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February 04, 1985

TERMS OF THE CONSOLIDATION

ARTICLE I
  (Debts concerned)

a) commercial credits guaranteed by the Compagnie Francaise d'Assurance pour le Commerce Exterieur (COFACE), pursuant to a contract or other financial arrangement having an original maturity of more than one year concluded before April 1, 1984;

b) loans by the French Government or its appropriate institutions having an original maturity of more than one year and concluded before April 1,1984.

2. The refinancing will apply to the amounts of principal and interest due from January 1, 1985 up to June 30, 1986 inclusive, and not paid, on the credits and loans mentioned in paragraph 1 above.

    - 252,308,313.35 French Francs and 12,395,794.50 US dollars as regards maturities falling due from January 1, 1985 up to June 30,1986 inclusive on credits referred to in paragraph 1 a) above (annex 1);

- 8,111,070.50 French francs, as regards maturities falling due from January 1, 1985 up to June 30, 1986 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 within a two month period from the signature of this Agreement.

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 above, resulting in the increase of the Philippine's commitments towards France, such new commitments would not be covered by the provisions of this Agreement.

ARTICLE II
  (Refinancing)

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 interest falling due between January 1, 1985 and the date of this agreement and not paid, as well as a provision corresponding to 13,33% of these maturities of interest or the documentary evidence of these 13,33 % 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 and the maturities relating to guaranteed commercial credits shall be listed on separate statements.

As regards the maturities of principal and interest falling due between the date of this agreement and June 30, 1986 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 13,33 % 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 and the maturities relating to guaranteed commercial credits 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 borrower with the guarantee of the Government of the Philippines :

- an additional loan equal to 26,67% of the amounts of interest mentioned on these statements.

The Banque de France shall forthwith debit the amount of these loans to the account of the Central Bank of the Philippines, acting as borrower with the guarantee of the Government of the Philippines, shall send the instructions to pay for execution to the French banks and institutions concerned and shall credit them with the appropriate sums.

C) In order to simplify the proceedings, the Parties agree that Annexes 1 and 2, 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, with the guarantee of the Government of the Philippines, shall repay the loans extended by the French Government according to article II above as follows:

a) as regards the loans corresponding to 100 % of the consolidated maturities in principal and 60 % of the maturities of interest, in 10 equal and successive semi-annual payments, the first payment to be made on March 15, 1991 and the final payment on September 15, 1995 ;

b) as regards the additional loans corresponding to 26.67 % of the consolidated maturities of interest in 2 equal and successive annual payments, the first payment to be made on September 15, 1986, and the second and final payment on September 15,1987.

ARTICLE IV

1. The amounts of principal and interest due as at December 31, 1984 and unpaid on the credits mentioned in paragraph 1a) of Article I above will be repaid directly to the COFACE according to the following schedule :

- 25 % on June 15, 1985 ;

- 25 % on December 15, 1985 ;

- 50 % on June 15, 1986.

2. The corresponding sums are estimated on the date of the present agreement at 212,813,871.05 French francs and 7,590,867.96 US dollars (annex 3) In case of a mutually acknowledged error of estimation, these amounts will be modified by the Parties hereto within a two month period from the signature of this Agreement.

3. On these arrears on credits guaranteed by the COFACE, interest will be due from the original contractual dates until the repayment dates mentioned in paragraph 1) above. This interest will be calculated and paid according to the relevant provisions of Article VI.

4. The COFACE, as the authorized agent of the French Government, and the Central Bank of the Philippines shall carry out the provisions of this Article.

  ARTICLE V
  (Commercial Risk)

The Central Bank of the Philippines shall assume all the financial obligations deriving from the present agreement as long as the original debtor is a public sector entity or has a guarantee from the Government of the Philippines or a financial public institution or corporation.

The Government of the Philippines, through the Central Bank, shall enjoin private debtors to make deposits with the Central Bank in local currency equivalent to the amounts due by these debtors. The Central Bank of the Philippines shall assume all the obligations related to the consolidation of the amounts due by private debtors, as long as the original maturities due have been paid in local currency. In case the original private debtor makes partial deposits in local currency, the Central Bank will be liable only for the corresponding amounts. If the private debtor has not paid the maturities due in local currency, the Central Bank is relieved of the corresponding obligation.

The Government of the Philippines shall guarantee all financial obligations assumed by the Central Bank under the present article.

  ARTICLE VI
  (Rate of interest)

The Government of the Philippines shall pay an interest at a rate which will be :

- The 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.), revised quarterly and increased by a margin of 0.8 % per annum, all charges and fees included, on the arrears, and maturities, covered by this agreement, on the commercial credits guaranteed by the Compagnie Francaise d'Assurance pour le Commerce Exterieur and originally denominated in French francs.

In any case, on a given three-month period, the rate applied margin included will not exceed 14.6 % per annum or be lower than 11.0 % per annum.

The T.M.O. is equal to the weighted average of monthly average rates of return at the settlement (at the issuing as regards the period prior to November 1, 1982) of loans guaranteed by the French Government and assimilated, recorded in the three months prior to the month in which an interest payment falls due, published by the Institut National de la Statistique et des Etudes Economiques. The calculation of this index is based only on the bonds which have no other remuneration than the average rate of return fixed at the payment for the whole duration of the loan.

- The three month LIBOR rate, revised quarterly and increased by 1.25 % per annum, all charges and fees included, on the arrears and maturities covered by this Agreement, on the commercial credits guaranteed by the COFACE and originally denominated either in U.S. dollars, or in Deutsche Mark or in Sterling Pounds.

- 4.5 % per annum, all charges and fees included, on the loans granted by the French Government for the refinancing of the maturities covered by this agreement, on the Government loans or loans by governmental institutions.

As regards commercial credits guaranteed by the Compagnie Francaise d'Assurance pour le Commerce Exterieur, the rates referred to above apply from the original contractual due dates until the dates of repayment.

As regards maturities an Government loans or loans of governmental institutions, the rate referred to above applies from the dates of the refinancing; the interest rates provided for in the contracts establishing such loans, increased by a moratorium interest where such interest is provided for in the contracts, will continue to apply from the original contractual due dates until the dates of the refinancing.

As regards payments referred to in Article IX paragraph 3 hereafter, these rates apply from the original contractual due dates until the effective date of payment, subject to the provisions or the original contracts establishing Government loans or loans by governmental institutions.

The interest shall be calculated and paid on 15th of March, 15th of June, 15th of September, and 15th of December of each year, the first payment being made on June 15, 1985. In case these interest payments are not made on due date, they shall bear interest at the increased rate defined hereafter.

In case of delay on any payment provided for in this Agreement, including the payments referred to in Article IX paragraph 3 hereafter, made after the deadline of February 28, 1985, the interest charged on the basis as defined above will be increased by 1 point, subject to the provisions of the original contracts establishing Government loans or loans by governmental institution.

  ARTICLE VII
  (Unit of account)

All the loans as well as 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 VIII

The Central Bank of the Philippines and the Banque de France acting as authorized agent of the French Government shall carry out the provisions of this Agreement, excluding those of article IV.

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

ARTICLE IX

According to the provisions of the Agreed Minute on December 20, 1984 :

1. The Government of the Philippines will extend 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 Government of the Philippines shall undertake to keep the Chairman of the Paris Club informed of any consolidation agreement which they would conclude.

3. The Government of the Philippines shall take all the necessary measures to ensure payments of all debt service due and not paid, 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 before February 28, 1985.

ARTICLE X

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

Done in Paris on February 4, 1985, in two originals, in English and French, both versions being equally authentic