(Japanese Note)

　Ulaanbaatar, January 20, 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 Mongolia 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 Mongolia as well as mitigation of the economic difficulties, including indebtedness, of Mongolia, the Government of Japan will extend to the Government of Mongolia, in accordance with the relevant laws and regulations of Japan, a grant of one billion yen (1, 000, 000, 000) (hereinafter referred to as "the Grant").

2.(1) The Grant and its accrued interest will be used by the Government of Mongolia 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 Mongolia will open a yen ordinary deposit account at an authorized foreign exchange bank of Japan in the name of the Government of Mongolia (hereinafter referred to as "the Account") within fourteen 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 Mongolia.

6.(1) The Government of Mongolia 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 Mongolian currency in an account to be opened in its name in the Bank of Trade and Development of Mongolia. The deposit shall be make 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 Mongolia.

(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 Mongolia 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) Yoshihiro Hasumi
Ambassador Extraordinary and Plenipotentiary of Japan to Mongolia

　His Excellency
Mr. Tsevegmidiin Tsogt
Minister for Trade and Industry of Mongolia

(Mongolian Note)

　Ulaanbaatar, January 20, 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 Mongolia 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) Tsevegmidiin Tsogt
Minister for Trade and Industry of Mongolia

　His Excellency
Mr. Yoshihiro Hasumi
Ambassador Extraordinary and Plenipotentiary of Japan to Mongolia