Donor Profile: South Korea

Last updated: December 23, 2022

ODA Spending


ODA in Context


South Korea was the 15th-largest donor country on the OECD DAC in 2021. This corresponds to 0.16% of its GNI, making South Korea the 25th-largest DAC donor in relative terms.




Since 2017, South Korea’s ODA/GNI ratio has been relatively stable. South Korea committed to reaching an ODA/GNI ratio of 0.2% by 2020, but the government acknowledged its failure to reach the target in the ‘Midterm Strategy for Development Cooperation (2021-2025),’ citing worsening public finances. The government also reported that ODA disbursements in 2021 decreased due to disruptions related to the COVID-19 pandemic.


ODA spending increased from 2020 to 2021 as a direct result of South Korea’s response to the COVID-19 pandemic, despite the Korean Won’s depreciation against the US dollar. The National Assembly, the national legislator of South Korea, approved the final 2022 ODA budget of KRW4.04 trillion (US$3.4 billion), an increase from KRW3.7 trillion (US$3.1 billion) in 2021. The budget included more ODA funding for health and global partnerships as part of South Korea’s global COVID-19 response.



ODA Breakdown


In 2020, South Korea disbursed 79% of its total ODA bilaterally, well above the DAC average of 58%, including 15% as earmarked funding to multilaterals. Current ODA flows are relatively consistent with the South Korean target bilateral-to-multilateral ratio of 75:25.



Bilateral Spending


Responding to the COVID-19 pandemic is a key focus of South Korea’s bilateral ODA. In 2020, the government disbursed 33% of its bilateral ODA to ‘health & populations,’ a shift away from a previous trend that strongly prioritized agriculture.


While the majority of the 235% increase in global health funding was largely due to the COVID-19 pandemic, South Korea intends to position itself as a global health and bio-industry powerhouse on the global stage in the future. In 2020, the government disbursed 11% of its bilateral ODA to infrastructure projects, 10% to education, and 8% to water and sanitation. Most of this funding came in the form of loans to Asian countries. Promoting inclusive and sustainable rural development, partially based on its own experience as an ODA recipient, is another priority of South Korea’s development policy.


South Korea has a strong preference for bilateral funding to LMICs, but might prioritize LICs in the future. 71% of South Korea’s bilateral ODA went to MICs in 2020; 60% went to LMICs and 11% to UMICs. This is significantly higher than the DAC average of 42% of bilateral ODA to MICs, of which 23% went to LMICs and 19% to UMICs.


LICs received just 13% of total bilateral ODA from South Korea in 2021, as opposed to the DAC average of 18%. South Korea has said it will allocate more ODA to LICs and LMICs, but no target for this shift was set in the ‘2022 Annual Implementation Plan.’


South Korea’s bilateral assistance centers on Asia, particularly its Southeast Asian neighbors. This focus was reaffirmed by the ‘2021 Annual Implementation Plan.’ In 2020, 49% of bilateral ODA went to Asia, significantly above the DAC average of 14%.


Loans and equity investments accounted for 40% of South Korea’s bilateral ODA in 2020, almost four times the DAC average of 11%. South Korea had a positive experience as a recipient of ODA loans, and the MOEF sees ODA loan provision as a tool for promoting fiscal discipline in partner countries. Despite internal debate about the risks of creating high levels of debt in partner countries through loans, South Korea intends to maintain a stable, high share of loans.


South Korea channels most of its bilateral grants and loans through its own implementing agencies (85% went through the public sector in 2020), mainly KOICA and Korea Eximbank.



Multilateral Spending and Commitments


Only 21% of South Korea’s ODA is channeled as core funding to multilaterals, compared to the DAC average of 42%. This share has been relatively consistent since South Korea joined the DAC in 2010.


Historically, South Korea has not prioritized financial support for multilateral organizations. However, its COVID-19 response included a stronger multilateral approach and increased funding to multilaterals specifically in global health. South Korea was invited to the G7 summit as a guest nation in June 2021, where it made significant pledges to Gavi and the COVAX AMC.


Recent commitments to multilateral organizations are summarized below.



Politics & Priorities


Political Context

South Korea is a presidential representative democratic republic. Elections take place every four years to elect governors, metropolitan mayors, municipal mayors, and provincial and municipal legislatures. The Korean public directly elects the president for a single five-year term by plurality vote. There are two main parties represented in Korea’s National Assembly: the liberal DPK and the conservative :abbrPPP.


Yoon Suk-yeol of the main opposition PPP won the presidential election on March 9, 2022, and was inaugurated on May 10, 2022. His election focused on strengthening the global response system to infectious diseases, with the aim of making South Korea a vaccine powerhouse.


The executive and the legislative branches in South Korea are currently split between the conservative and liberal parties, so bills could face stalemates moving forward.


