Signed in Manila, March 19, 1971.
Note: The Agreement entered into force, March 19, 1971.
Reference: This Agreement is also published in X DFA TS No. 1, p. 1.
The Government of the Republic of the Philippines and the Government of
Denmark, desiring to strengthen the traditional cooperation and cordial
relations between their countries, have agreed that, as a contribution
to the economic development of the Philippines, a Danish Government Loan
will be extended to the Philippines in accordance with the following
provisions of this Agreement and the attached Annexes, which are
considered an integral part of the Agreement:
ARTICLE I
THE LOAN
The Government of Denmark (hereinafter called the Lender) will make
available to the Government of the Philippines (hereinafter called the
Bor-rower) a Loan in an amount of 30 million Danish Kroner for the
purposes described in Article VI of this Agreement
.
ARTICLE II
LOAN ACCOUNT
Section I. An account designated "Government of the Philippines Loan
Account" (hereinafter called "Loan Account") will, at the Borrower's
request, be opened with Danmarks Nationalbank (acting as agent for the
Lender) in favor of Central Bank of the Philippines (acting as agent for
the Borrower). The Lender will ensure that sufficient funds are always
available in the Loan Account to enable the Borrower to effect punctual
payment for capital goods and services procured within the amount of the
Loan.
Section 2. The Borrower (or Central Bank of the Philippines) shall be
entitled, subject to the provisions of this Agreement, to withdraw from
the Loan Account amounts needed for payment of capital goods or services
procured under the Loan.
ARTICLE III
RATE OF INTEREST
The Loan will be free of interest.
ARTICLE IV
REPAYMENTS
Section 1. The Borrower will repay the Loan in thirty-five semi-annual
installments of 830,000 Danish Kroner each, commencing on October 1,
1977 and ending on October 1, 1994, and one final installment of 950,000
Danish Kroner on April 1, 1995.
Section 2. If the Loan is not fully utilized in accordance with the
provisions of Article VI, section 8, a revised schedule of repayment
shall be established by mutual consent.
ARTICLE V
PLACE OF PAYMENT
The Loan shall be repaid by the Borrower in convertible Danish Kroner to
Danmarks Nationalbank to the credit of the current account of the
Ministry of Finance with Danmarks Nationalbank.
ARTICLE VI
USE OF THE LOAN
Section 1. The Borrower will use the Loan to finance imports from
Denmark (including cost of transport from Denmark to the Philippines) of
such Danish capital goods as are to be used for identifiable projects
and are needed for the economic development of the Philippines. An
indicative list of such goods is contained in Annex II.
Section 2. The Loan may also be used to pay for Danish services required
for the implementation of development projects in the Philippines
including, in particular, pre-investment studies, preparation of
projects, provision of consultants during the implementation of
projects, assembly or construction of plants or buildings and technical
and administrative assistance during the initial period of undertakings
established by means of the Loan.
Section 3. All contract to be financed under the Loan shall be subject to approval by the Borrower and the Lender.
Section 4. The approval by the Lender of a contract for financing under
the Loan shall not imply any responsibility for the proper performance
of such contracts.
The Lender also disclaims responsibility for the efficient use of
supplies and services financed under the Loan and for the proper
operation of the projects, etc., to which such supplies have been made
and such services have been rendered.
Section 5. A contract under the Loan shall contain no clauses involving
any special credit facilities from the Danish party to the contract.
Section 6. The proceeds of the Loan may be used only for payment of
capital goods and services contracted for after the entry into force of
the Agreement, unless otherwise agreed by the Borrower and the Lender.
Section 7. The proceeds of the Loan shall not be used for payment to the
Borrower of any import duty, tax, national or other public charge such
as import surcharges, duties to compensate for domestic excise taxes,
charges or deposits in connection with the issuance of payments licenses
or import licenses.
Section 8. The Borrower may draw against the Loan Account in
fulfill-ment of contracts approved by the Parties for up to three years
after the entry into force of the Agreement or from such other date as
may be mutually agreed by the Borrower and the Lender.
ARTICLE VII
NON-DISCRIMINATION
Section 1. In regard to the repayment of the Loan, the Borrower
under-takes to give the Lender no less favorable treatment than that
accorded to other foreign creditors.
Section 2. All shipments of capital goods covered by this Agreement
shall be in keeping with the principle of free circulation of ships in
international trade in free and fair competition.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 1. Prior to the first drawing against the Account referred to in
Article II the Borrower will satisfy the Lender that all constitutional
and other requirements laid down by statute in the Borrower's home
country have been met, so that this loan Agreement will constitute an
obligation binding on the Borrower.
