typical university classes where one-way flow of information tends to be the norm. Supporting SMEs Provision of Training for SMEs to Enter Global Procurement Markets For Korean small and medium enterprises (SMEs) facing hardships due to the prolonged recession in the domestic construction sector, global procurement markets (consulting, construction, and equipment sectors) are increasingly being recognized as the blue ocean to create sustainable, new business opportunities. Although interested in participating in overseas development projects funded by EDCF or international organizations, many SMEs face substantial hurdles at the initial project bidding stage due to their lack of market information and inexperience in bidding, compared with large companies armed with a wealth of experience and networks. Memoire of Global Internship 'Do Dream' Global EDCF Internship Program Since 2010, EDCF has been offering the Global EDCF Internship Program to aspiring young ODA professionals, providing them hands-on experiences at EDCF project sites. Interns are dispatched to EDCF Representative Offices in partner countries such as Vietnam and Indonesia, where they can accumulate a wide range of experiences by preparing meetings with various international organizations and supporting field work for EDCF projects. Based on those experiences, the memoire of global internship Do Dream was able to be published. This program is expected to yield significant benefits for training global ODA professionals who will go on to represent Korea in the international development community as well as offer young people an opportunity to build careers abroad in development-related fields. 06 EDCF Supporters EDCF Supporters was launched in June 2013 to enhance the general public s understanding of EDCF and raise the awareness of the need for ODA. EDCF Supporters consisted of undergraduates and graduates who are interested in international development cooperation and ODA. Their role is to promote EDCF activities from the perspectives of the public by conducting various activities such as posting articles on the EDCF blog, joining volunteer activities, and working as volunteer guides at EDCF events. EDCF has been making efforts to support SMEs with high growth potential to enter the global procurement markets Against this backdrop, SMEs have a growing interest in EDCF projects, realizing that participating in them will be the shortcut to entering the global procurement markets. In other words, experience in EDCF projects enables SMEs to be eligible for the projects launched by more major international organizations. EDCF has been making efforts to help SMEs with high growth potential to participate in EDCF projects as a stepping stone to enter the global procurement markets. As part of the efforts, EDCF hosted two case-oriented, hands-on training programs for 120 SMEs in May and November In the SME training sessions, EDCF staff explained how to conduct feasibility studies, prepare bidding documents and hire consultants. In addition, former/current ADB officials gave lectures on the basics of international project participation such as ADB bidding procedures and proposal preparations. About 300 people from over 100 companies working in sectors such as construction, medical equipment, and IT participated in these intensive 20-hour training sessions. According to the trainee satisfaction survey, most participants responded that they were very satisfied with these classes and would want to take similar courses again. EDCF SNS (Social Network Service) In March 2013, EDCF launched a facebook page, online café and blog site to proactively respond to the growing requests from a variety of stakeholders for more information on EDCF and ODA. As an interactive communications channel, EDCF SNS provides information on EDCF and ODA in an easy-to-understand way for the general public. EDCF SNS is expected to become one of the representative communications channels of EDCF by creating a virtuous cycle in the social media activities: building contents appropriate for the online media (online café) accumulating publications and other specialized materials (blog) visualizing information in a way that is intelligible for the general public (facebook) providing event information and promoting new publications. Korea Eximbank plans to provide practical and informative training for SMEs every year to consistently assist them in getting a foothold in the global procurement markets. Global EDCF Internship Program, EDCF Supporters, EDCF SNS (from the left) Provision of Training for SMEs to enter Global Procurement Markets 42 43

24 New Projects Approved in Aid Agencies Involved EDCF USD 41million Rural Road Improvement Project Phase II (RRIP II) In Cambodia, road transport comprises over 90% of transportation infrastructure for passengers and goods. Yet, most rural roads taking up 87% of total length of all roads are unpaved (pavement ratio of 2%). In particular, rural roads that are remote from major cities and main road networks are in extremely poor conditions. Co-financing Project Construction of Express Road from Mojo to Hawassa, Ethiopia Ethiopia, the only African country that participated in the Korean War to aid South Korea, depends 95% of product delivery and passenger transportation on roads since it is an inland coun- ADB AusAid USD50million USD10million Unpaved rural roads in Cambodia are causing severe damages to the lives of local residents as they are frequently flooded during the rainy season and generate excessive amount of dust during the dry season. They are also impeding the balanced national growth in Cambodia. To address this situation, the Cambodian government has implemented a phased-in rural road development project. As a result, the Rural Road Improvement Project Phase I has been initiated, co-financed by the EDCF (USD 21 million, approved in 2011) and the Asia Development Bank (ADB) and is scheduled to be completed by June try. Under these circumstances, the exiting main road used as the major logistics route for the county connecting Ethiopia s capital Addis Ababa and the Mumbasa Port in Kenya has reached its limitations in accommodating the increasing traffic volume as the economy grows. Hence, the construction of a four lane highway in this project surfaced as a top priority to address by the government of Ethiopia. NDF PPCR USD5million RRIP II constitutes the second phase of the rural road improvement project. It involves paving 22 rural roads (total length of 311km) located in three northwestern provinces of Pursat, Battambang and Banteay Meanchey and improving bridges and drainage facilities scattered throughout the project area. Improvement of rural roads, which has been largely neglected from development, is expected to promote local economic growth, increase employment and achieve Adjusting its initial plan to construct the entire sections from Mojo to Hawassa (total extension USD16million a balanced national growth. Above all, the improvement of rural road network will greatly en- 210km), the Ethiopian government made the final decision to implement the phased-in construc- hance the quality of life for local residents as it will enhance their accessibility to socio-economic tion plan due to funding shortages and urgency of the road construction. To construct phase 1 infrastructure such as schools, hospitals and markets. from Meki to Ziway section, the Ethiopian government requested the AfDB to provide financing for the project. The AfDB then requested EDCF to be its co-financing partner for Ethiopia s project. Since the Cambodian government is placing a high priority on improving the road networks as one of its main development initiatives, the successful implementation of RRIP II is expected to 4 Aid Agencies Involved EDCF USD 100million As a result, the governments of Korea and Ethiopia held the policy dialogue in July 2013 where the two countries reached an agreement on co-financing amounting to USD 100 million, the largest scale ever for an EDCF project in Africa. To maximize the effectiveness of the Ethiopian project, EDCF decided that it should align its sched- pay the way for Korean construction companies to enter into the Cambodian market in the future. At the same time, the project is expected to result in enhanced cooperation between EDCF and the ADB, raising international recognition of EDCF s growing role in international development cooperation. AfDB USD129million ule with that of the AfDB whose project was already well in progress and completed the appraisal and approval processes in just four months. This became a turning-point in revitalizing EDCF s cooperation with the AfDB on co-financing, which had been shunned since Thanks to the with collaboration of WB, Export and Import Bank of China. prompt decision by the Korean government, Ethiopia was able to make further co-financing agreements with the World Bank and Export-Import Bank of China for its phase 2 construction. Kiff-off Meeting and Construction of Express Road From Mojo to Hawassa in Ethiopia Rural Road Improvement Projects in Cambodia 44 45

