IMF programme approved on November 27, 1996

Treatment of arrears as of December 31, 1996

Treatment of maturities falling due from January 1, 1997 up to July 31, 2000

Possibility to conduct debt swaps

On a voluntary and bilateral basis, the Government of each participating creditor country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps: (i) the amounts of outstanding loans treated in the Agreed Minutes as regards official development aid loans; (ii) the amounts of other outstanding credits, loans and consolidations treated in the Agreed Minutes, up to 20% of the amounts of outstanding credits as of December 31, 1996 or up to an amount of 30 million SDR, whichever is higher.

Good will clause

In response to the request of the representatives of the Government of the Republic of Madagascar, the Participating Creditor Countries agreed in principle to a meeting to consider the matter of the Republic of Madagascar's debt service payments falling due after November 30, 1999 and relating to loans or credits pursuant to a contract or other financial arrangement concluded before July 1, 1983 provided:

- that the Republic of Madagascar continues to have an appropriate arrangement with the International Monetary Fund;

- that the Republic of Madagascar has reached with other creditors effective arrangements meeting the conditions described in the Agreed Minute and has reported in writing to the Chairman of the Paris Club, pursuant to the Agreed Minutes;

- and that the Republic of Madagascar has complied with all conditions set out in the Agreed Minutes.

Free transferability provision

The Government of the Republic of Madagascar will take the relevant administrative measures or extend existing measures to ensure that the private debtors in Madagascar will be permitted to pay into the Central Bank the local currency counterpart of their obligations past due or falling due, corresponding to their debt of any nature owed to or guaranteed by the Participating or Observer Creditor Countries or their appropriate institutions.

Pullback clause

The Participating Creditor Countries reserve the right to review and agree to the implementation of the conditions stated in the Agreed Minutes for the comparability of treatment between all creditor countries. If the Participating Creditor Countries determine that these conditions are not substantially fulfilled, and do not agree to their implementation, the provisions of the Agreed Minutes will become null and void. In this case, the total amount of debts covered by the Agreed Minutes will be due and payable at that time, with the exception of maturities which have not yet fallen due on these debts. Any payments of principal and interest already made under the recommendations of the Agreed Minutes will be taken into account.

Special account

To facilitate the implementation of the Agreed Minutes, the Government of the Republic of Madagascar will deposit in the special account established with the Banque de France, the equivalent of at least SDR 4 million at the end of each month, commencing in May 1997 through November 1999 inclusive. The Government of the Republic of Madagascar undertakes to have this Bank notify the Chairman of the Paris Club as soon as each deposit has been made. The total amount approximates the amounts estimated to be payable to all Participating Creditor Countries from January 1, 1997 up to November 30, 1999 inclusive under the terms of the bilateral agreements to be concluded pursuant to the Agreed Minutes. As specific payments under these agreements become due, the Government of the Republic of Madagascar will draw on the special account to meet these payments; no drawing will be made on the special account for any other use before all payments due from January 1, 1997 up to November 30, 1999 inclusive under these agreements have been made. Any drawing on this account will be made after a previous 15-day notice to the above Bank, which this Bank will notify immediately to the Chairman of the Paris Club. This scheme could be continued by agreement between the parties.

Phases

• First phase : From January 1, 1997 up to February 28, 1998, implemented at the signature of the agreement
• Second phase : From March 1, 1998 up to February 28, 1999, implemented on August 6, 1999
• Third phase : From March 1, 1999 up to July 31, 2000, implemented on August 6, 1999

De minimis threshold of 250,000 SDR

Payment of non-consolidated amounts before October 31, 1997