Ask a question about 'Soft loan'
Start a new discussion about 'Soft loan'
Answer questions from other users
A soft loan
is a loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
with a below-market rate of interest. This is also known as soft financing
. Sometimes soft loans provide other concessions to borrowers, such as long repayment periods or interest holidays. Soft loans are usually provided by governments to projects they think are worthwhile. The World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and other development institutions provide soft loans to developing countries.
An example of a soft loan is China's
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
Export-Import Bank, who gave a $2 billion soft loan to Angola
Angola, officially the Republic of Angola , is a country in south-central Africa bordered by Namibia on the south, the Democratic Republic of the Congo on the north, and Zambia on the east; its west coast is on the Atlantic Ocean with Luanda as its capital city...
in October 2004 to help build infrastructure. In return, the Angolan government gave China a stake in oil exploration off the coast.