25 Linkage between ODA loans with Grants 02 the 21 st Century Uzbekistan-Korea Friendship Children s Hospital Project The Republic of Uzbekistan, located in Central Asia, is the center of transportation as well as the biggest potential market in the region with a population of 29 million and abundant natural resources. However, child health care is in severely poor condition with the infant mortality rate approximately 10 times higher than that of the OECD average. To overhaul its child health care system, the Uzbekistan government has put top priority on establishing a world-class children s hospital. To this end, it requested the Korea government to provide EDCF loans for the project in April The estimated total cost of this project is USD 130 million, of which USD 102 million(78% of the estimated cost) will be covered by the EDCF loan. The remainder of the cost is expected to be covered by Uzbekistan with its own budget. Target Water Supply Penetration Rate in Kurunegala (Unit: %) Deduru Oya Water Supply Project Sri Lanka is an island country in the Indian Ocean south of India, where natural resources are insufficient and trade dependence is high. Yet, thanks to the upswing in tourism and increased government investments, Sri Lanka has been recording an annual growth rate of over 6%. In line with its growth, demand for socio-economic infrastructure development is rapidly increasing in an effort to rebuild the economy. The Sri Lankan government developed the National Development Plans (Mahinda Chintana, Vision for the Future) in mid-2010 and has been increasing water supply investments with the aim of reaching 60% water supply penetration rate by But as of today, there remain wide regional disparities in terms of water supply. The project aims at establishing a world-class children s hospital, called the 21st Century Uzbekistan- Korea Friendship Children s Hospital, that will be a sevens story building with 275 beds in Tashkent, the capital of Uzbekistan. The project will provide consulting services such as medical planning, procurement support, and project supervision according to the project implementation stages. After the completion of the hospital construction, medical personnel such as doctors, nurses and medical technicians will be invited to Korea tp recieve education and training for the effecient operation of the hospital. The water supply penetration rate in Kurunegala where the EDCF project is taking place reaches only 19.2%, displaying one of the lowest rates in Sri Lanka. As a result of insufficient water supply, a large number of patients with waterborne diseases including chronic kidney failures have been generated. This project targeted 100,000 people to benefit from water supply in We expect to benefit an additional 49,000 people by 2017, and 90,000 more people by 2032, achieving 58% in water supply penetration rate. The coordinated aid among the three agencies; EDCF, KOICA, and KOFIH, is being carried out for the first time in the history of ODA for the health sector, and its efforts are expected to increase the effectiveness and sustainability of the project. To further enhance the sustainability and efficiency of this project, EDCF is seeking to provide joint projects linking EDCF loans with grant programs of the Ministry of Health and Ministry of Foreign Affairs. Once the aid agencies decide to participate, the Korea Foundation for International Healthcare (KOFIH, ODA agency of the Ministry of Health) is planning to dispatch a project advisor to Uzbekistan and invite medical personnel to Korea for training. In addition, the Korea International Cooperation Agency (KOICA, ODA agency of the Ministry of Foreign Affairs) is planning to initiate a grant program for dispatching its hospital operation and management experts to Uzbekistan to provide the medical personnel with in-depth training and education. Coordinated aid by the three agencies is being provided for the health sector in the history of ODA. These joint efforts are expected to greatly enhance the effectiveness and sustainability of the project. This project will improve the quality of life of local residents by providing safe potable water, improving sanitation and living conditions This project aims at providing comprehensive water supply facilities including one water intake facility (16,500m³/day), one filtration plant (15,000m³/day), and three water supply reservoirs. Furthermore, by providing trial runs and control management prior to the completion of the construction, successful maintenance of the facilities will be provided. The Sri Lankan government anticipates that this project will improve the quality of life of the local residents by providing safe potable water, improving sanitation and living conditions, and establishing the foundation for sustainable local economic growth. Water supply and sewerage projects are one of the representative environmental infrastructure projects that have direct impacts on sanitation and living conditions of local residents. The successful completion of the Deduru Oya Water Supply Project is expected to not only narrow the regional disparities in water supply but effectively transfer Korea s high quality water supply plans, construction and operation expertise to Sri Lanka. The establishment of the children s hospital is expected to substantially contribute to the improvement of the children s medical services in Uzbekistan based on highly advanced medical systems and up-to-date medical equipment. Furthermore, it will decrease the number of patients visiting overseas hospitals and decline the child mortality rates, thereby enabling the nation to achieve the UN Millennium Development Goals. Field Visit for Uzbekistan-Korea Friendship Children's Hospital Project MOD Meeting, Interviewing Habitat, Wrap-up Meeting (clockwise from top left) 46 47

