Enhanced Structural Adjustment Facility—Borrowing Agreement
- International Monetary Fund
- Published Date:
- April 1989
Caisse Centrale de Coopération Economique of France
Pursuant to Section III, paragraph 2 of the Instrument to Establish the Enhanced Structural Adjustment Facility Trust, the International Monetary Fund, in its capacity as Trustee of that Trust, approves the agreement for borrowing from the Caisse Centrale de Coopération Economique in terms of the draft set out in the attachment to EBS/88/62, and authorizes the Managing Director to take such action as is necessary to conclude and implement the agreement.
Decision No. 8831-(88/56) ESAF
April 4, 1988
Attachment to EBS/88/62
Enhanced Structural Adjustment Facility: Proposed Borrowing Agreement with the Caisse Centrale de Coopération Economique
I have been authorized to propose on behalf of the International Monetary Fund (the “Fund”) as Trustee of the Enhanced Structural Adjustment Facility Trust (the “Trust”) that the Caisse Centrale de Coopération Economique (“CCCE”) agree to lend to the Fund as Trustee for the purposes of providing resources to the Loan Account of that Trust, in accordance with the Instrument establishing the Trust (the “Instrument”) adopted by the Executive Board of the Fund by Decision No. 8759-(87/176) ESAF, adopted December 18, 1987. The purpose of this agreement is to set forth the terms and conditions, as authorized by Section III, paragraph 2 of the Instrument attached hereto, for the loan by CCCE to the Fund as Trustee.
1. The amount of the loan shall be the equivalent of SDR 800 million.
a. Interest in respect of drawings up to SDR 700 million shall be determined in accordance with paragraph 5(a).
b. Interest in respect of drawings above SDR 700 million shall be determined in accordance with paragraph 5(b).
2. a. The Trustee may make drawings under this agreement at any time during the period from the effective date of this agreement through June 30, 1993, upon giving CCCE at least ten business days (Washington, D.C.) notice by tested telex, provided that the drawdown date is a date that is a business day in Frankfurt, London, New York, Paris, and Tokyo and that total drawings may not exceed SDR 266 million until January 1, 1989 and SDR 533 million until January 1, 1990. Under exceptional circumstances, a drawing may be canceled by the Trustee or CCCE within five business days (Washington, D.C.) after notice of the drawing is given.
b. If any installment of interest is not paid to CCCE within a period of ten days after its due date, the Trustee shall not make further drawings under this agreement pending consultations with CCCE on the matter. However, the Trustee may resume drawings under this agreement once arrears to CCCE have been discharged.
c. The Trustee shall seek normally to make drawings in amounts not less than SDR 20 million (unless otherwise agreed between CCCE and the Trustee) and shall endeavor not to make more than twelve drawings during any calendar year.
3. a. The amount of each drawing shall be denominated in SDRs. Unless otherwise agreed between CCCE and the Trustee, the amount of each drawing shall be disbursed by CCCE, on the drawdown date specified in the Trustee’s notice, by transfer of the equivalent amount of U.S. dollars, deutsche mark, Japanese yen, French francs, and pounds sterling, in proportion to the amounts of each currency unit in the SDR, to the accounts of the Trust as specified in the Trustee’s notice.
b. Upon request, the Trustee shall issue to CCCE a non-negotiable certificate evidencing its claim on the Trust resulting from a drawing outstanding under this agreement.
4. a. Each drawing shall be repaid in ten equal semiannual installments beginning five and one-half years and ending ten years after the date of the drawing.
b. Any drawing or part thereof may be repaid by the Trustee at any time in advance of maturity only by agreement between CCCE and the Trustee.
c. Unless otherwise agreed, if a drawing matures or a payment of interest is due on a date that is not a business day in Frankfurt, London, New York, Paris, and Tokyo, the payment date shall be the next business day that is a business day in Frankfurt, London. New York, Paris, and Tokyo.
