The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Yong Hwan Kim, “Korea Eximbank”) announced on December 5 that it signed an Economic Development and Cooperation Fund (EDCF*) loan agreement with the Pakistani Government to extend USD 78 Million in credit for the Malakand Tunnel Construction Project.

* The Economic Development Cooperation Fund (EDCF) was established by the Korean government in 1987 to promote economic exchanges and to assist developing countries in achieving industrialization and economic stability through the provision of long-term, low-interest credit. Korea Eximbank currently manages the fund as its trustee. As of the end of October 2012, the EDCF has supported 282 projects in 50 countries with KRW 8.3 trillion.

The loan agreement was signed between Chairman Yong-hwan Kim of Korea Eximbank and Mr. Shaukat Ali Mukadam, Pakistan’s Ambassador to Korea, at the Lotte Hotel in Seoul.

The importance of the Malakand Tunnel project as a symbol of development cooperation between Korea and Pakistan was underlined by the presence of Pakistan’s President Asif Ali Zardari at the signing ceremony.

The USD 78 million to be provided under the agreement will be the largest EDCF loan ever extended to Pakistan by Korea Eximbank.

The aim of the Malakand Tunnel Construction Project is to build a tunnel and access road in the Malakand section of Road 45 situated in the Northwest of Pakistan. It is the first tunnel construction project to be funded by the EDCF.

Pakistan’s Road 45 is a north-south arterial road extending 309 km which connects the country to Central Asia, and is expected to contribute significantly to the movement of goods and economic activity in the Northwest region.

After signing the agreement, Chairman Kim observed, “Pakistan’s abundant labor and natural resources as well as its efforts to attract investment will make it for a land of opportunity for Korean firms once Pakistan’s investment conditions improve. In particular, this project will not only strengthen the economic cooperation between the two countries, but also facilitate the export of transportation infrastructure, an area in which Korean firms hold a competitive edge.”

To date, Korea Eximbank has extended a total of USD 160 million in EDCF loans for five projects in Pakistan.