Treaty (9 February 1990)

February 09, 1990

FINANCIAL PROTOCOL BETWEEN THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES AND THE GOVERNMENT OF THE FRENCH REPUBLIC

With a view to strengthening the ties of friendship and cooperation which bind them, the Government of the Republic of the Philippines and the Government of the French Republic have agreed to conclude the present protocol to foster the economic development of the Philippines.

ARTICLE 1 - EXTENT AND PURPOSE OF FINANCIAL SUPPORT

The French Government shall grant the Government of the Republic of the Philippines financial support designed to finance projects included in the development priorities of the Republic of the Philippines. The said support shall not exceed one hundred and sixty nine million French francs (169 MF) and shall be used to finance the purchase in France of French goods and services related to the implementation of projects referred in the schedule of the present protocol.

ARTICLE 2 - BREAKDOWN OF FINANCE PACKAGE

The financial support provided in Article 1 hereof shall comprise: - a loan from the French Treasury of a total amount not exceeding ninety eight million twenty thousand French francs (98,02 MF) - credit guaranteed by the French credit insurance agency (COFACE) of a total amount not exceeding seventy million nine hundred and eighty thousand French francs (70,98 MF)

ARTICLE 3 - MECHANISMS OF FINANCIAL SUPPORT

The financing of the projects referred to in the schedule hereto shall be provided jointly by the French Treasury loan and the guaranteed credit. The total drawing rights on the French Treasury loan and the guaranteed credit shall amount to 58% and 42% respectively of the total value of orders or goods and services provided under Article 1 hereof. The downpayment on each contract will be equal to at least 10% of the value of each contract. The French Treasury loan shall be used to finance the whole of the downpayment on each contract covered by the protocol. The French Treasury loan and the guaranteed credit - used simultaneously - shall finance the remainder of the value of each of the aforesaid contracts concerned.

ARTICLE 4 - CONDITIONS GOVERNING CREDIT FACILITIESa) The French Treasury loan shall be granted for a period of 30 years, including a

grace period of 10 years. The interest rate shall be 2.5% per year. Said loan shall be repaid in 40 equal consecutive six-monthly instalments, the first instalment falling due 126 months after the end of the calendar year during which each drawing is made. Interest shall be payable on the total amount outstanding; it shall be applicable as of the date of each drawing on the French Treasury loan and shall be paid at six-monthly intervals. For each project an agreement between the Department of Finance acting on behalf of the Government of the Philippines or duly designated government corporation guaranteed by the Government of the Philippines on one hand and the Credit National, acting on behalf of the French Government on the other hand shall define the mechanisms of application and of repayment of the said loan.

b) The guaranteed credit shall be granted for a period of 10 years and shall be repaid in 20 equal, consecutive six monthly instalments, the first instalment falling due six months after delivery of the equipment or completion of the project as stipulated in the contract. An agreement between the competent Philippines Authorities and the French banks shall define the mechanisms of application and of repayment of the said credit. It shall be stipulated in the said agreement that the interest rate(s) applicable shall be the normal interest rate(s) on the currency concerned on the date of signature of the contract. The credit insurance premium will be charged to the borrower. The said agreement shall stipulate the maximum time limit between the signature of the contract and the starting date for repayment of the guaranteed credit.

ARTICLE 5 - IMPLEMENTATION DEADLINE AND EXPIRY DATE OF THE FRENCH TREASURY LOAN

In order to qualify for the financial support provided in article 1 hereof, contracts must be concluded by February 28th 1991 at the latest. No drawing on the French Treasury loan provided in Article 2 hereof shall be made after February 28th 1993. The above dates shall not be extended except by special agreement between the two Governments in the event of exceptional difficulties.

ARTICLE 6 - CURRENCY OF ACCOUNT AND PAYMENT

All transactions under the terms of the present protocol shall be carried out in French francs.

ARTICLE 7 - FREIGHT AND INSURANCE

All contracts financed under the terms of the present protocol shall be invoiced exclusive of freight and insurance. Freight and insurance costs may, however, be financed by the simultaneous use of the Treasury loan and the guaranteed credit in the proportions stipulated in Article 3 hereof insofar as:- freight is provided under a bill of lading issued by a French shipping company and is certified by the French Merchant Navy as being a French service, - insurance is taken out with approved companies on the French market.

ARTICLE 8 - CONTRACTS COVERED

The final decision on whether contracts related to the projects referred to in Article 1 hereof qualify for financial support under the terms of the present protocol shall be made by exchange of letters between the Department of Finance of the Philippines and the Economic and Commercial Counsellor to the French Embassy in MANILA acting with the authorization of the competent French authorities. Exceptionally and in the event of an emergency an exchange of letters as defined above may also be used to authorize the partial substitution of new projects for projects listed in the schedule hereto or adjustment of the amounts among the listed projects.

ARTICLE 9 - TAXATION

The payment of principal and interest due on the credits provided by the present protocol shall not be liable to taxation in the Philippines.

ARTICLE 10 - APPRAISAL OF PROJECTS

In accordance with its international agreements, France, with prior notice to the Government of the Philippines, will proceed to post evaluations of the projects listed in this protocol. The Government of the Republic of the Philippines agrees to welcome the appraisal mission sent by the French Government and to provide it with relevant information about the projects.

ARTICLE 11 - DATE OF EFFECTIVENESS

The present protocol shall take effect at the date of its signature. IN WITNESS THEREOF, the undersigned, authorized for this purpose by their respective Governments, have signed this agreement and have affixed thereto their seals.

Done in MANILA, The 9th of February 1990 (in two originals, each in the English and French languages, the two texts being equally authoritative) For the Government of the Republic of the For the Government of the French Republic Philippines

(Sgd.) (Sgd.)Source: Supreme Court E-Library