The funds will come from South Korea's state-run Economic Development Cooperation Fund, the Yonhap news agency reported. The fund provides low-interest loans to developing countries.
Under the plan, the projects to be funded must be accepted by the governments of both South Korea and Azerbaijan, with the latter agreeing to support South Koreans engaged in such projects, the report said.
"The clinching of the deal aims to promote bilateral friendship and further boost Azerbaijan's economic and social development," the South Korean Foreign Ministry said.
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