South Korea increases loans to Least Developed Countries

15 January 2010 [MEDIAGLOBAL]: On 11 January, UN Secretary General Ban Ki-moon asked the General Assembly to “join together to make 2010 a year of sustainable development: to meet the MDGs [Millennium Development Goals], address climate change, promote global health, and take the necessary steps for lasting and robust economic recovery.” The first response to Ban’s call to action came the following day, when his home country, South Korea, announced that it will be expanding the number of loans available to developing countries in 2010. The Korean Ministry of Strategy and Finance says it plans to increase loans by nearly 52 percent by dipping into the Economic Development Cooperation Fund (EDCF), with additional funding from the Export-Import bank if needed. This brings the total funds available for loans in 2010 to 470 billion won, or $419 million. The Ministry also said that over the next few years it plans on adding some 12.5 trillion won, or $11.5 billion, to the EDCF. In the past, South Korea has focused its loan aid to nearby Asian countries, though with the expansion of loans, the Ministry says it will branch out to central Asia and Africa. Food shortage and climate change are two of the main issues the Ministry hopes these loans will help address, with most loans probably going to the agriculture and green growth sectors of Least Developed Countries. This increase is part of South Korea’s expanding efforts to boost its global assistance and influence, and to encourage domestic companies to expand to overseas markets. While some may think this is just an alternative way for already poor nations to go further into debt without borrowing from the World Bank, Zhiqun Zhu a Professor of Political Science and International Relations specializing in East Asian politics at Bucknell University explained that this is not necessarily the case. Zhu told MediaGlobal that South Korea “is a model in sustainable development” and “more pragmatic in its loan and aid programs” than the World Bank or other Western options. Zhu attributes the most appealing part of Korean loan program to Korea’s own development and growth experience; rising from the ashes of the Korean War and World War II to become one of the “Asian Tigers,” South Korea’s history “resonate[s] powerfully with other developing countries, many of which also suffered from wars and colonization.” Nicola Winter