Quito, November 20, 2006

Excellency,

	I have the honour to refer to the recent negotiations between the representatives of the Government of Japan and of the Government of the Republic of Ecuador that were held on the basis of the conclusions reached during the consultations between the representatives of the Government of the Republic of Ecuador and of the Governments of the creditor countries concerned held in Paris from June 11 to 13, 2003.  I have further the honour to confirm the following understanding reached in the course of the said negotiations:

1.	A debt relief measure in the form of rescheduling and deferral will be taken in accordance with the relevant laws and regulations of Japan by Japan Bank for International Cooperation together, where relevant, with private banks concerned (hereinafter referred to as “the Banks”).

2.	(1)	The debts to be rescheduled consist of the debts referred to in (a) to (c) below, which the Government of the Republic of Ecuador owes to the Banks.

(a)	The debts payable under the rescheduling agreement concluded between the Government of the Republic of Ecuador and the Overseas Economic Cooperation Fund (hereinafter referred to as “the Fund”) on the rescheduling of Yen loan(hereinafter referred to as “ the Rescheduled Debts I”) are as follows:

For the debts previously rescheduled pursuant to the arrangement made by the Notes exchanged between the Government of Japan and the Government of the Republic of Ecuador on August 4, 1992 concerning the debt relief measure with respect to the debts which the Government of the Republic of Ecuador owed to the Fund,

(i)	one hundred per cent (100%) of the principal having fallen due between March 1, 2003 and September 30, 2003, both dates inclusive, and not paid, the breakdown of which is shown in the List 1 attached hereto; and

(ii)	fifty per cent (50%) of the principal having fallen due between October 1, 2003 and March 31, 2004, both dates inclusive, and not paid, the breakdown of which is shown in the List 2 attached hereto.

(b)	The debts payable under the rescheduling agreement concluded between the Government of the Republic of Ecuador and the Export-Import Bank of Japan (hereinafter referred to as “the JEXIM”) on the rescheduling of Yen Loan (hereinafter referred to as “the Rescheduled Debts II”) are as follows:

For the debts previously rescheduled pursuant to the arrangement made by the Notes exchanged between the Government of Japan and the Government of the Republic of Ecuador on August 4, 1992 concerning the debt relief measure with respect to the debts which the Government of the Republic of Ecuador owed to the JEXIM,

(i)	one hundred per cent (100%) of the principal having fallen due between March 1, 2003 and September 30, 2003, both dates inclusive, and not paid, the breakdown of which is shown in the List 3 attached hereto; and

(ii)	fifty per cent (50%) of the principal having fallen due between October 1, 2003 and March 31, 2004, both dates inclusive, and not paid, the breakdown of which is shown in the List 4 attached hereto.

(c)	The debts payable under the rescheduling agreements concluded between the Government of the Republic of Ecuador on the one hand and the JEXIM and private banks concerned on the other on the rescheduling of Buyer’s Credit (hereinafter referred to as “the Rescheduled Debts III”) are as follows:

(i)	For the debts previously rescheduled pursuant to the arrangement made by the Notes exchanged between the Government of Japan and the Government of the Republic of Ecuador on August 4, 1992 concerning the debt relief measure with respect to the debts which the Government of the Republic of Ecuador and the Instituto Ecuatoriano de Electrificación (hereinafter referred to as “INECEL”) owed to the JEXIM and private banks concerned,

(aa)	one hundred per cent (100%) of the principal having fallen due between March 1, 2003 and September 30, 2003, both dates inclusive, and not paid, the breakdown of which is shown in the List 5 attached hereto,

(bb)	fifty per cent (50%) of the principal having fallen due between October 1, 2003 and March 31, 2004, both dates inclusive, and not paid, the breakdown of which is shown in the List 6 attached hereto.