26 Resumed EDCF Aid to Myanmar 03 Since the establishment of diplomatic ties in 1975, Korea and Myanmar have been strengthening cooperation in areas such as trade and foreign investment. Myanmar also received EDCF support for six projects totaling USD 84.7 million from 1992 to However, Korea s aid to Myanmar was put on hold for some time in accordance with the international sanctions imposed on Myanmar from 2005 until recently. In November 2011, Korea announced to resume EDCF support to Myanmar in response to the launch of a democratic government in the country and subsequently mitigating international sanctions against it. At the summit meeting in May 2012, Korea made a commitment to increase both concessional loans and grants to Myanmar. As a result, Korea has begun to actively engage in providing aid to Myanmar by identifying new projects at the Korea-Myanmar Economic Cooperation Council (June 2013) and the ODA Policy Council (July 2013). Korea is also making efforts to establish the EDCF Framework Arrangement between the two countries that stipulate the provision of USD 500 million in EDCF loans over the next five years to meet the growing development demand by Myanmar, signaling to take bilateral relations to new hights. as this is the second project after resuming EDCF support to Myanmar, the project is expected to pave the way for facilitating further economic cooperation between the two countries. IT Infra-Network Expansion Project While 30% of the Myanmar population live in and around cities, most cities in Myanmar are lacking proper levels of information and communications technology (ICT) infrastructure. As of 2012, fixed line and mobile phone penetration reached only 5.27%, while the internet penetration stood at a meager 0.6%. Realizing that the development of ICT infrastructure is a key driving force behind economic development, the Myanmar government has given top priority to building the ICT infrastructure across the nation. Based on abundant ICT experiences, Korea has provided various kinds of technical assistance to Myanmar such as establishing the ICT master plan, dispatching ICT specialists, and offering policy advices on the development of information security policies. Highly appreciating Korea s economic development utilizing ICT, the Myanmar government looks forward to building closer cooperation with Korea in the ICT sector. For this reason, the Myanmar government has requested EDCF to extend a loan for its IT Infra-Network Expansion Project in order to establish optical networks to improve its ICT environment. 500kV Transmission Network Extension Project EDCF Support to Myanmar USD85million The 500kV Transmission Network Extension Project in Taungoo-Kamanat represents the reinitiation of Korea s support to Myanmar. This project covers Phase 2 of the three-phase national power grid extension project to build a 454km long electricity by establishing a 188km long transmission network extending from the central region to the vicinity of southern Yangon in Myanmar. Based on the concerted efforts by EDCF, the Serbian company (Phase 1) and JICA (Phase 3), the project is anticipated to greatly contribute to the improvement of electricity supply in Myanmar. The electricity penetration rate in Myanmar reaches only 26% as of Frequent power failures, part-time electricity supply, and seasonal factors result in poor power supply. In particular, the rate of electricity loss caused in the process of transmission reaches 24%, five times higher than that of Korea. The loss rate is fairly high even compared with other developing countries. To address this situation, the Myanmar government has been proactively carrying out its electricity development policy to reduce the electricity loss rate to 17.7% by This is the first ever project to increase the voltage from 230kV to 500kV, which will result in the reduction of electricity loss rate. The project will enable the abundant electricity generated in the north to be supplied to the south in a stabilized manner, greatly alleviating the chronic electricity shortage in Yangon. Furthermore, the project will improve the productivity of companies, enhance the quality of life of the residents, and lay the foundation for the economic growth of Myanmar in the longer term. The successful completion of the project will enable Korea to showcase its advanced technologies in high voltage transmission networks to the world, helping more Korean companies to join future Myanmar projects as well as enter Southeast Asian markets as a whole. GOK-Myanmar MOD The project consists of the installation of optical transmission equipment, civil works to place 2,401km optical fiber cable, and consulting services for overall project management. Specifically, the project plans to install optical fiber cables in 37 major cities after dividing Myanmar into 4 sections, north, south, east, and west to extend the existing Myanmar Post and Telecommunication (MPT) networks located in the central area. Since 2011 USD156million The project is expected to play a crucial role in achieving the Myanmar government s ICT policy goal of gaining 30 million mobile subscribers and reaching 50% phone penetration by Furthermore the project is expected to pave the way for facilitating further economic cooperation between the two countries, being the second project after resuming EDCF support to Myanmmar. 500kV Transmission Network Extension Project in Taungoo-Kamanat, Myanmar Myanmar IT Infra-Network Expansion Project 48 49

27 Diversification of Supporting Sector 04 Integrated Disaster Risk Reduction and Climate Change Adaptation in Low Lying Areas of Pampanga Bay Project There has been a rising need in the international community to implement climate change response projects, due to the frequent outbreaks of natural disasters caused by global warming. Accordingly, EDCF has been increasing its support for climate change response projects. The Philippines has been encountering frequent floods due to the sedimentation of large amounts of volcanic ash in the lowlands of nearby Pampanga, Tarlac, and Zambales regions since the eruption of Mt. Pinabuto in As a consequence, every year during the rainy season, flooding causes damages to people resulting in submerged buildings, suspended power supply, inaccessible public transportation, unavailable drinking water and outbreak of waterborne epidemics. Furthermore, schools that are located in regions prone to flooding find it hard to provide normal education as flooding prevents students from coming to school, not to mention frequently cancelled classes. Project Area 6western states Project Target 19,000 households, schools, public facilities Expected Power Supply Renewable Energy Project for Sustainable Rural Development Honduras is classified as a lower middle income country by the World Bank where the proportion of the poor, including the extremely poor, exceeds 60% of total population. Most farming households are in poverty and regional income disparities are wide. Agricultural communities, in particular, are located in the mountainous areas and distributed widely and erratically, placing limitations on supplying electric power through expanding transmission and distribution networks. At present, electric power sent from the state electricity grid is being supplied to mainly major cities such as Tegucigalpa, the capital of Honduras, and the economic hub San Pedro Sula. 1,700kW The Honduran government has developed the National Vision and Development Plan to reduce poverty and achieve balanced regional development by expanding the supply of electric power. To achieve this, it has prioritized the construction of independent solar panels in agricultural communities where transmission/distribution networks cannot be reached. To address this, the Philippine government has requested the Korean government to provide EDCF loans for the Integrated Disaster Risk Reduction and Climate Change Adaptation in Low Lying Areas of Pampanga Bay Project. After the approval was gained from the Korean government, the loan agreement stipulating the provision of USD 80 million was established in Against this backdrop, this project aims at establishing independent solar panels in the mountainous areas in six western states of Honduras. It is expected to provide a total of 1,700kW electricity to approximately 19,000 households, schools, and public facilities including health clinics in the rural communities. By providing electricity to non-developed areas where the state grid is unreachable, the project is expected to contribute to improved basic living conditions such as education and health services, reduced poverty by invigorating economic activities, and balanced regional development. EDCF plans to continue to identify and support climate change response projects whereby leading the way to assist partner countries This project aims at preventing flood in the Pampanga region by dredging rivers, building dikes, and repairing flood gates. In addition, the project will provide support for normalizing school activities even during the rainy season by rebuilding schools and playgrounds, and installing well pumps. With the successful completion of the project, it is expected that the flood-prone areas will be significantly reduced, thus, improving prevention on water born epidemics. Furthermore, this project is expected to contribute greatly to the improvement of the overall educational environment by ensuring the availability of safe drinking water and ordinary school education even during the flooding season. The project is expected to contribute to improving basic living conditions such as education and health services Furthermore, the project will contribute to reducing reckless deforestation and greenhouse gas emissions by providing sustainable energy generation to agricultural communities. With the success of the project, the Korean government s efforts in increasing ODA in the environmental sector and helping address climate change in the developing world are expected to be taken note of by the international community. EDCF plans to continue to identify and support climate change response projects whereby it leads the way in establishing a firm foundation for developing countries to prevent natural disasters and achieve sustainable economic growth. The success of this project will enable Korea to raise the global awareness of its advanced technology in solar power generation. It will also have a positive impact on establishing Korean companies presence in the solar power generation markets in Central and South America. Field Visit to Pampanga Bay Field Visit to Honduras 50 51

