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July 29, 1985

  ARTICLE I

APPLICATION OF THE AGREEMENT

1. In accordance with the recommendations contained in the Agreed Minute on the Consolidation of Philippine Debts, signed at Paris on December 20, 1984, by representatives of certain nations, including the United States, and agreed to by the representatives of the Philippines, hereinafter referred to as the "Minute", the Philippines and the United States agreed to consolidate and reschedule certain Philippine payments with respect to debts which are owed to, guaranteed by or insured by the United States Government or its Agencies, as provided for in this Agreement.

2. This Agreement shall be implemented by separate agreements (the "Implementing Agreements"), between the Philippines and the United Stated with respect to PL-480 agreements, which are administered by the United States Department of Agriculture, and between the Philippines and each of the following United States Agencies: the Agency for International Development, the Export-Import Bank of the United States, the Commodity Credit Corporation and the United States Department of Defense. The Implementing Agreement of the Department of Defense will apply to repayment of amounts which it will pay the Federal Financing Bank pursuant to Contracts of Guaranty covering Contracts between the Federal Financing Bank and the Philippines.

  ARTICLE II

DEFINITIONS

1. "Contracts" means those agreements or other financial arrangements which have maturities denominated and payable in currencies other than the Philippine peso originally falling due during the Consolidation Period under:

(a) Commercial credits guaranteed or insured by the United States or its Agencies, which credits had original maturities of more than one year and which were extended pursuant to an agreement concluded before April 1, 1984

(b) Loans from United States Government Agencies and PL-480 credits which had original maturities of more than one year and which were extended pursuant to an agreement concluded before April 1, 1984.

(c) A table listing the relevant Contracts to be included under the rescheduling is attached hereto as Annex A.

2. "Consolidated Debt" means 100 percent of unpaid principal and 60 percent of unpaid interest with respect to Contracts falling due during the Consolidation Period. "Non-consolidated Debt" means the remaining 40 percent of the unpaid interest. Consolidated and Non-consolidated Debt includes all unpaid principal and interest owed on guaranteed by the Philippine Public Sector with respect to the Contracts falling due during the Consolidation Period. Consolidated and Non-consolidated Debt include principal and interest payments owed by the Philippine Private Sector only to the extent to which respective Private Sector debtors have deposited by December 31, 1986, into the Central Bank of the Philippines amounts relating to the principal and interest payment Non-consolidated Debt.

3. "Consolidation Period" means the period from January 1, 1985, through June 30, 1986, inclusive.

4. "Arrears" means the sum of principal and interest with respect to Contracts, which are due as of December 31, 1984, and unpaid including late interest from each original Contract due date at the Contract interest rate through December 31, 1984.

5. Interest" means Interest payable on Consolidated Debt, Non-consolidated Debt and Arrears in accordance with the terms of this Agreement and accruing at the rates set forth in this Agreement, beginning on the due dates specified in each of the Contracts for the payments of principal and interest comprising the Consolidated and Non-consolidated Debt and beginning on January 1, 1985, for payments of principal and interest comprising the Arrears. Interest shall continue to accrue on the outstanding balance of the Consolidated Debt, Non-consolidated Debt and Arrears, until such outstanding balance is repaid in full. "Additional Interest" means Interest accruing at the rates set forth in the Implementing Agreements or due but unpaid installments of Interest, Consolidated Debt, Non-consolidated Debt and Arrears, beginning on the respective due dates for such installments as established by this Agreement and the Implementing Agreements, continuing to accrue until such amounts are repaid in full.

6. "Agencies" means the Agency for International Development, the Export-import Bank of the United States, the Commodity Credit Corporation and the United States Department of Defense.

7. "Public Sector" means the Government of the Philippines or its agencies, instrumentalities or corporations owned or controlled by it.

8. "Private Sector" means any entities which do not belong to the public Sector.

  ARTICLE III

TERMS AND CONDITIONS OF PAYMENT

1. The Philippines agrees to repay the Consolidated Debt in United States dollars in accordance with the following terms and conditions:

(b) The rate of Interest on Consolidated Debt shall be as follows for the United States and Its Agencies:

(i) 4.0 percent per year for the United States with respect to PL-480 agreements;

(ii) For the Commodity Credit Corporation the rate of Interest on Consolidated Debt shall be determined on an annual basis and will reflect the cost of borrowing by the Corporation. For interest accruing in calendar year 1985, the annual rate shall be 11.5 percent. Interest accruing in subsequent years, the Commodity Credit Corporation shall notify the Philippines of the appropriate rate no more than thirty days after the beginning of such year.