(ii)	For the debts previously rescheduled pursuant to the arrangement made by the Notes exchanged between the Government of Japan and the Government of the Republic of Ecuador on January 31, 1995 concerning the debt relief measure with respect to the debts which the Government of the Republic of Ecuador owed to the JEXIM and private banks concerned, one hundred per cent (100%) of the principal having fallen due between March 1, 2003 and September 30, 2003, both dates inclusive, and not paid, the breakdown of which is shown in the List 7 attached hereto.

(2)	(a)	The total amount of the Rescheduled Debts I will be one hundred and eighty-three million five hundred and forty thousand yen (￥183,540,000).

(b)	The total amount of the Rescheduled Debts II will be sixty-four million sixty thousand five hundred yen (￥64,060,500).

(c)	The total amount of the Rescheduled Debts III will be one hundred and forty-six million five hundred and eighty-seven thousand five hundred yen (￥146,587,500).

(3)	Modifications may be made to the total amount referred to in sub-paragraph (2) above and to the Lists 1 to 7 attached hereto by an agreement between the authorities concerned of the Government of Japan and of the Government of the Republic of Ecuador, after the final verification to be made by the authorities concerned of the Government of the Republic of Ecuador and the Banks.

(4)	The terms and conditions of the rescheduling will be stipulated in rescheduling agreements to be concluded between the Government of the Republic of Ecuador and the Banks (hereinafter referred to as “the Rescheduling Agreements”), which will contain, inter alia, the following principles:

(i)	(aa)	Each of the Rescheduled Debts I and II will be paid in twenty (20) equal semi-annual installments beginning on March 15, 2014.

(bb)	The Rescheduled Debts III will be paid in thirty (30) semi-annual installments beginning on March 15, 2007 in accordance with the payment schedule shown in Annex attached hereto.

(ii)	(aa)	The rate of interest on the Rescheduled Debts I will be one point five per cent (1.5%) per annum beginning from each due date mentioned in the Lists 1 and 2 attached hereto.

(bb)	The rate of interest on the Rescheduled Debts II and the Rescheduled Debts III will be zero point five per cent (0.5%) per annum above the applicable London inter-bank offered rate (hereinafter referred to as “ LIBOR” ) on Japanese Yen deposits applied for six months lending, beginning from each due date mentioned in the Lists 3 to 7 attached hereto.  The rate of interest will be determined on the day falling two London banking days before the original due date for the first payment, and on March 15 and September 15 in each year for the consecutive interest periods after the first payment.

(5)	The Rescheduling Agreements will also stipulate the terms and conditions of the payments provided for in paragraph 3.

3.	(1)	The debts to be deferred consist of the debts referred to in (a) and (b) below, which the Government of the Republic of Ecuador owes to the Banks.

(a)	For the debts previously rescheduled pursuant to the arrangement made by the Notes exchanged between the Government of Japan and the Government of the Republic of Ecuador on August 4, 1992 concerning the debt relief measure with respect to the debts which the Government of the Republic of Ecuador owed to the Fund, fifty per cent (50%) of the principal having fallen due between October 1, 2003 and March 31, 2004, both dates inclusive (hereinafter referred to as “the Deferred Debts I”), the breakdown of which is shown in the List 8 attached hereto.

(b)	For the debts previously rescheduled pursuant to the arrangement made by the Notes exchanged between the Government of Japan and the Government of the Republic of Ecuador on August 4, 1992 concerning the debt relief measure with respect to the debts which the Government of the Republic of Ecuador owed to the JEXIM and private banks concerned, fifty per cent (50%) of the principal having fallen due between October 1, 2003 and March 31, 2004, both dates inclusive (hereinafter referred to as “the Deferred Debts II”), the breakdown of which is shown in the List 9 attached hereto.

(2)	(a)	The total amount of the Deferred Debts I is sixty one million one hundred and eighty thousand yen (￥61,180,000).

(b)	The total amount of the Deferred Debts II is forty-eight million six hundred and sixty-eight thousand yen (￥48,668,000).