28 Upgrading EDCF Evaluation System 01 Major Ex-post Evaluations in 2013 Making continued progress in improving EDCF evaluation by proposing a new evaluation criterion to supplement OECD DAC five criteria and increasing joint evaluations. Joint Evaluation between EDCF and KOICA CONTINUED PROGRESS OF EDCF EVALUATION EDCF recognizes evaluation as an important tool for learning and accountability. EDCF s evaluation can be classified into project evaluations, country evaluations, sectoral evaluations, and thematic evaluations, depending on what is being evaluated. All evaluations consists of the establishment of project performance indicators, mid-term review, completion evaluation and ex-post evaluation, according to the different project stages. By evaluator, EDCF evaluation can also be divided into joint evaluations and joint evaluations. EDCF has been raising the partner country's interest and participation in its projects through conducting joint evaluations. It has also been reinforcing the objectivity and professionalism of its evaluation results by making joint evaluations with domestic aid agencies such as KOICA. In 2013, the EDCF Evaluation Team completed a total of 10 evaluations including the Philippines country evaluation and transportation sector evaluation. In particular, two impact evaluations, newly introduced in 2012, were conducted to analyze the concerned projects to know how the projects impact the partner countries. EDCF also strengthened the ownership and evaluation capacity of partner countries by conducting four joint evaluations and aimed to reinforce the objectivity of evaluation results by conducting external evaluations. In November 7, 2013, EDCF co-hosted the ODA Evaluation Seminar with the OECD DAC. Over 100 government officials, scholars, and experts from major aid agencies such as the KfW, ADB, JICA participated in the seminar. At the seminar, EDCF received high attention for proposing to introduce a new evaluation criterion to supplement the five evaluation criteria of the OECD DAC. Furthermore, EDCF has enhanced the professionalism and objectivity of its evaluation results by increasing joint evaluations. In EDCF conducted a total of two joint evaluations with KOICA on the internet information network project in Bangladesh. In 2013, EDCF conducted joint evaluations on four projects including the project to rebuild the Niyagama training center in Sri Lanka. As a result of these efforts, EDCF has enhanced coordination between EDCF and KOICA for joint projects that combine loans and grants by sharing evaluation know-how and experience, contributing to stepping up evaluation objectivity as well as evaluation capacity. EDCF has built stronger partnerships with aid agencies at domestic and international levels. It has regularly attended the OECD DAC evaluation network meetings to promote cooperation with international donor institutions. On the domestic front, EDCF has strengthened cooperation with the Ministry of Foreign Affairs (MOFA) and KOICA. Moreover, EDCF has strengthened networks with relevant aid agencies by participating in evaluation-related events such as ODA forums and workshops hosted by the Ministry of Health & Welfare and Ministry of Employment and Labor. Country Evaluation 02 Joint Evaluation between EDCF and the Philippines The Philippines Country Evaluation In 2013, EDCF conducted the county evaluation on the Philippines, which is one of the priority partner countries and the second-largest recipient of EDCF loans. The evaluation aimed at assessing EDCF's contributions to the Philippines' development and setting up the future direction of EDCF s aid strategies towards the Philippines under the Country Partnership Strategy (CPS). An external evaluation agency was hired to assess the evaluation results in an objective and independent manner. Moreover, a range of qualitative and quantitative evaluations have been conducted. In particular, a joint evaluation by EDCF and the Philippines was conducted to enhance the ownership and evaluation capacity of the recipient country, whereby the opinions of the Philippines were comprehensively reflected in the country evaluation. According to the evaluation, EDCF's aid strategies towards the Philippines were found to be highly correlated with the development policies of the country. Most of the projects EDCF supported were infrastructure projects that were in line with EDCF s support direction as well as the Medium-Term Philippines Development Plan (MTPDP) of the country, properly meeting the development needs of the Philippines. Since the framework arrangement (F/A) was signed by the governments of Korea and the Philippines, efficiency has greatly improved in the project design and implementation stages leading to shortened project cycles. On the other hand, it was found that more ex-post management is required to complement the lack of proper management capacity of the country. The projects also had a very strong socio-economic impact at the country level. Since the implementation of EDCF projects, the Millennium Development Goals (MDGs) and Human Development Index (HDI) indicate that the quality of life in the Philippines has steadily improved. At the same time, macroeconomic indicators such as employment and GDP have been on the rise. EDCF has made policy recommendations to the government of the Philippines as a result of the country evaluation. It is expected that the recommendations will contribute to the development of support strategies in the same or similar sectors in the future. Policy recommendations are as follows: First, more partner country s participation is required throughout the entire course of developing EDCF support strategies for the Philippines. Second, the role of the Manila representative office needs to increase in order to facilitate communications between EDCF and the partner country. Third, the Philippines should seek ways to improve monitoring and evaluation for result-based management of the project/sector. Fourth, the partner country should actively participate in forums such as the Philippines Development Forum (PDF) to enhance cooperation with other development donors

