South Korea's finance ministry said Tuesday it has signed an agreement with the Inter-American Development Bank to double the ceiling on its loan program in a bid to support infrastructure development in Latin America.

Asia's No. 4 economy plans to raise the ceiling of the cooperative loan program from $500 million to $1 billion starting next year under the letter of intent signed between South Korea's Economic Development Cooperation Fund and the IDB.

The signing ceremony took place on the margin of the meeting between Finance Minister Choo Kyung-ho and IDB President Ilan Goldfajn held in Seoul.

"We will utilize the update to effectively address the growing development demand in Latin America, and support South Korean firms' entry in the region," the Ministry of Economy and Finance said.

The EDCF-IDB loan facility allows South Korea and Latin American nations to jointly develop infrastructure projects in the region and share operating costs.

South Korea launched the EDCF program in 1987 in an effort to help other developing countries with their basic infrastructure facilities. (Yonhap)