(3)	With respect to the Deferred Debts I and the Deferred Debts II, it is confirmed that the payment of the following amounts has been made by the Government of the Republic of Ecuador on March 31, 2004;

(a)	the total amount of the Deferred Debts I referred to in subparagraph (2)(a) above; and

(b)	the total amount of the Deferred Debts II referred to in subparagraph (2)(b) above.

(4)	(a)	The rate of interest on the Deferred Debts I will be one point five per cent (1.5%) per annum beginning from the due date mentioned in the List 8 attached hereto.

(b)	The rate of interest on the Deferred Debts II will be zero point five per cent (0.5%) per annum above the applicable LIBOR on Japanese Yen deposits applied for six months lending, beginning from each due date mentioned in the List 9 attached hereto.  The rate of interest will be determined on the day falling two London banking days before the original due date for the first payment of interest, and on March 15 and September 15 in each year for the consecutive interest periods after the first payment.

4.	If the representative of the Government of the Republic of Ecuador and the representatives of the Governments of the creditor countries concerned come to a new conclusion in connection with reorganization of the debts of the Republic of Ecuador including the debts covered by the present arrangement, consultations will be held between the Government of Japan and the Government of the Republic of Ecuador in order to discuss the matter of continuation or modification of the present arrangement.

I should be grateful if Your Excellency would confirm the foregoing understanding on behalf of the Government of the Republic of Ecuador.
 
I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration.

(Signed)  Hiroyuki Hiramatsu
	Ambassador Extraordinary
      and Plenipotentiary of Japan
	to the Republic of Ecuador

His Excellency
Mr. José Jouvín Vernaza
Minister of Economy and Finance
of the Republic of Ecuador

ANNEX



0.44%    on    March 15,	2007
0.58%    on    September 15,  2007
0.74%    on    March 15, 	2008
0.90%    on    September 15,	2008
1.07%    on    March 15,	2009
1.25%    on    September 15,	2009
1.43%    on    March 15,	2010
1.62%    on    September 15,	2010
1.82%    on    March 15,	2011
2.02%    on    September 15,	2011
2.22%    on    March 15, 	2012
2.43%    on    September 15,	2012
2.64%    on    March 15,	2013
2.86%    on    September 15,	2013
3.08%    on    March 15,	2014
3.30%    on    September 15,	2014
3.53%    on    March 15,	2015
3.76%    on    September 15,	2015
4.00%    on    March 15,	2016
4.23%    on    September 15,	2016
4.48%    on    March 15, 	2017
4.72%    on    September 15,	2017
4.97%    on    March 15, 	2018
5.22%    on    September 15,	2018
5.47%    on    March 15,	2019
5.72%    on    September 15,	2019
5.98%    on    March 15,	2020
6.24%    on    September 15,	2020
6.51%    on    March15,	2021
6.77%    on    September 15,	2021

Quito, November 20, 2006

Excellency,

	I have the honour to acknowledge the receipt of Your Excellency’s Note of today’s date, which reads as follows:

“(Japanese Note)”

I have further the honour to confirm on behalf of the Government of the Republic of Ecuador the understanding set forth in Your Excellency’s Note.

I avail myself of this opportunity to extend to Your Excellency the assurance of my highest consideration.

(Signed)  José Jouvín Vernaza
    Minister of Economic and Finance
	of the Republic of Ecuador

His Excellency
Mr. Hiroyuki Hiramatsu
Ambassador Extraordinary
and Plenipotentiary of Japan
to the Republic of Ecuador

Quito, November 20, 2006

Excellency,

	I have the honour to refer to the recent negotiations between the representatives of the Government of Japan and of the Government of the Republic of Ecuador that were held on the basis of the conclusions reached during the consultations between the representatives of the Government of the Republic of Ecuador and of the Governments of the creditor countries concerned held in Paris from June 11 to 13, 2003.  I have further the honour to confirm the following understanding reached in the course of the said negotiations: 

1.	(1)	The present arrangement will apply to the total amount of the principal of the commercial debts with a repayment period of more than one year, contracted before January 1, 1983 between the Government of the Republic of Ecuador or its public institutions on the one hand and the creditors concerned resident in Japan (hereinafter referred to as “the Creditors”) on the other and insured by the Government of Japan (hereinafter referred to as “the Rescheduled Commercial Debts”):