29 Sectoral Evaluation Evaluation OF the Transportation Sector EDCF s first sectoral evaluation was conducted in 2011 on the water supply and sewage sector. In 2012, evaluation on the ICT sector was carried out. And in 2013, EDCF conducted evaluation on the transportation sector, which was the largest recipient of ODA support by sector as of the end of Impact Evaluation Impact Evaluation of Vietnam Health Sector Projects EDCF conducted the impact evaluation of the road projects in 2012 and the health sector projects in Vietnam in 2013, after adopting the thematic evaluation for the first time in More specifically, EDCF conducted the impact evaluation to systematically understand the impact of the projects undertaken for Vietnam's health care sector in Dak Nong and Gia Lai provinces and to use the evaluation results in identifying similar possible projects. 03 EDCF has been supporting a range of projects, particularly on transportation development, to assist partner countries in achieving economic growth. This sectoral evaluation aims to identify current issues, develop future sectoral policies, improve project implementation procedures, and enhance the measures to conduct the procedures by assessing the impact of the EDCF support for developing transportation infrastructure on the partner country. This evaluation has been conducted based on DAC s five evaluation criteria of adequacy, efficiency, effectiveness, impact and sustainability to assess EDCF s aid approaches, project outcomes and contributions to the sector s development in the partner country. 04 The subjects of the evaluation were the Medical Equipment Supply to Dak Nong Provincial General Hospital Project and Medical Equipment Provision to Pleiku City General Hospital Project, which were completed in 2009 and 2010, respectively. The evaluation was conducted by an external agency to ensure independence and objectivity. Various preliminary research and on-site surveys in Vietnam were carried out in parallel. In particular, the Difference in Differences (DID) approach that compares the data of the beneficiary group and the quasi-group based on the survey results prior to and after the project was taken to analyze the changes in satisfaction levels of the hospital patients. As for evaluation targets, seven transportation projects in countries such as Nigeria and Bangladesh where ex-post evaluations are completed and four projects whose sizes were over USD 20 million and requiring ex-post evaluations (e.g. the Vietnam project) were selected. An external research institute conducted the evaluation to improve the independence and objectivity of the evaluation results. Domestic research and field surveys were carried out as methods of evalatuion. Furthermore, the top-down approach and the bottom-up approach were taken together to reflect DAC s five evaluation criteria as well as cross-cutting issues. This sectoral evaluation aims to identify current issues, develop future sectoral policies, improve project implementation procedures, and enhance the measures to conduct the procedures by assessing the impact of the EDCF support for developing transportation infrastructure. The evaluation results show that EDCF s transportation projects have been successful given that the Korean government and EDCF s support strategies were aligned with the development policies of the partner countries and that the infrastructure designs and use of consultants have been adequate. In terms of efficiency, while some projects such as the Myanmar project have seen increased project costs, most of the projects were evaluated to have been successfully implemented within the planned budgets. Some of the target projects, however, received the assessment that they needed improvements due to changes to the project scopes requested by the borrowing country and complicated bidding procedures. The evaluation results showed that both projects had positive impacts on improving hospital satisfaction and health environment (facilities, working conditions, equipment). The analysis using the DID method revealed that satisfaction levels of doctors and nurses improved in facilities, construction projects, and equipment categories patients satisfaction improved as well. According to the time-series analysis, the projects created positive ripple effects resulting in increased inpatients and outpatients and decreased mortality rates. The impact evaluation made a few recommendations for future EDCF health projects in Vietnam, which are also applicable to developing strategies for similar projects elsewhere. The recommendations are as follows: First, the overall action plans should be developed by fully reflecting the impact evaluation results. Second, the demand of the recipient country should be fully taken into account when supporting health sector projects. Third, follow-up management of the medical equipment is required by strengthening coordinated efforts among development aid institutions. Lastly, training on medical technicians to handle the newly provided equipment should be enhanced. In terms of effectiveness, a number of positive effects have been displayed by meeting the established goals. The reduction in transit time, in particular, created substantial effects. Regarding impact, the projects were successful in contributing to the industry growth, market expansion, and job creation. As for sustainability, most projects demonstrated good performances in fiscal, institutional, human resource sections. However, some paved roads in Vietnam and Cambodia were discovered to be damaged, indicating stronger follow-up measures need to be taken. National Cambodia-Korea Vocational Training School Impact evaluation of National Cambodia-Korea Vocational Training School Project EDCF conducted an impact evaluation of the vocational training sector projects to systematically and specifically understand the impact of the projects on Cambodia and to use the evaluation results to identify similar possible projects. The evaluation results showed that the project had a positive impact on improving an employer satisfaction, income and employment rates of graduates. Moreover, the project enhanced technical sustainability by improving Cambodia s maintenance capability and supported higher education and vocational training program. The impact evaluation made a few recommendations for future EDCF vocational training projects in Cambodia. First, a cooperation mechanism with agencies in charge of education program, academic-industrial cooperation, teacher training should be established. Second, all stakeholders should participate in the project planning stage by analyzing the educational system. These recommendations would be reflected in the same field of EDCF support policy making to improve effectiveness of EDCF projects. As part of its efforts to contribute to the development of future strategies in the same and similar sectors, EDCF has made recommendations for improving the transportation projects as follow. First, it is required to develop Korean-style ODA projects for transportation development. Specifically, we need to develop low cost and high-efficiency projects by taking advantage of IT technologies. Second, mid-to long-term sectoral strategies for the transportation sector need to be developed. Third, in setting the budget and project timeframe, the partner country's circumstances need to be fully taken into account. Finally, public-private partnerships (PPP) need to be increased to complement sectoral projects

30 3 Statistical and Financial Information 58 Statistical Information 66 Financial Report 72 Statistics of Korea's ODA Due to the continued downturn in the global economy, net ODA disbursements from OECD DAC members decreased by 1.1% to USD 126 billion year-on-year. By contrast, EDCF's loan disbursements over the past six years rose 2.5 times from KRW 237 billion in 2008 to 614 billion in 2013, contributing to the achievement of the government's objective of further increasing ODA.

31 Statistical Information Funding Resources 1 Sources of Fund (Year-end Cumulative Total) (Unit: KRW million) Loan and Funding Resources Loan (Unit : KRW million) Contribution from Government Borrowings from Government Operation Profit and Reserves 1,379,870 1,529,870 1,879,870 2,178,845 2,488,845 Division Total Commitments 1) 4,287,519 1,145,171 1,201,190 1,048,555 1,190,304 1,279,399 10,152, ,032 1,035, , , ,462 Loan to foreign governments 4,285,923 1,145,171 1,201,190 1,048,555 1,190,304 1,279,399 10,150, ,472 Loan for Korean investments in developing countries 1, ,596 Disbursements 2,010, , , , , ,818 4,436, ,332 95,993 78,328 37, Loan to foreign governments 2,008, , , , , ,818 4,434,709 Loan for Korean investments in developing countries 1, ,596 Contribution from Government Borrowings from Government Operation Profit and Reserves Numbers of Commitments Loan to foreign governments Loan for Korean investments in developing countries % 57.9% 67.1% 69.6% 73.5% 1) Yearly EDCF commitment amounts were converted at the 2013 year-end foreign exchange rate. 40.2% 39.2% 31.6% 24.6% 16.6% 3.9% 3.0% 5.8% 9.9% 1.3%

