(Japanese Note)

　Vientiane, November 7, 1995

　Excellency,

　I have the honour to refer to the recent discussions held between the representatives of the Government of Japan and of the Government of the Lao People's Democratic Republic concerning Japanese economic cooperation to be extended with a view to strengthening friendly and cooperative relations between the two countries, and to propose on behalf of the Government of Japan the following arrangements:

1. For the purpose of contributing to promotion of the economic structural adjustment efforts by the Government of the Lao People's Democratic Republic as well as mitigation of the economic difficulties, including indebtedness, of the Lao People's Democratic Republic, the Government of Japan will extend to the Government of the Lao People's Democratic Republic, in accordance with the relevant laws and regulations of Japan, a grant of five hundred million yen (500, 000, 000) (hereinafter referred to as "the Grant").

2.(1) The Grant and its accrued interest will be used by the Government of the Lao People's Democratic Republic properly and exclusively for the purchase of products enumerated in a list to be mutually agreed upon between the authorities concerned of the two Governments and services incidental to such products, provided that those products are produced in eligible source countries.

(2) The list mentioned in sub-paragraph (1) above will be subject to modifications which may be agreed upon between the authorities concerned of the two Governments.

(3) The scope of the eligible source countries mentioned in sub-paragraph (1) above will be agreed upon between the authorities concerned of the two Governments.

3.(1) The Government of the Lao People's Democratic Republic will open a yen ordinary deposit account at an authorized foreign exchange bank of Japan in the name of the Government of the Lao People's Democratic Republic (hereinafter referred to as "the Account") within fourteen days after the date of coming into force of the present arrangements and will notify in writing the Government of Japan of the completion of the procedure for opening the Account within seven days after the date of the opening of the Account.

(2) The sole purpose of the Account is to receive the payment in Japanese yen by the Government of Japan referred to in paragraph 4 as well as to make payments necessary for the purchase of the products and services referred to in sub-paragraph (1) of paragraph 2, and such other payment as may be agreed upon by the authorities concerned of the two Governments.

4. The Government of Japan will execute the Grant by making payment in Japanese yen of the amount referred to in paragraph 1 to the Account during the period between the date of receipt of the written notification referred to in sub-paragraph (1) of paragraph 3 and March 31, 1996, unless the period is extended by mutual agreement between the authorities concerned of the two Governments.

5.(1) The Government of the Lao People's Democratic Republic will take necessary measures:

(a) to use the Grant and its accrued interest within a period of twelve months after the date of the execution of the Grant and to refund the amount remaining in the Account after the period to the Government of Japan unless the period is extended by mutual agreement between the authorities concerned of the two Governments;

(b) to ensure that customs duties, internal taxes and other fiscal levies which may be imposed in the Lao People's Democratic Republic with respect to the purchase of the products and services referred to in sub-paragraph (1) of paragraph 2 shall not be borne by the Grant;

(c) to ensure that the Grant and its accrued interest be used properly and effectively for promotion of the economic structural adjustment efforts as well as mitigation of the economic difficulties, including indebtedness, of the Lao People's Democratic Republic; and

(d) to present to the Government of Japan a report prepared in a written form acceptable to the Government of Japan on the transactions on the Account together with copies of contracts, vouchers and other documents concerning the relevant transactions without delay when the Grant and its accrued interest are completely drawn in accordance with the provisions of sub-paragraph (2) of paragraph 3 or when the period for the use of the Grant and its accrued interest expires in accordance with the provisions of (a) above or upon request by the Government of Japan.

(2) The products purchased under the Grant shall not be re-exported from the Lao People's Democratic Republic.

6.(1) The Government of the Lao People's Democratic Republic shall ensure that an amount equivalent to the yen disbursement paid with respect to the purchase of the products referred to in sub-paragraph (1) of paragraph 2 will be deposited in Lao currency in an account to be opened in its name in the Bank of Lao P.D.R. The deposit shall be made within the period of three years from the date of coming into force of the present arrangements, unless otherwise agreed between the authorities concerned of the two Governments.

(2) The currency thus deposited shall be utilized for economic and social development purposes in the Lao People's Democratic Republic.

(3) The authorities concerned of the two Governments will consult with each other about the utilization of the currency deposited.

7. Further procedural details for the implementation of the present arrangements will be agreed upon through consultation between the authorities concerned of the two Governments.

8. The two Governments will consult with each other in respect of any matter that may arise from or in connection with the present arrangements.

　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 Lao People's Democratic Republic the foregoing arrangements shall be regarded as constituting an agreement between the two Governments, which will enter into force on the date of Your Excellency's reply.

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

　(Signed) Masao Wada
Ambassador Extraordinary and Plenipotentiary of Japan to the Lao People's Democratic Republic

　His Excellency
Mr. Phongsavath Boupha
Vice-Minister of Foreign Affairs of the Lao People's Democratic Republic

(Lao Note)

　Vientiane, November 7, 1995

　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 Lao People's Democratic Republic the foregoing arrangements and to agree that Your Excellency's Note and this Note shall be regarded as constituting an agreement between the two Governments, which will enter into force on the date of this reply.

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

　(Signed) Phongsavath Boupha
Vice-Minister of Foreign Affairs of the Lao People's Democratic Republic

　His Excellency
Mr. Masao Wada
Ambassador Extraordinary and Plenipotentiary of Japan to the Lao People's Democratic Republic