(a)	For the commercial debts previously rescheduled pursuant to the arrangement made by the Notes exchanged between the Government of Japan and the Government of the Republic of Ecuador on August 4, 1992 (hereinafter referred to as “the Previous Notes I”), 

(i)	one hundred per cent (100%) of the principal having fallen due between March 1, 2003 and September 30, 2003; and

(ii)	fifty per cent (50%) of the principal having fallen due between October 1, 2003 and March 31, 2004.

(b)	For the commercial debts previously rescheduled pursuant to the arrangement made by the Notes exchanged between the Government of Japan and the Government of the Republic of Ecuador on January 31, 1995 (hereinafter referred to as “the Previous Notes II”), one hundred per cent (100%) of the principal having fallen due between March 1, 2003 and September 30, 2003.

(2)	The Rescheduled Commercial Debts consist of debts contracted in Japanese yen and in United States dollars.  The estimate of total amount of the Rescheduled Commercial Debts is as follows:

(a)	The total amount of the debts referred to in (i) of sub-paragraph (1)(a)above will be one hundred and sixteen million three hundred and thirteen thousand eight hundred and fifty-six yen (¥116,313,856) for the debts contracted in Japanese yen and six hundred and sixty-nine thousand six hundred and ninety-four United States dollars and seventy-three cents ($669,694.73)for the debts contracted in United States dollars.

(b)	The total amount of the debts referred to in (ii) of sub-paragraph (1)(a)above will be fifty-eight million one hundred and fifty-six thousand nine hundred and nine yen (¥58,156,909) for the debts contracted in Japanese yen and three hundred and thirty-four thousand eight hundred and forty-seven United States dollars and two cents ($334,847.02) for the debts contracted in United States dollars.

(c)	The total amount of the debts referred to in sub-paragraph (1)(b)above will be two hundred and thirty-two million one hundred and forty-three thousand three hundred and ninety-two yen (¥232,143,392) for the debts contracted in Japanese yen and one million three hundred ninety-two thousand seven hundred and thirty-five United States dollars and twenty-six cents ($1,392,735.26)for the debts contracted in United States dollars.

(3)	Modifications may be made to the total amount referred to in sub-paragraph (2) above by an agreement between the authorities concerned of the Government of Japan and of the Government of the Republic of Ecuador, after the final verification to be made by the authorities concerned of the two Governments.

(4)	The Rescheduled Commercial Debts will be paid in thirty (30) semi-annual installments beginning on March 15, 2007 in accordance with the payment schedule shown in the Annex I attached to this Note (hereinafter referred to as “the Payment Scheme”).

2.	(1)	The Government of the Republic of Ecuador will pay to the Creditors, on March 15 and September 15 each year, the interest to be calculated as described in sub-paragraph (3) below, on each of the Rescheduled Commercial Debts concerned to the extent that they have not been settled.  The first payment of the interest will be made on March 15, 2007.

(2)	(a)	(i)	The rate of interest on the debts referred to in sub-paragraph (1)(a) of paragraph 1. applied for the period between each original due date stipulated in the Previous Notes I and the day preceding the date of exchange of this Note, both dates inclusive, will be eight point one per cent (8.1%) per annum for the debts contracted in Japanese yen and seven point seven nine per cent (7.79%) per annum for the debts contracted in United States dollars.

(ii)	The rate of interest on the debts referred to in sub-paragraph (1)(b) of paragraph 1. applied for the period between each of the original due date stipulated in the Previous Notes II and the day preceding the date of exchange of this Note, both dates inclusive, will be seven point nine per cent (7.9%) per annum for the debts contracted in Japanese yen and nine point zero per cent (9.0%) per annum for the debts contracted in United States dollars.
 
