soft loan - meaning and definition. What is soft loan
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What (who) is soft loan - definition

LOAN WITH A BELOW-MARKET RATE OF INTEREST
Soft-loan; Soft financing

Soft Loan         
Commonly, a loan from a government or multilateral development bank with a long repayment period and below-market interest.
soft loan         
(soft loans)
A soft loan is a loan with a very low interest rate. Soft loans are usually made to developing countries or to businesses in developing countries. (BUSINESS)
N-COUNT
soft loan         
¦ noun a loan made on terms very favourable to the borrower.

Wikipedia

Soft loan

A soft loan is a loan 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 and other development institutions provide soft loans to developing countries.

This contrasts with a hard loan, which has to be paid back in an agreed hard currency, usually of a country with a stable, robust economy.

An example of a soft loan is a $2 billion loan by China's Export-Import Bank to Angola in October 2004 to help build infrastructure. In return, the Angolan government gave China a stake in oil exploration off the coast. Another example is the interest free soft loan of Rs. 20 billion given by the Asian Development Bank (ADB) to the government of West Bengal (India) on the condition that it be used for health, education and developing infrastructure, and that the government would implement 16 economic reforms.

The field of natural finance uses the term "soft loan" as an enforced ability–based repayment loan where the softness is not based on below market interest, but rather on terms that do not include fixed dates for repayment, but do mandate repayment when the borrower is able to.

Examples of use of soft loan
1. Most of Patong has been repaired and re–opened thanks to government soft loan programmes.
2. The soft loan will be repaid over 20 years, including a 5–year grace period.
3. The EIB is the soft–loan lending arm of the EU, which finances projects in member states and partner countries.
4. The World Bank has extended a $500 million soft loan for Iraqi infrastructure projects with an interest–free grace period of more than 10 years.
5. These people are our true friends and we treat them badly by such trifling matters." To get the "soft loan", Cementation executives pressured the department of trade.