5. a. The amount outstanding in respect of each drawing under paragraph 1(a) shall bear interest at a rate of one half of one percent per annum; provided, however, that if the rate of interest on Trust loans may need to be adjusted to exceed the rate of one half of one percent per annum in any interest period under Section IV, paragraph 5 of the Instrument, CCCE and the Trustee shall review the matter and shall give consideration to an increase in the rate of interest to apply to amounts outstanding under paragraph 1(a) during that interest period of the Trust. Such review shall include consideration of the possible implications of any such increase for borrowers from the Trust and for the operations of the Trust. The interest rate applied to amounts outstanding under paragraph 1(a) during any interest period of the Trust shall in no event exceed the rate of interest on Trust loans during that interest period.
b. The amount outstanding in respect of each drawing under paragraph 1(b) shall bear interest at an annual rate determined by the Trustee at the time each drawing is made and at intervals of six calendar months thereafter, from the product of:
(i) the interest rates on domestic instruments in each currency included in the SDR basket, as reported to the Trustee by each reporting agency, on the business day of the Fund referred to in paragraph 9, as follows:
—the bond equivalent yield for six-month U.S. Treasury bills,
—the six-month interbank rate in Germany,
—the six-month rate for interbank loans against private paper in France,
—the average rate for newly issued bank CDs in Japan with a maturity of between 150 and 180 days,
—the six-month interbank rate in the United Kingdom, and
(ii) the percentage weight of that currency in the valuation of the SDR on that business day, calculated by using the same amounts and exchange rates for currencies as are employed by the Fund for calculating the value of the SDR in terms of the U.S. dollar on that day.
The applicable interest rate shall be the sum of the products so calculated, rounded to two decimal places.
c. Interest in respect of each drawing shall be paid six calendar months after the drawdown date and every six calendar months thereafter. The amount of interest payable shall be calculated on an actual day basis and using a 360-day year, and shall be paid in respect of the period from and including the drawdown date to but excluding the first interest payment date and, for each successive period, from and including the previous interest payment date to but excluding the next interest payment date.
6. Unless otherwise agreed between CCCE and the Trustee, payments by the Trustee of principal and interest with respect to each drawing shall be made by crediting the equivalent amount of U.S. dollars, deutsche mark, Japanese yen, French francs, and pounds sterling, in proportion to the amounts of each currency unit in the SDR, to the accounts of CCCE as specified by CCCE in advance of such payments; the Trustee shall instruct its paying agent to confirm to the institution(s) to which payment is to be made the amounts of currency to be paid and the value date of the payment, such confirmation to be received not later than 11 A.M. in Paris on the value date of the payment.
7. a. CCCE shall have the right to transfer at any time all or part of any claim to any member of the Fund, to the central bank or other fiscal agency designated by any member for purposes of Article V, Section 1, or to any official entity that has been prescribed as a holder of SDRs pursuant to Article XVII, Section 3 of the Fund’s Articles of Agreement.
b. The transferee shall acquire all the rights of CCCE under this agreement with respect to repayment of and interest on the transferred claims.
8. At the request of CCCE, calls on its commitment to meet drawings may be suspended temporarily at any time prior to December 31, 1992, subject to the provisions of Section III. paragraphs 4(b) and (c) of the Instrument.
9. Unless otherwise agreed between the Trustee and CCCE, all transfers, exchanges, and payments of principal and interest shall be made at the exchange rates for the relevant currencies in terms of the SDR established by the Fund for the third business day of the Fund before the value date of the transfer, exchange, or payment.
10. If the Fund changes the composition of the SDR or the method of valuing the SDR, all transfers, exchanges, and payments of principal and interest made three or more business days of the Fund after the effective date of the change shall be made on the basis of the new composition or method of valuation; provided, however, that no such change shall affect any drawing for which notice has been given for drawdown subsequent to the change.
11. Any question arising hereunder shall be settled by mutual agreement between CCCE and the Trustee.
If the foregoing proposal is acceptable to CCCE, this communication and your duly authenticated reply accepting this proposal shall constitute an agreement between CCCE and the Trustee, which shall enter into effect on the date the Trustee acknowledges receipt of your reply.*