(iii)	The rate of interest on the Rescheduled Commercial Debts applied from the date of exchange of this Note will be nought point five per cent (0.5%) per annum above the applicable five-year Japanese Government Bond yield (hereinafter referred to as “the Bond yield”) for the debts contracted in Japanese yen and nought point five per cent (0.5%) per annum above the applicable London inter-bank offered rate (hereinafter referred to as “the LIBOR”) on United States dollars deposits for the debts contracted in United States dollars.

(iv)	With respect to the debts referred to in sub-paragraph (1)(a) of paragraph 1., notwithstanding the provisions of (i) and (iii) of sub-paragraph (2)(a) above, the difference between the amount of late interest to be paid calculated by the rate of interest referred to in sub-paragraph (i) above, for the period between the original due date stipulated in the Previous Note I and the day preceding the date of the exchange of this Note, both dates inclusive, and the amount of rescheduling interest calculated by the rate of interest referred to in (iii) will be cancelled on the date of exchange of the present Notes.

(v)	With respect to the debts referred to in sub-paragraph (1)(b) of paragraph 1, notwithstanding the provisions of (ii) and (iii) of sub-paragraph (2)(a) above, of the previously rescheduled debts pursuant to the arrangements made in the Previous Note II, concerning the debts due on March 31, 2003, the difference between the amount of late interest to be paid calculated by the rate of interest referred to in (ii) above and the amount of rescheduling interest calculated by the rate of interest referred to in (iii) above for the period between June 13, 2003 and the day preceding the date of exchange of this Note, both dates inclusive, and concerning the debts due on September 30, 2003, the difference between the amount of late interest to be paid calculated by the rate of interest referred to in (ii) above and the amount of rescheduling interest calculated by the rate of interest referred to in (iii) above for the period between September 30,2003 and the day preceding the date of exchange of this Note, both dates inclusive, will be cancelled on the date of exchange of the present Notes.

(b)	(i)	The dates March 15 and September 15 each year are hereinafter referred to as the “base dates”.  The period between a base date and the day immediately preceding the next base date (both dates inclusive) is hereinafter referred to as the “rate fixation period”.

(ii)	The applicable Bond yield with respect to a particular rate fixation period means, whenever used in this Note, the Bond yield applied by banks of Japan on the first business day in the rate fixation period.

(iii)	The applicable LIBOR on United States dollar deposits with respect to a particular rate fixation period means, whenever used in this Note, the LIBOR applied for six months lending on the first business day in the rate fixation period.

(iv)	Each of the Bond yield or the LIBOR on United States dollar deposits is applicable only during the corresponding rate fixation period, insofar as the debt concerned remains unsettled.

(3)	(a)	The amount of interest to be paid with respect to a particular rate fixation period will be calculated by multiplying the amount of the debt unsettled by the product of the number of the days the debt has not been settled in the said rate fixation period and the applicable daily interest rate.  The applicable daily interest rate is calculated by dividing the rate of interest referred to in sub-paragraph (2)(a) above by three hundred and sixty-five (365).  The illustration in the form of numerical formula of the method of calculation mentioned above is shown in the Annex II attached to this Note.

(b)	In case where the debt concerned has remained unsettled beyond one rate fixation period, the amount of interest to be paid will be the total of the amount of interest calculated with respect to each of the rate fixation periods concerned.

(4)	In case where any payment under the Payment Scheme or the payment schedule of interest as set out in sub-paragraph (1) above is retarded, the Government of the Republic of Ecuador will pay the late interest accruing from the overdue amount at the rate of one per cent (1%) per annum above the rate of interest referred to in (iii) of sub-paragraph (2)(a)above.

3.	The remaining fifty per cent (50%) of the principal having fallen due between October 1, 2003 and March 31, 2004 referred to in (ii) of sub-paragraph (1) (a) of paragraph 1. (hereinafter referred to as “the Remaining Debts”) consist of debts contracted in Japanese yen and in United States dollars. It is confirmed that:

(1)	The payment of the Remaining Debts contracted in Japanese yen, amounting to fifty-eight million one hundred and fifty-six thousand nine hundred and forty-seven yen (\58,156,947), has been completed by the Government of the Republic of Ecuador; and that

(2)	The payment of the Remaining Debts contracted in United States dollars, amounting to three hundred and thirty-four thousand eight hundred and forty seven United States dollars and seventy-one cents ($ 334,847.71), has been completed by the Government of the Republic of Ecuador.