Section 2. The Borrower will inform the Lender of Persons who are
authorized to take any action on behalf of the Borrower, and supply
authenticated specimen signatures of all such persons.
Section 3. Any notices, requests or agreements under this Agreement shall be in writing.
ARTICLE IX
PARTICULAR COVENANTS
The Loan shall be repaid without deduction for, and free from, any taxes
and charges, and free from all restrictions imposed under the laws of
die Borrower. This Agreement shall be free from any present and future
taxes imposed under existing or future laws of the Borrower in
connection with the issue, execution, registration, entry into force of
the Agreement, or otherwise.
ARTICLE X
DURATION OF THE AGREEMENT
Section 1. The Agreement shall come into force on the date of signature.
Section 2. When the Loan has been repaid, the Agreement shall terminate forthwith.
ARTICLE XI
SPECIFICATION OF ADDRESSES
The following addresses are specified for the purposes of this Agreement: For the Borrower:
Central Bank of the Philippines Manila
Development Bank of the Philippines Makati, Rizal
Department of Foreign Affairs Manila
Cablegrams:
PHILCENBANK
PHILDEBANK
DEFORAF
For the Lender with respect to disbursements:
Ministry of Foreign Affairs,
Danish International Development Agency,
Copenhagen.
Cablegrams:
ETRANGERES COPENHAGEN.
For the Lender with respect to servicing of the Loan:
Ministry of Finance
Copenhagen.
Cablegrams:
FINANS COPENHAGEN.
In witness whereof the Parties hereto, acting through their
representatives duly authorized for this purpose, have caused this
Agreement to be signed in two copies in the English language in Manila
on this 19th day of March 1971.
For the Government of the Philippines: | |
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(Sgd.) CARLOS P. ROMULO | |
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For the Government of Denmark: | |
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(Sgd.) ILLEGIBLE | |
ANNEX I
The following provisions shall govern the rights and obligations under
the Agreement between the Government of Denmark and the Government of
the Philippines on a Danish Government Loan to the Philippines
(hereinafter called the Agreement), of which they are considered an
integral part with the same force and effect as if they were fully set
forth therein.
ARTICLE I
CANCELLATION AND SUSPENSION
Section 1. The Borrower may, by notice to the Lender, cancel any amount of the Loan which the Borrower shall not have withdrawn.
Section 2. In the event of default by the Borrower in the fulfillment of
any commitment or arrangement under the Agreement, the Lender may
suspend, in whole or in part the right of the Borrower to make
withdrawals from the Loan Account.
If the default which entitled the Lender to suspend the Borrower's right
to draw against the Loan Account persists beyond a period of sixty days
after the Lender's notice to the Borrower of the suspension, the Lender
may at any time claim immediate repayment of all withdrawals made from
the Loan Account, notwithstanding anything in the Agreement to the
contrary, unless the basis on which the suspension was made has ceased
to exist.
Section 3. Notwithstanding any cancellation or suspension all the
provisions of the Agreement shall continue in full force and effect
except as is specifically provided in this Article.
ARTICLE II
SETTLEMENT OF DISPUTES
Section 1. Any dispute between the Parties arising out of the
interpreta-tion or administration of the present Agreement, which has
not been settled within six months through diplomatic channels, shall,
at the requests of either Party, be submitted to a tribunal of
arbitration consisting of three members. The chairman of the tribunal
shall be a citizen of a third country and shall be appointed by common
consent of the Parties. Should the Parties fail to agree on the
appointment of the chairman of the tribunal, either Party may request
the President of the International Court of Justice to make the
appointment. Each Party appoints its own arbitrator; if a Party abstains
from appointing an arbitrator, the latter may be appointed by the
chairman of the tribunal.
Section 2. Each Party will observe and carry out awards given by the tribunal.
ANNEX II
This Agreement is applicable to supplies of the following Danish machinery and equipment for an irrigation project:
2000 water pumps with accessory diesel engines; 2000 diesel engines for pumps which will be manufactured in the Philippines.
19 March 1971
Sir:
I have the honor to acknowledge receipt of your letter of today's date which reads as follows:
"Excellency,
With reference to the Agreement of today's date between the
Government of Denmark and the Government of the Philippines I have
the honour to propose that the following provisions shall govern the implementation of Article VI of the Agreement.
Payment out of the Loan Account shall be effected in the following manner:
(1) The Danish exporter or consultant and the Philippine
importer or prospective investor shall negotiate a contract, subject to
the final approval of the Philippines' and the Danish authorities. No
contract below 200,000 Danish Kroner, except for utilization of any
final balance below that amount, shall be eligible for financing under
the Agreement.
