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September 14, 1987

The Government of the Republic of the Philippines (hereafter referred to as the Philippine Government) and the Government of the Republic of France (hereafter referred to as the French Government) in order to give effect to the recommendations of the Agreed Minute of the meeting within the framework of the Paris Club on January 22, 1987 have agreed as follows :

TERMS OF THE CONSOLIDATION

1. The consolidated debt of the Philippines to France covered by this Agreement is made up of instalments of principal and interest of :

a) commercial credits having an original maturity of more than one year, guaranteed by the Compagnie Francaise d 'Assurance pour le Commerce Exterieur (COFACE), pursuant to a contract or other financial arrangement concluded before April 1, 1984, extended to the Philippine Government or to one of its agencies, organizations or institutions, or covered by a guarantee of payment of the Philippine Government or one of its agencies, organizations or institutions.

b) loans by the French Government or its appropriate institutions having an original maturity of more than one year, concluded before April 1, 1984, extended to the Philippine Government or to one of its agencies, organizations or institutions, or covered by a guarantee of payment of the Philippine Government or one of its agencies, organizations or institutions.

2. The present consolidation will apply to the amounts of principal and interest due from January 1, 1987 up to June 30, 1988 inclusive, and not paid, on the credits and loans mentioned in paragraph 1 above.

3. The total amount of the maturities referred to in paragraph 2 above is estimated at the date of this Agreement, at 200,062,892.87 French Francs, and at 11,033,123.62 American Dollars :

- 190,286,741.24 French Francs and 11,033,123.62 American Dollars as regards maturities falling due from January 1, 1987 up to June 30, 1988 inclusive on credits referred to in paragraph 1 a) above (Annex 1) ;

- 9,776,151.63 French Francs, as regards maturities falling due from January 1, 1987 up to June 30, 1988 inclusive on loans referred to in paragraph 1 b) above (Annex 2).

In case of a mutually acknowledged error of estimation, the amounts so estimated shall be modified by the Parties hereto.

The annexes will form an integral part of this Agreement.

4. In the event of any amendment being made after March 31, 1984 to the contracts concerning the maturities referred to above, resulting in the increase of debt commitments of the Philippines towards France, such new commitments would not be covered by the provisions of this Agreement.

5. This Agreement shall in no way affect rights and obligations under the common law or under commitments undertaken by the Parties in the contracts referred to above, except for the provisions set forth in Article V, paragraphs 3 and 5 hereafter.

The debts of the Philippines mentioned in paragraph 2 of Article I shall be refinanced on the following terms:

A) From the entry into force of this Agreement and not later than two months after its signature, the Central Bank of the Philippines shall provide the Banque de France with a statement of the maturities of principal and of interest falling due between January 1, 1987 and the date of this Agreement and not paid, as well as a provision corresponding to 30 % of these maturities of interest or the documentary evidence of these 30 % of interest which might have been paid before the entry into force of this Agreement. The Central Bank of the Philippines shall provide, at the same time, the relevant instructions to pay and the names of the payees as well as their bankers, with a breakdown for the principal and the interest. The maturities relating to Government loans on the one hand, and the maturities relating to guaranteed commercial credits on the other hand, shall be listed on separate statements.

As regards the maturities of principal and of interest falling due between the date of this Agreement and June 30, 1988 inclusive, the Central Bank of the Philippines shall provide the Banque de France, on the 15th of each month at the latest, with a statement of the maturities of principal and interest due as of the previous month, and a provision of 30 % of these maturities of interest together with the relevant instructions to pay and the names of the payees, as well as their bankers, with a breakdown for the principal and the interest. The maturities relating to Government loans on the one hand, and the maturities relating to guaranteed commercial credits on the other hand, shall be listed on separate statements.

B) In order to enable the payment in favour of creditors to be made, the Banque de France (acting as the authorized agent of the French Government), shall extend on its books to the Central Bank of the Philippines (acting as the authorized agent of the Philippine Government), a loan equal to 100 % of the amounts of principal and 70 % of the amounts of interest mentioned on the statements referred to above.

The Banque de France shall forthwith debit the amount of these loans to the account of the Central Bank of the Philippines (acting as the authorized agent of the Philippine Government) and shall credit with the corresponding sums the French banks and institutions concerned.

C) In order to simplify the proceedings, the Parties agree that Annexes 1 and 2 to this Agreement, duly approved and signed by them, shall be considered as the relevant Instructions to pay and statements mentioned above.

The Central Bank of the Philippines (acting as the authorized agent of the Philippine Government) shall repay the loans extended by the French Government according to article II above, in 10 equal and successive semi-annual payments, the first payment to be made on April 1, 1993 and the final payment to be made on October 1, 1997.