As a result of the presidential election, South Korean ODA for gender equality could be at risk. The former conservative prosecutor considers himself an ‘anti-feminist’ and has called for the abolition of MOGEF.


More clarity on budget increases will come once the budget is delivered in late 2022 or early 2023.


Main Actors


Click for more details on each actor.


Two ministries guide development policy under the overall policy and decision-making authority of the President:


MOFA sets policies and priorities for bilateral grants and multilateral ODA channeled through the UN and other multilateral instruments, such as the Global Fund.


MOEF sets policies for ODA loans and manages contributions to international financial institutions. It also supervises South Korea’s EDCF and Korea Eximbank. In addition, MOEF sets the national budget, and its Budget Office can veto grants and loans proposed by MOFA that do not meet project approval criteria. Within these ministries, key actors include:


KOICA is a key player in development policy implementation in South Korea. The agency was founded in 1991 and provides bilateral grants and technical cooperation. It has 44 country offices as well as representatives dispatched to the UN and the OECD;


EDCF was established in 1987 to promote economic cooperation between South Korea and partner countries through loans. MOEF is responsible for the operations and policymaking of the EDCF, while Korea Eximbank manages and implements loans from the fund; and


CIDC the coordinating body responsible for deciding on major ODA -related policies. CIDC was established in 2006 and meets approximately three times per year to evaluate and plan KOICA and EDCF initiatives. It consists of 25 members including the Prime Minister (the Chair), cabinet members, the President of KOICA, the Chair of the Korea Eximbank, and eleven civilian experts. The ‘Sub-Committee for Evaluation’ is composed of 1) the Head of the Planning and Coordination Office of the Prime Minister’s Office (chair); 2) the Director-General of MOFA; 3) the Director-General of MOEF; 4) executives from KOICA; 5) executives of the Korea Eximbank; and 6) eight representatives from academia and civil society. The latest OECD ‘Development Co-operation Peer Review,’ published in 2018, found that the CIDC’s involvement in priority-setting has strengthened quality assurance and result management in South Korea's development cooperation.


Parliament: The National Assembly, or the parliament of the Republic of Korea, can influence the direction of South Korea’s development policy and budget. The National Assembly votes on, amends as necessary, and approves the budget bill presented by the government. Within the National Assembly, the ‘Foreign Affairs and Unification Committee’ is responsible for development cooperation and can change overall ODA spending amounts and specific allocations through its ‘Sub-Committee on Budget.’ The Parliament provides the legal basis for South Korea’s ODA policies.


Civil Society: South Korean CSOs are involved in policymaking and play an increasing role in ODA implementation.


Development Priorities

South Korea, itself an ODA recipient until 1995, prioritizes sharing its successful development experience and promoting inclusive development partnerships.


The ‘Framework Act on International Development Cooperation,’ first published in 2010 and amended in 2018, outlines the overarching principles of South Korean development cooperation and clarifies the responsibilities of different actors. The ‘Framework Act’ sets out six pillars for development:

  • Poverty reduction;
  • The human rights of women, children, adolescents, and people with disabilities;
  • Gender equality;
  • Sustainable development and humanitarianism;
  • Economic cooperation; and
  • Peace and prosperity in the international community.

Supporting low-income countries to achieve the SDGs and protecting the human rights of adolescents were also prioritized with the amendments made in 2018.


The ‘Mid-term Strategy for Development Cooperation (2021-2025)’ translates the ‘Framework Act’ into concrete strategic priorities for medium-term development policy and indicative volumes of ODA. The strategy has 12 priority goals, including strengthening global health risk response, increasing humanitarian assistance, promoting South Korea's ‘Green New Deal,’ diversifying development finance, and strengthening partnership with civil society. The strategy also states that ODA will be closely aligned with South Korea’s foreign strategy.


South Korea’s key development priorities for 2021 to 2025 include:

  • Doubling ODA volume between 2019 and 2030 to 0.30% ODA/GNI by 2030;
  • Providing over 70% of bilateral ODA to South Korea’s 27 priority partner countries; and
  • Changing the share of grants to loans to 60% and 40%, respectively (±3%).

Within the ‘Mid-term Strategy,’ South Korea’s development cooperation is guided by an ‘Annual Implementation Plan’ that outlines specific priorities.


In the ‘2022 Annual Implementation Plan,’ South Korea recommitted to doubling its ODA budget between 2019 and 2030. It will also significantly expand its support to the health sector and intends to focus on climate change response and digital transformation as development priorities for societal and economic change in partner countries.


South Korea will attempt to increase its share of untied grants – development assistance that can be used to purchase goods in any market, rather than just the donor country - to 95% through 2025.


The government will prioritize helping neighboring countries achieve the SDGs and will focus its ODA spending on five key sectors:

  • Infrastructure;
  • Health;
  • Education;
  • Agriculture and fisheries; and
  • WASH.