32 Regional Distribution 1) of Loans (as of December 31, 2013) Sector Distribution of Loans (as of December 31, 2013) (Unit : KRW million) (Unit : KRW million) Disbursements 2013 Cumulative Total Number Amount 2) Share Number Amount 2) Share Asia Middle East , % 218 6,910, % South & Central Asia 3 193, % 61 1,892, % Far East Asia 3) , % 148 4,750, % Middle East % 9 267, % Africa 6 398, % 55 2,165, % North of Sahara % 1 26, % South of Sahara 6 398, % 54 2,138, % Europe % , % Oceania % 2 15, % America 1 47, % , % North & Central America 1 47, % , % South America % 7 246, % Total 21 1,279, % ,152, % [1,200.21] 4) [9,433.63] 4) 1) Regional classification is based on DAC classification. 2) Yearly EDCF commitment amounts were converted at the 2013 year-end foreign exchange rate. 3) Includes two loans for Korean investments in developing countries, which amounted to KRW1,596 million. 4) Unit : USD million Disbursements 2013 Cumulative Total Number Amount 2) Share Number Amount 2) Share Social Infrastructure , % 138 4,323, % Education 2 102, % , % Health 3 191, % 37 1,107, % Water supply & sanitation 7 357, % 51 1,779, % Government & civil society 2 81, % , % Economic Infrastructure 6 525, % 145 5,115, % Transport & storage 3 311, % 81 3,276, % Communications 1 59, % , % Energy 2 154, % 32 1,087, % Production Sectors % , % Agriculture, forestry & fishing 1) % , % Multisector 2) 1 21, % 5 77, % Unallocated % , % Total 21 1,279, % ,152, % [1,200.21] 4) [9,433.63] 4) 1) Yearly EDCF commitment amounts were converted at the 2013 year-end foreign exchange rate. 2) Includes two loans for Korean investments in developing countries, which amounted to KRW1,596 million. 3) Includes general environmental protection 4) Unit : USD million 60 61

33 Regional Distribution 1) of Loans (as of December 31, 2013) Sector Distribution of Loans (as of December 31, 2013) (Unit : KRW million) (Unit : KRW million) Disbursements 2013 Cumulative Total Number Amount 2) Share Number Amount 2) Share Asia Middle East , % 187 3,144, % South & Central Asia , % 49 1,010, % Far East Asia 3) , % 129 2,003, % Middle East 4 13, % 9 131, % Africa , % , % North of Sahara % 1 24, % South of Sahara , % , % Europe 1 2, % , % Oceania , % America 6 34, % , % North & Central America 4 7, % , % South America 2 27, % 5 95, % Total , % 253 4,436, % 1) Regional classification is based on DAC classification. 2) Yearly EDCF commitments amounts were converted at the 2013 year-end foreign exchange rate. 3) Includes two loans for Korean investments in developing countries, which amounted to KRW 1,596 million. Disbursements 2013 Cumulative Total Number Amount 2) Share Number Amount 2) Share Social Infrastructure , % 103 1,589, % Education 10 35, % , % Health 12 71, % , % Water supply & sanitation 15 85, % , % Government & civil society % , % Economic Infrastructure , % 127 2,510, % Transport & storage , % 71 1,564, % Communications 4 21, % , % Energy , % , % Production Sectors 3 13, % , % Agriculture, forestry & fishing 1) 3 13, % , % Multisector 2) 1 21, % 4 69, % Unallocated % 9 94, % Total , % 253 4,436, % 1) Yearly EDCF commitments amounts were converted at the 2013 year-end foreign exchange rate. 2) Includes two loans for Korean investments in developing countries, which amounted to KRW 1,596 million. 3) Includes general environmental protection

34 Distribution by Country Distribution by Country (Unit : KRW million) Countries Commitments Share Disbursements Share Vietnam 2,102, % 873, % Philippines 769, % 125, % Bangladesh 648, % 348, % Indonesia 593, % 268, % Sri Lanka 589, % 390, % Cambodia 466, % 258, % Tanzania 396, % 119, % Mozambique 343, % 89, % Uzbekistan 254, % 107, % Angola 247, % 157, % Myanmar 242, % 76, % China 233, % 217, % Jordan 217, % 95, % Pakistan 216, % 62, % Ghana 194, % 78, % Ethiopia 190, % 6, % Laos 188, % 107, % Nicaragua 165, % 68, % Ecuador 135, % 55, % Bosnia-Hercegovina 115, % 97, % Honduras 115, % 33, % Cameroon 101, % 15, % Turkey 96, % 69, % Mongolia 154, % 75, % Mali 94, % 22, % Republic of South Sudan 89, % - 0.0% (Unit : KRW million) Countries Commitments Share Disbursements Share Dominica Republic 87, % 21, % Nepal 80, % 68, % Romania 80, % 80, % Senegal 80, % 67, % DR Congo 72, % - 0.0% Azerbaijan 69, % - 0.0% Bolivia 67, % 24, % Sierra Leone 58, % - 0.0% Rwanda 54, % - 0.0% Yemen 50, % 35, % Kenya 49, % 47, % Madagascar 47, % 11, % Zambia 44, % - 0.0% Croatia 44, % 44, % Colombia 42, % 15, % Poland 38, % 38, % Uganda 33, % 5, % Albania 28, % 28, % Tunisia 26, % 24, % Panama 22, % 22, % Equatorial Guinea 21, % - 0.0% Hungary 19, % 19, % Nigeria 18, % 18, % Kazakhstan 16, % 16, % Kyrgyz Republic 16, % 16, % Papua New Guinea 15, % 8, % Total 10,152, % 4,436, % 64 65