(iii) 6 percent per year for the Department of Defense;

(iv) For the Export-Import Bank of the United States the rate of Interest on Consolidated Debt shall be Eximbank's cost for new medium-term borrowing plus one half of one percent. For interest accruing during the period January 1, 1985 through September 15, 1985, the annual rate be 11.969 percent. For each subsequent six-month period the Export-Import Bank of the United States shall notify the Philippines of the appropriate rate prior to the beginning of such six month period.

(v) 3.0 percent per year for the Agency for International Development;

(c) All interest payable with respect to the Consolidated shall be paid semi-annually on March 15 and September 15 of each year, commencing on September 15, 1985.

(d) A table summarizing the amounts of the Consolidated Debt owed to the United States and its Agencies is attached hereto as Annex B.

2. (a) The Philippines agrees to repay the Non-consolidated Debt, which amounts to approximately $54 million, in three equal installments of approximately $18 million each, payable on July 1, 1986, September 15, 1986, and September 15, 1987.

(c) Interest with respect to the Non-consolidated Debt shall be paid semi-annually on March 15 and September 15 of each year, commencing on September 15, 1985.

(d)A table summarizing the amounts of Non-consolidated Debt to the United Government and its Agencies is attached hereto as Annex C.

3. The Philippines agrees to repay the Arrears in accordance with the following terms and conditions:

(a) The Arrears, which amount to approximately $4.4 million, shall be pain in three installments as follows:

(i) one-quarter of the Arrears which amounts to approximately $1.1 million shall be paid on June 15, 1985;

(ii) one-quarter of the Arrears which amounts to approximately $1.1 million shall be paid on December 15 1985;

(iii) one-half of the Arrears which amounts to approximately $2.2 million shall be paid on June 15, 1986.

(b) The rate of Interest on Arrears, if any, for the Export-Import Bank shall be at the rate of 11.969 percent per annum during the period January 1, 1985 through June 30, 1985 and will valid for each six month period thereafter.

(c) The rates of Interest on Arrears owed to the United States of its Agencies other than the Export-Import Bank shall be the same as the rates specified in Article III, paragraph 1(b) of this Agreement

(d) Interest with respect to Arrears shall be paid in semi-annual installments on June 15 and December 15 of each year, commencing on June 15, 1985.

(d)A table summarizing the amounts of Arrears owed to the United States Government is attached hereto as Annex D.

4. The Philippines shall cause the Central Bank of the Philippines to assume the payment of the Consolidated Debt, non-consolidated Debt and Arrears referred to in Paragraphs 1, 2 and 3 of this Article for the liabilities of the Philippine Private Sector debtors for which the equivalent pesos have been deposited with the Central Bank of the Philippines. In turn, the corresponding obligations assumed by the Central Bank of the Philippines shall be assumed by the Philippines.

5. It is understood that adjustments may be made, as necessary, in the amounts of Consolidated Debt, Non-consolidated Debt and Arrears by mutual consent between the United States Government its Agencies and the Philippines.

  ARTICLE IV

GENERAL PROVISIONS

1. The Philippines agrees to grant the United States Government treatment and terms no less favorable than that which it accorded or which may be accorded, to any other creditor country or its agencies for the consolidation of debts of comparable maturities.

2. The Philippines will seek to secure from external creditors, including banks and suppliers, rescheduling or refinancing arrangements on terms comparable to those set forth in the Minute for credits of comparable maturities to avoid inequity between different categories of creditors.

3. Except as they may be modified by the Agreement or the sub Implementing Agreements, all terms of the Contracts remain in force and effect.

4. The Philippines agrees to pay all debt service due from and not paid by a) the Public Sector or b) the Private Sector to the extent that the corresponding pesos have been deposited with the Central Bank of the Philippines which is owed to or guaranteed by the United states Government or its Agencies but which is not covered by this Agreement, except debt service with respect to contracts which are in litigation or the subject of a dispute, as soon as possible, and in any case not later than February 28, 1986.

  ARTICLE V

ENTRY INTO FORCE

1. This Agreement shall enter into force following signature of the Agreement and receipt by the Philippines of written notice from the United States government that all necessary domestic legal requirements for entry into force of the Agreement have been fulfilled.

Done at Manila, the Philippines, in duplicate in the English language this 29th day of July 1985.

Annex A

Contracts Subject to Rescheduling

  Department of Defense

Loan Numbers

Agency for International Development

Loan Number

Exim Bank

Loan Number 

PL-480

Credit Number

Commodity Credit Corporation

Credit Number

Various Commodity Credit Agreements

  Annex B

Summary of Consolidated Debt

(thousands of US dollars)

Summary of Non-consolidated Debt

(thousands of US dollars)

Annex D

Summary of Arrears

(thousands of US dollars)