Grant assistance will be prioritized in six sectors:

  • Education;
  • Humanitarian assistance;
  • Agriculture and fisheries ;
  • Health; and
  • Public administration.

In October 2018, South Korea adopted two policies to guide its future foreign relations: the ‘New Northern Policy’ and ‘New Southern Policy,’ both of which serve to strengthen ties with partner countries to the north and south of the Korean peninsula. The 2020 update, called the ‘New Southern Policy Plus,’ prioritizes cooperation on health and medicine, education, sustainable investments in trade, infrastructure, future industries, and security.


At the ASEAN Summit in November 2020, the government announced an updated version of the ‘New Southern Policy,’ known as the ‘New Southern Policy Plus.’ It lays out seven areas for cooperation:

  • Health and medicine, post-COVID-19;
  • Human resource development and sharing of South Korea’s education model;
  • Mutual cultural exchange;
  • Mutually beneficial and sustainable investment in trade;
  • Infrastructure development of rural and urban areas;
  • Future industries for mutual prosperity; and
  • Non-traditional security sectors.

These policies demonstrate South Korea’s intention to strengthen engagement with India and ASEAN countries, and to engage in more regional infrastructure connectivity projects (such as railways and power generation) in cooperation with North Korea, Russia, China, and Central Asian nations as part of the ‘New Northern Policy.’ These policies are expected to increase South Korea’s ongoing development focus on infrastructure activities in Asia.


In addition to its thematic initiatives, the government has taken on a leadership role in the international push for increasing adherence to ODA effectiveness principles. Following the HLF-4 in Busan in 2011, South Korea has hosted regular ‘Busan Global Partnership Forums,’ bringing together stakeholders to reinforce commitment to and track progress against the ‘Busan principles:’

  • Countries should define the development model that they want to implement;
  • Sustainable impact should be the driving force behind investments and efforts in development policymaking;
  • Development cooperation requires active partnership; and
  • Development cooperation must be transparent and accountable to all citizens.

In 2020, South Korea also re-joined the ‘Global Partnership for Effective Development Cooperation Steering Committee,’ a vehicle for driving development effectiveness. South Korea places particular importance on both the ‘Busan Global Partnership Forums’ and the ‘Global Partnership for Effective Development Cooperation Steering Committee’ as they emerged from HLF-4.


As outlined in the ‘International Development Cooperation Government-Civil Society Partnership Basic Plan’ published in January 2019, civil society will play a key role in enhancing the transparency and accountability of South Korea's ODA. Through partnerships with civil society, South Korea will strengthen accountability on the development cooperation process.


The South Korean government has stated its intention to expand multilateral collaboration in response to global challenges, including climate change and humanitarian crises. In 2016, the South Korean government published a ‘Multilateral Aid Strategy’ which identified the following five UN agencies as compatible partners with their policy focus:

  • UNDP;
  • WFP;
  • UNICEF;
  • WHO; and
  • UNHCR.

In the 2023 proposed budget, 16% of total multilateral funding will be provided to these five agencies.


South Korea seeks to diversify its activities by promoting public-private partnerships such as the ‘Global Corporate Social Responsibility Program,’ which encourages the involvement of the South Korean private sector in development cooperation. Despite this goal, only 1% of bilateral ODA was channeled through PPPs in 2020. The ‘2022 Annual Implementation Plan’ intends to increase the total grant share for PPPs by 4% from 2021. It also prioritizes civil society engagement, promoting a competitive ODA model and reducing fragmentation of development assistance.


By issue


Global health: Given its focus on COVID-19 response, it is unsurprising that global health and pandemic response are key focus areas for South Korean ODA. South Korea plans to significantly expand its support to the health sector with a focus on increasing assistance for global health, such as COVID-19 vaccine development and global partnerships with multilateral health organizations. This includes the government’s active commitment to the COVAX AMC, GHSA, and the Global Vaccine Partnership.


Read more about South Korea’s ODA to Global Health


Climate: South Korea’s multilateral approach has been influenced by its status as a ‘middle power’ and its ongoing strategic priorities. South Korea also seeks to promote green ODA in LICs. As host of the GCF, South Korea is committed to increasing climate ODA and coordination.


Read more about South Korea’s ODA related to Climate Change


Gender equality: Once a core focus of South Korean ODA, funding levels could be at risk in the future due to President Yoon Suk-yeol’s campaign as an anti-feminist and his desire to abolish MOGEF.


Read more about South Korea’s ODA related to Gender Equality


Agriculture: Funding for the COVID-19 pandemic has eclipsed ODA for agriculture in recent years, though agriculture has been a historical priority for South Korea.


Read more about South Korea’s ODA for Agriculture


Education: Like other priorities, education has decreased in importance after South Korea’s prioritization of global health funding for COVID-19 response in recent years.


