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March 17, 1997

In connection with the Exchange of Notes dated March 17, 1997, (hereinafter referred to as "the Exchange of Notes"), concerning a Japanese loan to be extended with a view to promoting the economic stabilization and development efforts of the Republic of the Philippines (hereinafter referred to as "the Loan." ), the representatives of the Philippine Delegation and of the Japanese Delegation wish to record the following: 

1. With reference to sub-paragraph (3) of paragraph 3 of the Exchange of Notes concerning the financing of eligible local currency requirements for the implementation of the projects mentioned in the said sub-paragraph, the representative of the Japanese Delegation stated that:

(1) Such requirement of local currency as general administrative expenses, interest during construction; taxes and duties, expenses concerning office, remuneration to employees of the executing agencies and housing, not directly related to the implementation of the projects, as well as purchase of land properties, compensation and the like, however, will not be considered as eligible for financing under the Loan.

(2) The procurement of products and/or services will be made in accordance with the procedures of international competitive tendering except where such procedures are inapplicable or inappropriate.

2. With regard to the Loan, the representative of the Japanese Delegation stated that any financial requirements of the project not being covered with the proceeds of the Loan under the loan agreement mentioned in sub-paragraph (1) of paragraph 2 of the Exchange of Notes, will be duly met by the Government of the Republic of the Philippines to assure the smooth implementation of the said project.

3. The representative of the Japanese Delegation stated that the Philippine side should give such due consideration to the due and prompt procedure of importation of the products required for the implementation of the projects under the Loan, as it has given in the course of the implementation of the projects under the successive Japanese loans for projects.

4. The representative of the Japanese Delegation stated that the Philippine side should give due consideration to the local residents' support for the projects enumerated in the List attached to the Exchange of Notes and to the environmental impact which the said projects have, in order to assure the smooth implementation of the said projects.

5. With reference to sub-paragraph (1) of paragraph 3 of the Exchange of Notes, the representative of the Japanese Delegation stated that the Loan may be made available to cover payments already made and/or to be made between November 24, 1996 and the previous day of coming into force of the loan agreement mentioned in sub-paragraph

(1) of paragraph 2 of the Exchange of Notes, as well as payments to be made on and after the day of coming into force of the said loan agreement, for purchases of the products and/or services referred to in the said sub-paragraph.

6. The representative of the Philippine Delegation stated that the Philippine side had no objection to the statements mentioned in paragraphs 1, 2, 3, 4 and 5 above.