4.	(1)	The Government of the Republic of Ecuador will pay to the Creditors, immediately after the exchange of this Note and Your Excellency’s Note in reply, interest to be calculated as described in sub-paragraph (3) below on each of the Remaining Debts concerned.

(2)	(a) The rate of interest on the Remaining Debts applied for the period between the original due date and the day preceding the payment date, both dates inclusive, will be eight point one per cent (8.1%) per annum and for the Remaining Debts contracted in Japanese yen and seven point seven nine per cent (7.79%) per annum for the Remaining Debts contracted in United States dollars.

(b)	Notwithstanding the provisions of sub-paragraph (a) above,  the difference between the amount of late interest to be paid calculated by the rate of interest referred to in sub-paragraph(a) above and the amount of rescheduling interest to be paid calculated by the rate of interest referred to in sub-paragraph (2)(a)(iii) of paragraph 2. will be cancelled on the date of exchange of the present Notes.

(3)	The amount of interest to be paid with respect to the Remaining Debts will be calculated by multiplying the amount of the debt by the product of the number of the days the debts had not been settled and the applicable daily interest rate.  The applicable daily interest rate is calculated by dividing the rate of interest referred to in sub-paragraph (2) above by three hundred and sixty-five (365).  The illustration in the form of numerical formula of the method of calculation mentioned above is shown in the Annex III attached to this Note.

5.	(1)	The Government of the Republic of Ecuador will notify the Government of Japan, through the Central Bank of the Republic of Ecuador, of the amount and the dates of payments which will be made in order to settle the Rescheduled Commercial Debts in accordance with the Payment Scheme.

(2)	The Government of the Republic of Ecuador will pay total amount of the Rescheduled Commercial Debts to the Creditors in the currency designated in the contracts concerned through the Central Bank of the Republic of Ecuador in accordance with the Payment Scheme.

6.	The interest paid will be exempted from all taxes and duties of the Republic of Ecuador.

7.	The Government of the Republic of Ecuador will pay bank charges incidental to the settlement of the commercial debts concerned.

8.	It is confirmed that the terms and conditions of the contracts concerned not specifically referred to in this Note will remain applicable, unless otherwise agreed upon by the parties to the contracts concerned.

9.	If the Government of the Republic of Ecuador accords to creditors resident in any third country terms and conditions more favorable than those referred to in sub-paragraph (4) of paragraph 1. with regard to debt relief measures, the Government of the Republic of Ecuador will forthwith accord to the Creditors the terms and conditions not less favorable than those accorded to creditors resident in such third country.

10.	If the representative of the Government of the Republic of Ecuador and the representatives of the Governments of the creditor countries concerned come to a new conclusion in connection with reorganization of the debts of the Republic of Ecuador including the debts covered by the present arrangement, consultations will be held between the Government of Japan and the Government of the Republic of Ecuador in order to discuss the matter of continuation or modification of the present arrangement.

I have further the honour to propose that this Note and Your Excellency’s Note in reply confirming on behalf of the Government of the Republic of Ecuador the foregoing understanding shall constitute an agreement between the two Governments, which shall enter into force on the date of Your Excellency’s Note in reply.

