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March 15, 1988

The representatives of the creditor countries, in a joint meeting held in Paris on January 22nd, 1987 with the representatives of the Government of the Philippines in order to examine the request for refinancing or rescheduling that country's external debt, have agreed to recommend to their respective Governments such refinancing or rescheduling arrangement on the terms set out in the minutes signed in Paris on January 22nd, 1987.

Accordingly, Compañia Española de Seguros de Credito a la Exportacion, S.A. Madrid, hereinafter referred to as CESCE, acting as an agent appointed and instructed by the Spanish Government, and the representatives of the Government of the Philippines have agreed as follows:

CLAUSE I

Debts Concerned

This Agreement applies to amounts of principal and interests of Philippine debts, resulting from commercial credits insured by CESCE and extended to or guaranted by the Government of the Philippines or public institutions, having an original maturity of more than one year, concluded before April 1st, 1984, and due from January 1st, 1987 up to June 30th, 1988 inclusive and unpaid, as specified in Annexes I and II.

Debt service due under the previous bilateral agreement signed on September 13th, 1985 is not affected by the present Agreement.

CLAUSE II

Terms of the Rescheduling

A) 100% of the amounts of principal and 70% of the amounts of interest due from January 1st, 1987 up to June 30th, 1988 inclusive and not paid, on credits mentioned in Clause I above, will be rescheduled.
 
The corresponding surns will be repaid by the Government of the Philippines in 10 equal and successive semi-annual instalments, the first one falling due on April 1st, 1993 (end of the grace period) and the last one on October 1st, 1997 (end of the repayment period).
 
B) The payment of the remaining 30 % of interest will be made directly to the creditors according to the original contracts.

CLAUSE III

Amount a Rescheduled

The amounts in Pesetas rescheduled hereunder are described in Annex I and in Annex II for US Dollars.

Should some of the figures contemplated in Annexes I and II above be erroneously evaluated or omitted, the corresponding modifications might be Introduced as soon as errors or omissions have been detected.

CLAUSE IV

Rate of Interest

The interests on the rescheduled amounts will be calculated from the original maturity date up to the end of the repayment period, on the basis of a 360 days year.

All interest payments will be made semi-annually on April 1st and October 1st of each year. The first payment of interests will be made on April 1st, 1988.

The rate of interest to be applied on the Pesetas amounts contemplated in Annex I is 12% fixed for the life of the Agreement.

The rate of interest to be applied on the US Dollar amounts cont em plated in Annex II is the six month Libor rate with a spread of 0,50 per cent, free from encumbrances or additional commissions, as determinated by The Financial Times on October 1st and April 1st preceding each maturity date.

If no Libor rate is published on any of such da tea, the applicable rate shall be the rate prevailing on the previous day and, if necessary, backwards, day by day, but not further back than 30 days before the initial date.

Should no Libor rate be any longer published for any reason whatsoever, the parties hereto shall meet, not later than 15 days after the request made by the interested party, in order to agree on two first rate Banks operating in the E.E.C., one to be designed by each party, who will determine the average rate to be applied on the basis of the rates practiced by these two banks.

CLAUSE V

Past due Interest

In the event of a delay of more than 30 days by the Government of the Philippines to pay the outstanding amounts on the due dates as contemplated in this Agreement, a delayed interest will be applied at the rate specified in Clause IV above, increased by 0,5 %.

CLAUSE VI

Payments

All payments arising from this Agreement shall be considered as paid by the Government of the Philippines through its Agent, the Central Bank of the Philippines, when credited on the account of CESCE n 30-19054-L at Banco Exterior de España, Carrera de San Jeronimo, 36, 28014 MADRID.

CLAUSE VII

Exemptions

All payments covered by this Agreement shall be made without deduction for any present or future taxes or withholdings of whatever nature imposed in the Republic of the Philippines.

CLAUSE VIII

Disputes Concerning the Interpretation and Execution of the Present Agreement.

Both parties shall endeavour to settle any dispute arising in connection with this Agreement through negotiations or, should no result be obtained from these negotiations. by submitting the dispute to the arbitration of the International Chamber of Commerce. In this event, arbitration will take place in Zurich.

The application of this Agreement shall not be suspended except for the part under discussion.

CLAUSE IX

Modifications Concerning the Original Contracts

Except for the payments under consolidation, the present Agreement does in no way modify other agreements or promises suscribed by the buyers or guarantors In the original contracts concerned. Consequently, this Agreement shall in no circumstances be used as a justification to introduce other modifications whatever in the clauses of the original contracts.

CLAUSE X

Notices and Communications

All notices and communications between both parties hereto shall be sent to the following addresses:

CLAUSE XI

Signature and Ratification

This Agreement will come into force upon signature by the Parties and ratification by the respective Authorities. Both parties agree to obtain the said ratification without delay and to communicate the date of ratification to the other part.

This Agreement is signed in duplicate in the English language in Madrid on the 15th of March 1.988 and in Manila on the 24th of March 1988.