35 Financial Report Financial Statements Statements of Financial Position (December 31, 2013 and 2012) Year (in millions) Report of Independent Auditors To the Trustee of The Economic Development Corporation Fund We have audited the accompanying statement of financial position of Economic Development Corporation Fund (the Fund ) as of December 31, 2013 and the related statement of financial operations and changes in net assets for the year then ended. Management is responsible for the preparation and fair presentation of these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit. The accompanying statement of financial position of the Fund as of December 31, 2012 and the related statement of financial operations and changes in net assets for the year then ended, were audited by other auditors, whose report thereon dated February 1, 2013, expressed an unqualified opinion. We conducted our audit in accordance with auditing standards generally accepted in the Republic of Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Category (KRW) (USD) (KRW) Assets Current Assets 189, ,647 Cash and cash equivalents 83, ,229 Short-term financial instruments 5, ,000 Short-term investments 12, ,773 Accrued income 8, ,934 Short-term loans 78, ,973 Other current assets ,737 Investment Assets 3,198,639 3,031 2,913,295 Long-term loans 3,172,294 3, ,896,530 Long-term financial instruments 22, ,765 Total assets 3,388,399 3, ,130,942 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Fund as of December 31, 2013 and its financial operations and its changes in net assets for the year then ended in accordance with National Accounting Standards as adopted by Republic of Korea. Without qualifying our opinion, we draw attention to the following: The procedures and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report is for use by those knowledgeable about Korean auditing standards and their application in practice. Liabilities Current liabilities 8, ,666 Current portion of long-term borrowings 7, ,000 Other current liabilities 1, Non-current Liabilities 328, Long-term borrowings 328, ,332 Other non-current liabilities Total liabilities 337, ,025 Net assets: Base net assets 1,259,870 1, ,259,870 Seoul, Korea January 29, 2014 Reserves and surpluses 1,789,437 1, ,688,274 Adjustments of net assets 1, ,773 Total net assets 3,051,084 2, ,949,917 Total liabilities and net assets 3,388,399 3, ,130,942 This report is effective as of January 29, 2014, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any

36 Note to Financial Statements Statement of Operations (Years ended december 31, 2013 and 202) Year (in millions) Total cost Revenue Net cost Total cost Revenue Net cost Category (KRW) (USD) (KRW) (USD) (KRW) (USD) (KRW) (KRW) (USD) Net program costs The economic development cooperation program 175, (47,241) (44.1) 128, ,925 (41,726) (108,199) Administration and operating expenses - Non-distributed expesses Interest expenses 6, ,615 Losses on valuation of derivatives and foreign exchange translation 1, ,273 Losses on disposal of assets Other expenses 8, ,792 Non-distribution revenues 17, ,724 Interest income 21, (10,204) Gains on valuation of derivatives 6, (7,125) Significant Accounting Policies (a) The accompanying financial statements have been prepared in accordance with the National Accounting Standards under Article 11-1 of the National Accounting Act. (b) The U.S. Dollars amounts are converted, for convenience only, at the basic rate of KRW 1,055.30/ USD 1 as of December 31, 2013 (c) Interest income from loans and others are recognized on an accrual basis when the income amount is reasonably estimated and a high possibility of an inflow of economic benefits exists. (d) At acquisition, the Fund classifies securities into short-term investments or long-term investments. Securities are initially carried at cost, including incidental expenses, with cost being determined using the specific identification method. Short-term investments include debt securities, equity securities and other short-term investments whose maturity dates are due within one year from the financial position date or whose disposals are planned within one year from the financial position date and long-term investments include debt securities, equity securities and other long-term investments whose maturity dates are due over one year from the statement of financial position date or whose disposals are planned over one year from the financial position date. Debt securities are measured at amortized cost. Equity securities and other long-term or short-term investments are measured at an acquisition cost. But equity securities and long-term or short-term investments are recorded at a fair value when the fair value can be reliably measured. And unrealized gains or losses from securities are presented as adjustments on the statement of changes in net assets. If the recoverable amount is lower than the book value of the securities, the drop remains for a long time and there is no chance to recover, an impairment loss is recognized as loss on impairment of investments in non-distribution expenses in the statement of operations. (e) Provision for subsidized loan and guarantee is recorded at a difference between principal of the loan and present value of estimated collections. Present value of estimated collections is determined by discounting the total amounts receivable in the future using the effective interest rate (or yield on national bonds of similar conditions when the effective interest rate is not available). Gains on disposal of assets 2, (1,619) Other income 1, (7,450) 21, (26,399) Net operating costs 208, ,689 Non-exchange revenues Fiscal operating result 208, ,689 The statement of operations is the financial statement showing the result of operations including the costs of the fund s policies or programs and collections of the costs, which is divided into three sections: net program costs, net cost of operations and results of operations. The costs and expenses are presented in a plus (+) and the revenues and incomes are presented in a minus (-) in the statement of operations. Revenues are the gross inflow of economic benefit representing an increase in net asset from exchange or non-exchange transactions. Exchange transactions are considerations received in exchange for goods and services. Non-exchange transactions are considerations received that are mandated by regulation, or contributions received. Expenses are the gross outflow of economic benefit representing a decrease in net asset by providing goods or services or from nonexchange transactions. Costs directly related to programs are classified as cost of program and other costs are classified as non-distributed expenses

37 Note to Financial Statements Cash and Cash Equivalents, and Other Financial Assets Cash and cash equivalents and other financial assets as of December 31, 2013 and 2012 are as follows Loans Loans other than government as of December 31, 2013 and 2012 are as follows (in millions) (in millions) Year Annual interest rate Category (%) (KRW) (USD) (KRW) Cash and cash equivalents: MMDA , ,229 MMW Dividends ,000 MMDT - 76, , ,229 Short-term financial instruments: Cover bills 10,000 Time deposits in local currency , ,000 5, ,000 Total 88, ,229 Year Annual interest rate Category (%) (KRW) (USD) (KRW) Current Assets: Loans in Local Currency: Development project loans , ,788 Equipment loans , ,885 75, ,673 Loans in Foreign Currency Equipment loans 1.7 2, , Non-Current Assets: Loans in Local Currency Development project loans ,782,173 2, ,299,235 Short-term and Long-term Investments Short-term and long-term investments as of December 31, 2013 and 2012 are as follows Equipment loans , ,803 Two-Step loans 3.5 3, ,827 (in millions) Program loans , ,208 Year ,615,457 3, ,108,073 Acquisition cost Fair value Book value Acquisition cost Fair value Book value Loans in Foreign Currency Category (KRW) (USD) (KRW) (USD) (KRW) (USD) (KRW) (KRW) (KRW) Development project loans , ,852 Short-term investments Equity securities (*) 11, , , , , ,773 Equipment loans , ,555 Long-term investments Equity securities (**) 22, , , ,765 16,765 16,765 Total 33, , , , , , , ,407 Total 3,834,928 3, ,293,153 (*) Short-term investments in equity securities under trading and available-for-sale were valued at their market values. On December 31, 2013, to the book value. gain and loss on valuation of short-term investments amounting to 3 million (2012: 1,265 million) was added (**) Long-term investments are invested as investment in Future Carbon Fund organized by Asian Development Bank (ADB) for the purpose of supporting green growth of developing countries. The fair values of long-term investments could not be reliably estimated due to the lack of financial information of the said companies. Accordingly, these equity securities were presented at their acquisition cost