(2) The Government of the Philippines will make available to the
Danish Ministry of Foreign Affairs copies of the contracts to be
concluded under this Agreement. The latter will ascertain, inter alia,
that
(a) the commodities or services contracted for fall within the framework of the Agreement;
(b) the capital equipment involved has been manufactured in
Denmark, or the services to be rendered will be performed by persons
carrying on business in Denmark; and inform the Government of the
Philippines of its findings.
(3) When the contracts have been approved, the Government of the
Philippines may draw on the Loan Account to effect payment of the
consignment referred to in the contract. Payments out of this account to
Danish exporters or consultants shall be subject to presentation of the
necessary documents when Danmarks Nationalbank has ascer tained that
the conditions for effecting such payments have otherwise been complied
with."
I have the honor of confirming herewith that my Government agrees with these provisions.
I avail myself of this opportunity, Sir, to renew to you the assurances of my high consideration.
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(Sgd.) CARLOS P. ROMULO |
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Secretary of Foreign Affairs |
Mr. William Winther Schmidt |
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Charge d'Affaires |
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Embassy of the Kingdom of Denmark |
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Djakarta |
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Excellency,
With reference to the Agreement of today's date between the Governmerit
of Denmark and the Government of the Philippines i have the honor to
propose that the following provisions shall govern the implementation of
Article VI of the Agreement. Payment out of the Loan Account shall be
effected in the following manner:
(1) The Danish exporter or consultant and the Philippine
importer or prospective investor shall negotiate a contract, subject to
the final approval of the Philippines' and the Danish authorities. No
contract below 200,000 Danish Kroner, except for utilization of any
final balance below that amount, shall be eligible for financing under
the Agreement.
(2) The Government of the Philippines will make available to the Danish
Ministry of Foreign Affairs copies of the contracts to be concluded
under this Agreement. The latter will ascertain, inter alia, that
(a) the commodities or services contracted for fall within the framework of the Agreement;
(b) the capital equipment involved has been manufactured in Denmark, or
the services to be rendered will be performed by persons carrying on
business in Denmark, and inform the Government of the Philippines of its
findings.
(3) When the contracts have been approved, the Government of the
Philippines may draw on the Loan Account to effect payment of the
consignment referred to in the contract. Payments out of this account to
Danish exporters or consultants shall be subject to presentation of the
necessary documents when Denmarks National Bank has ascertained that
the conditions for effecting such payments have otherwise been complied
with. If the foregoing provisions are acceptable to the Government of
the Philippines, I have the honor to suggest that this letter and your
reply to it constitute an agreement between our two Governments on this
matter. Please accept, Excellency, the assurance of my highest
consideration.
(Sgd.) WILLIAM WINTHER SCHMIDT |
For the Government of Denmark: |
Manila, March 19, 1971
His Excellency
Mr. Carlos P. Romulo
Secretary of Foreign Affairs
Manila
MINISTRY OF FOREIGN AFFAIRS
Secretariat for Technical Co-operation
with Developing Countries
Copenhagen
Memorandum on capital goods and services eligible for financing under Danish Government Loans to developing countries.
1. The object of Danish government loans is to contribute towards the
financing of identifiable development projects in developing countries.
Loans may be used for purchases of such Danish capital equipment or for
payment of such services as are required for the establishment of
projects. An individual loan is not necessarily tied to any individual
development project but may, on the other hand, not be used for
acquisition of any article available in Denmark. Danish government loans
are therefore neither project loans nor programme loans in the
strictest sense of these terms.
2. The Danish authorities cannot enter into substantive negotiations
about a government loan to a developing country, until the letter has
specified what categories of capital equipment and services are to be
supplied and financed under the loan. A list of such capital goods and
services will be incorporated in the loan agreement, but the list may be
amended and amplified also after the signing of the loan agreement.
3. If it is proposed to use parts of a loan for nonstationary equipment
or for a small or large number of uniform capital goods to be
distributed among an undetermined number of users the loan will be
subject to the additional condition that such equipment shall be an
integral part of a specific project, defined by a detailed project
description showing the geographical placing of the equipment. The same
rule shall apply to supplies of breeding cattle.
4. A loan may be used either by the borrower to finance projects or
relent, on terms to be stipulated by the borrower, to semi-governmental
undertakings, local government authorities or private undertakings in
the borrower's territory.