I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

(Signed)  Hiroyuki Hiramatsu
	Ambassador Extraordinary
	and Plenipotentiary of Japan
	to the Republic of Ecuador

His Excellency
Mr. José Jouvín Vernaza
Minister of Economy and Finance
of the Republic of Ecuador

ANNEX I

		0.44%	on	March 15,	2007
		0.58%	on	September 15,	2007
		0.74%	on	March 15,	2008
		0.90%	on	September 15,	2008
		1.07%	on	March 15,	2009
		1.25%	on	September 15,	2009
		1.43%	on	March 15,	2010
		1.62%	on	September 15,	2010
		1.82%	on	March 15,	2011
		2.02%	on	September 15,	2011
		2.22%	on	March 15,	2012
		2.43%	on	September 15,	2012
		2.64%	on	March 15,	2013
		2.86%	on	September 15,	2013
		3.08%	on	March 15,	2014
		3.30%	on	September 15,	2014
		3.53%	on	March 15,	2015
		3.76%	on	September 15,	2015
		4.00%	on	March 15,	2016
		4.23%	on	September 15,	2016
		4.48%	on	March 15,	2017
		4.72%	on	September 15,	2017
		4.97%	on	March 15,	2018
		5.22%	on	September 15,	2018
		5.47%	on	March 15,	2019
		5.72%	on	September 15,	2019
		5.98%	on	March 15,	2020
		6.24%	on	September 15,	2020
		6.51%	on	March 15,	2021
		6.77%	on	September 15,	2021

ANNEX II




	Numerical formula of the method of calculation of the amount of interest on the Rescheduled Commercial Debts


I = A x D x R x 1/365


	I:	The amount of interest

	A:	The amount of the debt unsettled

	D:	The number of the days the debt has not been settled

	R:	The rate of interest (per annum)

(NOTE)

	(1)	With respect to the first payment of the interest on the debts referred to in sub-paragraph (1)(b) of paragraph 1., having fallen due on or before June 12, 2003, the amount of the payment shall be calculated by applying the following numerical formula.  The first payment of the interest will be made on March 15, 2007.


I = A x｛(D1 x R1) + (D2 x R2)｝x1/365


	I:	The amount of interest

	A:	The amount of the debt unsettled 

	D1:	The number of the days from the original due date to June 12, 2003, both dates inclusive

	R1:	The rate of interest (per annum) referred to in (ii) of sub-paragraph (2)(a) of paragraph 2.

	D2:	The number of the days from June 13, 2003 to March 14, 2007, both dates inclusive

	R2:	The rate of interest (per annum) referred to in (iii) of sub-paragraph (2)(a) of paragraph 2. 

 
	(2)	With respect to the first payment of the interest on the Rescheduled Commercial Debts other than the debts referred to in (1) above, D is equal to the number of the days from each original due date to the previous day of March 15, 2007 both dates inclusive.

	(3)	With respect to the consecutive payments of the interest after the first payment, D is equal to the number of the days from the day of the previous payment to the previous day of the payment, both dates inclusive. 

 

Annex III




	Numerical formula of the method of calculation of the amount of accrued interest on the Remaining Debts


I = A x D x R x 1/365


	I:	The amount of accrued interest

	A:	The amount of the debt unsettled

	D:	The number of the days the debt has not been settled

	R:	Nought point five per cent (0.5%) per annum above the Bond yield for the debts contracted in Japanese yen and nought point five per cent (0.5%) per annum above the applicable LIBOR on United States dollars deposits for the debts contracted in United States dollars.

(NOTE)

	With respect to the payment of the interest, D is equal to the number of the days from the original due date to the previous day of March 31, 2004 both dates inclusive

Quito, November 20, 2006

Excellency,

	I have the honour to acknowledge the receipt of Your Excellency’s Note of today’s date, which reads as follows:

“(Japanese Note)”

I have further the honour to confirm on behalf of the Government of the Republic of Ecuador the foregoing understanding and to agree that Your Excellency’s Note and this Note in reply shall constitute an agreement between the two Governments, which shall enter into force on the date of this Note in reply.

I avail myself of this opportunity to renew to Your Excellency the assurance of my highest consideration.

(Signed)  José Jouvín Vernaza
     Minister of Economic and Finance
	of the Republic of Ecuador

His Excellency
Mr. Hiroyuki Hiramatsu
Ambassador Extraordinary
and Plenipotentiary of Japan
to the Republic of Ecuador