Read more about South Korea’s ODA for Education


By region


South Korea’s New Southern and Northern Policies guide its regional cooperation.


Asia-Pacific: The Asia-Pacific region is a primary focus of South Korean ODA, as it houses 12 of 27 priority partner countries for 2021-2025.


Central Asia: South Korean ODA will also be a focus for the period form 2021-2025.


Africa and Latin America: Partner countries in Africa and Latin America will receive modest levels of funding from South Korea. Each region contains seven and four priority partners, respectively.


Political Outlook


The conservative People Power Party will continue to focus on making South Korea a powerful go-to actor in global health. Funding to other sectors could fall as a result.


Budget


Budget breakdown


South Korea’s CIDC requested an increased ODA budget of KRW4.2 trillion (US$3.4 billion) for 2022 to increase funding for health and global partnerships, as part of its global COVID-19 response. The final 2022 budget approved by the National Assembly was KRW4.04 trillion (US$3.4 billion), 3% less than the requested amount. It includes a 6% increase in budget allocation toward the global COVID-19 response for 2022, as requested by MOFA.


South Korea’s total ODA budget includes breakdowns by sector, region, ministry, and implementing agency. It also allocates assistance to bilateral and multilateral channels within each ministry’s budget. The annual budget lists concrete activities to be funded from each ministry’s budget, allowing very limited ministerial discretion over their respective budgets once each has been approved by the parliament.


According to the approved ODA budget for 2022, 80% was allocated as bilateral ODA (including earmarked funding to multilateral organizations) and the remaining 20% was channeled as core funding to multilaterals. Within bilateral assistance, 59% was as grants and 41% as concessional loans. South Korea continued to focus its development cooperation on the African continent (19%), while its focus on Asia (37%) has decreased slightly.


88% (KRW1.3 trillion, US$1.1 billion) of MOEF’s ODA budget will be delivered bilaterally, almost exclusively as concessional loans through the EDCF. Only 5% of MOEF’s bilateral ODA (KRW70.3 billion; US$60 million) will be delivered as grants. KRW192.4 billion (US$163 million) will be provided as multilateral funding.


The ODA -related budget of MOFA has two major funding lines: bilateral grants and multilateral organizations.


Bilateral grants account for 87% of ODA (KRW1.3 trillion, US$1.1 billion) from MOFA, broken down into projects/programs, technical assistance channeled through KOICA, and funding delivered through PPPs.


Multilateral ODA accounts for the remaining 13% of the MOFA’s ODA -related budget (KRW184.3 billion, US$156 million) and comprises of assessed and voluntary contributions to international organizations, such as the Global Fund.



The figures presented in the table above do not fully reflect all ODA spending for several reasons.


First, funding flows from ministries beyond the 14th-largest in the South Korean government, regional-, and provincial governments are not included in the budget table.


Discrepancies also result from double-counting of funding for some IFIs, UN agencies, and other organizations. The ‘2022 Implementation Plan’ notes that the double-counted amount for IFIs is KRW38 billion (US$32 million) worth of concessional loans to ADB, IDB, and GCF, which are repeated in the MOEF’s budget and the budget line for total ODA to IFIs. The document also states that South Korea’s total multilateral assistance to 16 " UN and other agencies" in 2022 is KRW243 billion (US$206 million), but does not specify which agencies are included in this category.


Budget Process


ODA levels are set by MOEF between January and April; specific allocations are made between July and October.

  • Ministries submit medium-term finance plans: Each ministry submits a medium-term spending plan to the MOEF by the end of January. From these documents, MOEF draws up budget guidelines, including spending limits for each ministry.
  • Ministries develop budgets: Between May and June, ministries develop their budgets for the coming year, based on the limits set by the MOEF. At this stage, relevant ministries, particularly MOFA, develop proposals for sectoral and geographic ODA allocations. Key stakeholders are the Directors-General of the ministries, who submit the ministerial budgets for review in June.
  • CIDC debates budget allocations: Between July and September, ministries that have a role in dispersing ODA negotiate their sectoral and geographic allocations in a process led by the CIDC. The process includes expert consultations followed by a review by the committee and final approval by the MOEF.
  • The government submits its draft budget: By the beginning of September, the government submits its draft budget to the National Assembly, or parliament, for debate, amendments, and approval. Once the budget has been submitted, committees within the National Assembly review the draft budget in detail. The ‘Foreign Affairs and Unification Committee’ is responsible for the ODA budget. Following the review, the ‘Special Committee on Budget and Accounts’ conducts an overall review of the budget draft.
  • National Assembly approves the budget: In December, the National Assembly votes on the ODA budget in a plenary session.

Issue Deep-Dives

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Qi Liu

qliu@seekdevelopment.org

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