5. The following list covers capital good and services from Denmark
which, under previous loan agreements, have been earmarked for financing
out of Danish government loans. The list may serve as a guideline in
the prospective borrower's deliberations on potential uses of a Danish
government loan:
a. Capital Equipment
I. Stationary equipment for |
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Cement works |
Sugar refineries (diffusors) |
Water supply installations |
Chicken farms |
Drainage & irrigation installations |
Spray-drying plant |
Abattoirs |
Grain-drying plant |
Dairies |
Fish meal factories |
Breweries |
Hospitals |
Cold stores |
Hotels |
Ice Factories |
Harbour installations |
Plants for pre-fabrication of houses |
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II. Non-stationary equipment (of. item 3 above) |
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Agricultural machinery |
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Diesel engines |
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Pumps |
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Machine tools |
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Compressors |
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Wood-working machinery |
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Metal-working machinery |
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Cranes and other contractor's equipment |
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Electromotors |
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Transformers Generators |
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Other equipment for electric power supply |
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Teleprinters |
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Telephones, desk switchboards, etc. |
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Radio communication installations |
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Hospital equipment |
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Hotel equipment |
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b. Services
Project planning, assembly and consultant services in connection with
the establishment of the undertakings indicated in item A.I, above and
fertilizer industries. Also, project planning and supervision of road,
bridge, rail-way, and harbor construction.
c. Turn-key Projects
Loans may also be used to finance complete projects, including project
planning, assembly and consultant as well as deliveries of capital
equipment for projects of the above-mentioned categories (combination of
A.I and B), except that purely local expenses (for Construction of
buildings, wages for local workers, board and lodging for consultant
engineers, fitters, etc.) will generally not be eligible for financing
out of loan funds. The foregoing details are intended for information
only. They are not an exhaustive list of supplies available from
Denmark. Denmark's diplomatic missions and the Ministry of Foreign
Affairs will give more detailed information in reply to inquiries about
specific wishes for imports from Denmark.
MINISTRY OF FOREIGN AFFAIRS
Secretariat for Technical Cooperation
with Developing Countries
Copenhagen
Annexes.
To the authorities
of................................................................................who
are in charge of the administration of the Government Loan Agreement
concluded with Denmark
on................................................................................The
following details, supplementing and interpreting the terms of the Loan
Agreement, are intended to facilitate the utilization of the Danish
Loan.
1. Procedure for payments to be effected under the Loan Agreement.
1) Opening of the Loan Account
As soon as the Loan Agreement has entered into force, the Agent acting
on behalf of the Borrower should take steps to open with Danmarks
Nationalbank the Loan Account referred to in Article II of the Agreement
by requesting Danmarks Nationalbank to open the Loan Account.
At the same time, it will be useful to establish a procedure for
payments to be effected from the Loan Account for goods and services to
be supplied under contracts approved by the Borrower and the Lender.
Such payments may be effected either by forwarding to Danmarks
Nationalbank a Payment Order in the form of a Letter of Authority
addressed to Danmarks Nationalbank (a tentative form is suggested in
Annex I), or by opening of a letter of credit with Danmarks Nationalbank
or a Danish commercial bank.
The letter requesting Danmarks Nationalbank to open the Loan Account
should contain authenticated specimen signatures of the persons who are
authorized to act on the Borrower's behalf, of, Article VIII (2) of the
Loan Agreement. The opening letter may be in the form suggested in Annex
2.
2) Declaration to make the Loan Agreement an obligation binding on the Borrower.
Prior to the first drawing against the Loan Account the
Borrower must satisfy the Lender that all constitutional requirements
and other requirements laid down by statute in the Borrower's country
have been met so that the Loan Agreement constitutes an obligation
binding on the Borrower, of, article VIII, Sec. 1.
This formal requirement — known for example, from loan agree-ments with
the International Bank for Reconstruction and Development — will be
satisfied by a declaration made to the lender by a competent authority
of the Borrower's home country. The declaration may be a very short one,
and a formal legal opinion citing statutory provisions is not required.
The rules as to which authority is competent to make such a binding
declaration vary from country to country; the authority may, for
instance, be the Ministry of Foreign Affairs, Ministry of Justice, or
President of the Supreme Court. If the competent authority is not the
Ministry of Foreign Affairs, the competence of the authority making the
declaration should be confirmed by the Ministry of Foreign Affairs.
II. Approval of contracts eligible for financing under the Loan Agreement.
1) Contracts concluded prior to the entry into force of the
Loan Agreement will normally not be approved. Approval may, however, be
granted if the contract was concluded after the opening of negotiations
for the Loan Agreement, and if the contract was concluded on the
condition that supplies delivered under the contract would be eligible
for financing out of a Danish government loan.