38 Statistics of Korea's ODA KOREA S ODA STATISTICS IN 2012 Reflecting the continued downturn in the global economy over the last few years, net Official Development Assistance (ODA) from the Development Assistance Committee (DAC) members reached USD billion, representing a decrease of 1.1% over that of year Despite this downturn, Korea s net ODA disbursements have increased steadily, and a total of USD 1,596 million, a 20.6% increase from 2011, has been disbursed to developing countries. Korea was ranked the 16th largest donor country among 29 DAC members, and has enhanced development assistance in accordance with Korea s economic growth and global status. Korea s ODA/GNI ratio in 2012 stood at 0.14%, an increase of 0.02% point compared to Bilateral ODA Net disbursements of bilateral ODA in 2012 amounted to USD 1,183 million. Bilateral ODA increased in terms of both loans and grants, and bilateral loans accounted for 39.6% of total bilateral ODA, amounting to USD 468 million, while bilateral grants accounted for 60.4%, amounting to USD 715 million. Loans extended by the Economic Development Cooperation Fund (EDCF), Korea s bilateral loan program, increased 13.0% and bilateral grants also increased 24.3%. According to Korea s ODA expansion plan, Korea s ODA disbursements are anticipated to continue increasing in the future. Korea s ODA by Category (Net Disbursements) (Unit: USD million) Category Bilateral ODA ,183.2 Budget Support Bilateral Core Contributions, PPF & NGOs 1) Project-type Intervention Experts and Other Technical Assistance Scholarships & Student Costs Debt Relief Administrative Costs Other In-donor Expenditure Others Multilateral ODA Multilateral ODA (in net disbursements) increased to USD 414 million in 2012, a 23.7% year-on-year increase. Contributions and subscriptions to the World Bank Group (USD 154 million) accounted for the largest portion with 25.1%, followed by those to regional development banks (USD 126 million), a 21.2% year-on-year increase, and UN agencies (USD 115 million), a 39.6% year-on-year increase. The main causes of the increased volume of transfers to multilateral development banks and UN agencies are related to the increasing ratio of contributions and subscriptions, and also due to the expansion of support for UN Peace Keeping Operations. In addition, the untied aid ratio has been increased to 55.1%, a 4% year-on-year increase. It is caused by the planned expansion of untied aid under the ODA advancement plan of the Korean government by up to 75% by the year Multilateral ODA UN Agencies IDA Other World Bank Regional Development Banks Global Environment Facility Montreal Protocol Other Agencies Total Net ODA , , ,597.5 ODA/GNI (%) ODA Commitments 1, , , , , , ) Korea s ODA volume excludes assistance to the Democratic People s Republic of Korea (North Korea)

39 Geographic Distribution of Bilateral ODA (Net Disbursements) In 2012, more than half (57.5%) of bilateral ODA was channeled to the Asian region, while 22.1% went to Africa and 6.4% went to Central and Latin America. The geographical proximity of many Asian countries and the interest expressed by many Asian countries to emulate Korea s development experience partially accounts for the concentration of ODA. Africa s share of ODA has grown almost 10 times in 10 years from 2.7% in 2002 to 22.1% in The overall increase demonstrates strengthened ties between Africa and Korea. Looking at the distribution of ODA according to income groups, 40.6% of bilateral ODA was allocated to lower-middle-income countries (LMICs), 35.2% to least-developed countries (LDCs), 8.3% to upper-middle-income countries (UMICs) and 1.0% to other lower-income countries (OLICs) respectively in (Unit: USD million) Region Amount Share (%) Amount Share (%) Africa Sub-Saharan Africa North Africa Africa Unallocated Asia Middle East Far-East Asia South & Central Asia Middle East Asia Unallocated Top 10 Recipients of Bilateral ODA in 2012 (Net Disbursements) Vietnam, which continued to be the largest recipient of Korea s ODA in 2012, received 16.9% of Korea's bilateral ODA. Vietnam was followed by Afghanistan (6.6%), Cambodia (4.7%), Sri Lanka (4.4%), Tanzania (4.3%), etc. Korea s top 10 partner countries accounted for 52.1% of Korea s bilateral ODA. (Unit: USD million) Country Grant Loan Total Share (%) Vietnam Afghanistan Cambodia Sri Lanka The Philippines Top 5 Recipients Laos Mongolia Jordan ) Afghanistan Indonesia Top 10 Recipients ) Loan figures may be negative due to repayments America Central America South America America Unallocated Oceania Europe Unallocated Total , Least-Developed Countries (LDCs) Other Low-Income Countries (OLICs) Lower-Middle-Income Countries (LMICs) Upper-Middle-Income Countries (UMICs) Unallocated Total ,

40 Sectoral Distribution of Bilateral ODA (Commitments) As for sectoral distribution, social and economic infrastructure accounted for 43.8% (USD million) and 27.9% (USD million) of bilateral ODA commitments, respectively. More specifically, transportation and storage (18.5%) received the largest amount of ODA followed by agriculture, forestry, fishing (15.3%), government and civil society (13.0%), water supply and sanitation (10.7%), health (10.7%), and education (7.3%). Reflecting the growing demand for social overhead capital, Korea s bilateral ODA continued to focus on economic and social infrastructure and services. In particular, transportation and storage were designated as top priorities among economic infrastructure sectors as assistance to the transportation sector is anticipated to boost economic development and ultimately contribute to the balanced development of affected regions. Sectoral Distribution of Bilateral ODA (Commitments) (Unit: USD million) Sector Amount Share (%) Amount Share (%) Social Infrastructure & Services Education Health Population Programs Water Supply & Sanitation Government & Civil Society Other Social Infrastructure & Services Economic Infrastructure & Services Transportation & Storage Communications Energy Banking & Financial Services Business & Other Services Production Sectors Agriculture, Forestry, Fishing Industry, Mining, Construction Trade & Tourism Multi-Sector 1) Humanitarian Aid Administrative Costs Of Donors Support to NGOs Other 2) Total 1, , ) Spending on cross-cutting issues is included. 2) Unallocated/unspecified: aid which does not fall under a specific category in this table 76 77

41 4 The Korean government entrusted Korea Eximbank with the operation and management of EDCF. Pursuant to governmental guidelines, Korea Eximbank comprehensively manages the appraisal and evaluation of development cooperation projects execution of loan agreements, and provision of advisory services. 80 ODA System of Korea 82 EDCF Operational System 85 EDCF Loan Procedure Chart 86 Overseas Network