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August 03, 1984

in the spirit of the friendly relations existing between the Republic of the Philippines and the Federal Republic of Germany,

desiring to strengthen and intensify those friendly relations through financial co-operation in a spirit of partnership,

aware that the maintenance of those relations constitutes the basis of this Agreement,

intending to contribute to social and economic development in the Republic of the Philippines,

with reference to the talks held on 2 and 3 August 1984 between Mr. Vicente B. Veldepenas, Jr., Minister for Economic Planning, and Herr Siegfried Lengl, Deputy Minister for Economic Cooperation, as well as to the Summary Record of Discussions of 3 Auexist 19B4, signed by them,

have agreed as follows:

(1) The Government of the Federal Republic of Germany shall enable the Government of the Republic of the Philippines or another recipient "to be determined jointly by the two Governments to obtain from the Kreditanstalt fur Wieder— aufbau (Development Loan Corporation) Frankfurt/Main, a loan of up to DM 30,000,000 (thirty million Deutsche Mark) to meet foreign exchange costs resulting from the purchase of goods and services to cover current civilian requirements, and to meet foreign exchange and local currency costs of transport, insurance and assembly arising in connection with the importation of goods financed under this Agreement.

The supplies and services must be such as are covered by the list annexed to this Agreement and for which supply or service contracts have been concluded after 1 January 1934.

(2) in deciding on the utilization of the amount referred to in paragraph 1 above; preference shall be given to German-Philippine joint ventures and German enterprises in the Philippines.

(3) The amount of DM 30,000,000 (thirty million Deutsche Mark) referred to in paragraph 1 above shall be taken from the following projects which were agreed under bilateral financial co-operation and are no longer required by the Philippine side:

(a) DM 12,500,000 (twelve million five hundred thousand Deutsche Mark) from the project "Two container cranes for Manila harbour" (Manila harbour development II), pledged under the intergovernmental Agreement of 29 August 1980;

(b) DM 13,500,000 (thirteen million five hundred thousand Deutsche Mark) from the project "Two additional container cranes for Manila harbour" (Manila harbour development 111), pledged under the intergovernmental Agreement of 10 June 1981;

(c) DM 4,000,000 (four million Deutsche Mark) from the project "Island electrification 111", pledged under the intergovernmental Agreement of 8 December 1983.

(4) The remaining DM 7,000,000 (seven million Deutsche Mark) from the project "Island electrification 111", pledged under the intergovernmental Agreement of 8 December 1983, shall be used to increase the funds provided for the project "Island electrification I".

(5) The intergovernmental Agreements referred to in paragraphs 3 and 4 above shall be amended accordingly by the present Agreement.

(1) The utilization of the amounts referred to in Article 1 of this Agreement, the terms and conditions on which they are made available as well as the procedure to be followed in awarding the contracts shall be governed by the provisions of the agreements to be concluded between the recipient of the loan and the Kreditanstalt fur Wiederaufbau, which shall be subject to the laws and regulations applicable in the Federal Republic of Germany.

(2) The Government of the Republic of the Philippines, insofar as it is not itself the borrower, shall guarantee to the Kreditanstalt fur VViederaufbau all payments in Deutsche Mark to be made in fulfilment of the borrower's liabilities under the agreements to be concluded pursuant to paragraph 1 above.

The Government of the Republic of the Philippines shall exempt the Kreditanstalt fur Wiederaufbau from all taxes and other public charges levied in the Republic of the Philippines in connection with the conclusion and implementation of the agreements referred to in Article 2 of the present Agreement.

The Government of the Republic of the Philippines shall allow passengers and suppliers free choice of transport enterprises for such transportation by sea or air of persons and goods as results from the granting of the loan, abstain from taking any measures that might exclude or impair the participation of transport enterprises having their place of business in the German area of application of this Agreement, and grant any necessary permits for the participation of such enterprises.

With regard to supplies and services resulting from the granting of the loan/ the Government of the Federal Republic of Germany attaches particular importance to preferential use being made of the economic potential of Land Berlin.

ARTICLE 6

With the exception of those provisions of Article 4 which refer to air transport this Agreement shall also apply to Land Berlin, provided that the Government of the Federal Republic of Germany does not make a contrary declaration to the Government of the Republic of the Philippines within three months of the date of entry into force of this Agreement.

This Agreement shall enter into force on the date of signature thereof.

DONE at Manila on August 3, 1984 in duplicate in the English and German languages/ both texts being equally authentic.

to the Agreement between the Government of the Republic of the Philippines and the Government of the Federal Republic of Germany concerning Financial Co-operation

List of goods and services eligible for financing from the loan under Article 1 of the Agreement of 3 August 1984:

(a) Industrial raw and auxiliary materials as " well as semi manufactures,

(b) industrial equipment,

(c) spare parts and accessories of all kinds,

(d) chemical products, in particular fertilizers, plant protection agents, pesticides, medicaments.

Imports not included in the above list may only be financed with the prior approval of the Government of the Federal Republic of Germany.

The importation of luxury and consumer goods for personal needs as well as any goods and facilities serving military purposes may not be financed from the loan.