2) All contracts should contain information, or be accompanied by
information on the nature and location of the projects for which the
supplies concerned are intended.
In cases where supplies consist of nonstationary capital equipment of a
large or small number of uniform items of capital goods to be
distributed among a more or less well-defined group of users, approval
will be granted on the condition that such supplies form part of a
specified project; in that event, a detailed project description should
be attached to the contract. Examples of such supplies are: engines,
pumps, agricultural machinery, contractor's equipment, generators,
compressors, electrical equipment, etc.
Ships and other means of transports will normally not be eligible for financing under the Loan Agreement.
3) In addition to the type of services which are eligible for financing
in pursuance of Article VI (2) of the Loan Agreement, contracts with
Danish firms or experts for assistance in examining and evaluating
offers, including quotations, will be eligible for financing under the
Loan Agreement.
It will often be useful for the Borrower to invite competitive bids for
contracts. The Danish Ministry of Foreign Affairs will assist the
Borrower in the distribution of invitations for tenders to potential
Danish bidders. If the Borrower should wish the supplier to furnish a
banker's guarantee for the performance of the contract in cases where
the con-tract stipulates payment of a large part of the amount of the
contract on receipt of the order, such a guarantee should be issued by a
Danish bank in favor of the Borrower; payments, if any, under such a
guarantee must be paid into the Loan Account in Danmarks Nationalbank.
4) The amount of the contract must be stated in Denmark Kroner. The
approval covers only that amount, regardless of any clauses in the
contract stipulating adjustment of the amount as a result of changes
made in the rates of exchange.
5) A form is attached (Annex 3) which the Borrower may use for
transmission of approved contracts to the Ministry of Foreign
Affairs in Denmark.
ANNEX I
Our Letter of Authority No ..................................
Danmarks Nationalbank,
Copenhagen.
Dear Sirs,
Loan Agreement
of.................................................................between
Denmark and In accordance with the terms and conditions of
the above-mentioned Loan Agreement we hereby authorize you
irrevocably, valid until
................................................................. , to
effect payments in full or in part an amount of up to
D.kr _________________
to against delivery of the following documents:
(e.g. invoice, bill of lading or other transport document evidencing receipt of goods, insurance policy).
We ask you to place the amoiint(s) paid to the debit of our account with
you designated:
"......................................................................."
After approval of the documents, please forward these
to.............................................................. The
above payments are made under a contract of
...............................................between (supplier) and
........................................................ (purchaser)
which was approved by the Government of (authority of borrower) on
.....................................................and by the Danish
Ministry of Foreign Affairs on
ANNEX II
Danmarks Nationalbank,
Copenhagen.
Dear Sirs,
Loan Agreement
of............................................................................
between Denmark and
................................................................................
With reference to Article II of the above-mentioned Agreement I request
you, on behalf of the Government of (name of the Borrower), to open an
account in the name of as agents of the Government of (name of the
Borrower) to be styled "Government of (country) "Loan Account"
(hereinafter called "Loan Account").
Payments into the Loan Account will be made from time to time by the Ministry of Foreign Affairs of Denmark.
Payments from the Account are to be made from time to time either
1) against Letters of Authority to Denmarks National Bank, or
2) by means of a letter of credit opened with the Danmarks Nationalbank or a Danish Commercial bank.
under contracts approved by the Danish Ministry of Foreign Affairs in conformity with Loan Agreement.
Any two of the following persons are authorized to sign Payment
Authorities jointly on behalf of the Government of
...............................................................
1...........................................................................................................
2...........................................................................................................
3...........................................................................................................
4...........................................................................................................
Specimen signatures of each of the above persons are attached.
A copy of this letter has been sent to the Danish Ministry of Foreign Affairs.
ANNEX III
To:
The Ministry of Foreign Affairs,
Secretariat for Technical Cooperation
with Developing Countries,
Amaliegade 7,
DK 1256 Copenhagen K.
Dears Sirs,
Re: Loan Agreement
of.....................................................................between
Denmark and
...................................................................................
The following are details of a contract, a copy of which is enclosed,
approved by the Government
of.................................................................for
financing under the above-mentioned Loan Agreement.
1) Name and address of the Danish supplier
2) Date of contract
3) Name of purchaser
4) Short description of goods and/or works & services
5) Value of contract: D.kr.
6) Terms of payment.
Please communicate the Danish Government's approval of the contract
to.................................................................................at
your earliest convenience.