The Philippine Government shall assume all the financial obligations deriving from the present Agreement as long as the original debtor is the Philippine Government or one of its agencies, organizations or institutions, or covered by a guarantee of payment of the Philippine Government or one of its agencies, organizations or institutions.

The Philippine Government shall pay, on amounts consolidated under this Agreement, interest which will be determined as follows:

1. As regards the refinancing under Article II of the amounts due on the Governmental loans or loans by Governmental institutions, mentioned in Article I paragraph 1 b) above, the rate applied shall be 3,5 % per annum, all charges and fees included.

2. As regards amounts due on the commercial credits guaranteed by the COFACE, mentioned in Article I paragraph 1 a) :

a) as for the credits originally denominated in French Francs, the monthly average rate of return at the settlement of loans guaranteed by the French Government and assimilated (the French "taux du marche obligataire" T.M.O.), published by the Institut National de la Statistique et des Etudes Economiques (I.N.S.E.E.), increased by a margin of 0,4 % per annum, all charges and fees included.

As for the credits originally denominated in American Dollars, the three month LIBOR on American Dollars, increased by a margin of 0,5 % per annum, all charges and fees included.

b) The calculation of the interest will be made, on the basis of a 365 days year period, starting from the original due dates on up to the repayment dates of consolidated amounts, on three month calculation periods ending on the 15th of March, 15th of June, 15th of September, and 15th of December of each year.

As for the credits denominated in French Francs, the rate of reference related to each of these calculation periods will be the average rate of the TMO during the last calendar month prior to the concerned period of calculation.

As for the credits denominated in American Dollars, the rate of reference related to each of the calculation periods will be the average LIBOR published by the IMF for the last calendar month prior to the concerned period of calculation.

3. As regards the commercial credits guaranteed by the COFACE, these rates apply and replace the conditions of original contracts, from the original due dates on up to the dates of repayment of the consolidated amounts.

As regards the amounts due on Governmental loans or loans by Governmental institutions, this rate applies from the dates of refinancing on, up to the repayment dates of the consolidated amounts; the interest stated in the original contracts providing for these Government loans, increased with penalty charges settled in these contracts if any, still apply to the period starting from the original due dates on, up to these of the re financings.

4. The interest due in respect of the provisions hereabove shall be paid on the 1st of January, the 1st of April, the 1st of July and the 1st of October of each year, the first payment being made on January 1, 1988. If these interest payments are not made on due dates, they shall bear interest at the increased rate as defined hereafter.

The interest due on the period included between the original due dates and the dates of refinancing will be paid within one month after the receipt of the billing statement by the Central Bank of the Philippines.

5. As regards payments referred to in Article VIII, paragraph 3 hereafter, the interest referred to in this article applies to the period starting on the original due dates and ending on the dates of repayment, except for the loans of the Credit National for which the provisions of the original contracts will still apply.

6. In case of delay on any payment provided for in this Agreement, including the payment of maturities referred to in Article VIII paragraph 3 hereafter made after the deadline of March 31, 1987 mentioned in the January 22, 1987 Agreed Minute, the interest charged on the basis as defined above wi11 be increased by one point.

All the loans as well as all the obligations arising from this Agreement and the settlements corresponding to these obligations shall be calculated and made in the currencies in which the corresponding credits were originally denominated.

GENERAL PROVISIONS

ARTICLE VII

The Central Bank of the Philippines on the one hand, and the Banque de France on the other hand, will act as the authorized agents of their respective Governments in carrying out the provisions of this Agreement.

The methods of payment of the amounts due under this Agreement will be determined by an agreement between the Central Bank of the Philippines and the Banque de France.

ARTICLE VIII

According to the provisions of the Agreed Minute on January 22, 1987 :

1. The Philippine Government will extend immediately to the French Government any terms more favourable than those contained in the present Agreement which it may extend, de jure or de facto, to any other creditor in respect of total or part settlement of the Philippine's debt of comparable terms.

2. To this end, the Philippine Government shall undertake to keep the Chairman of the Paris Club informed of any consolidation agreement which they would conclude.

3. The Philippine Government undertakes to pay all its public or publicly guaranteed debt service due and not paid as at January 22, 1987, with respect to consolidation agreement, loans or commercial credits, and owed to or guaranteed by the French Government or its appropriate institutions, and not covered by the Agreed Minute, as soon as possible, and in any case not later than March 31, 1987. Interest will be paid at an increased rate on the unpaid amounts from March 31, 1987 pursuant to the provisions referred to in Article V, paragraph 6.

4. The Philippine Government guarantees the Immediate and unrestricted transfer of the foreign exchange counterpart of all amounts paid In local currency by the private debtors in the Philippines for servicing their foreign debt owed to or guaranteed by the French Government or its appropriate institutions, and not covered by the Agreed Minute.

ARTICLE IX

The present Agreement shall come into force on the date of its signature.