(Japanese Note)

　Tokyo, 19 February, 1965.

　Sir,I have the honour to refer to the recent negotiations held in Tokyo by representatives of our two Governments for the purpose of fostering the economic relations between Japan and Brazil and assisting Brazil in meeting the present requirements of her foreign exchange position.

　In these negotiations, due notice was taken of the discussions held in Paris on 24 May 1961, between Brazil and her European creditor countries, on whose basis the under-standing was reached thereafter between the Governments of Japan and the United States of Brazil on 26 January 1962, as well as of the decision taken more recently also in Paris, on 1 July 1964, aiming at the refinancing of Brazil's commercial liabilities incurred on account of her imports on a deferred payment basis, from several countries including Japan.

　As a result of the said negotiations, the following understanding has been reached between our two Governments regarding the manners of the refinancing of the Brazil's de ferred payment commercial debts to Japan excluding the debys incidental to Usiminas (hereinafter referred to as the Brazilian commercial debts to Japan):

1. The refinancing of Brazilian commercial debys to Japan shall cover: a) all transactions included in the understanding signed on 26 January 1962, referring to debts matured or maturing in the years of 1963, 1964, 1965, and 1966; b) new obligations falling due in 1964, 1965, not included in the said understanding, resulting from contracts made by Brazilian importers and duly registered at the "Superintendencia da Moeda e do Credito", up to 31 December 1963.

2. The Export-Import Bank of Japan (hereinafter referred to as the Eximbank) will, in accordance with the loan agreement between the Eximbank and the Banco do Brasil S.A. (herein-after referred to as the Banco), hereinafter referred to as "the Loan Agreement", make available to the Banco a loan amount up to the limits of 2,776 million yen (two billion seven hundred and seventy six million yen) equivalent to 7,710 thousand dollars (seven million seven hundred and ten thousand dollars) at the present IMF parity rate, toward the refinancing of the debts and obligations mentioned in paragraph 1 above, the aggregate amount of which is 11,881 thousand dollars (eleven million eight hundred and eighty one thousand dollars).

3. The above-mentioned loan amount is based on the following table:

　Year Total amount of debts due (in thousand of U.S. dollars) % Amount to be by Japan (in thousand of U.S. dollars) refinanced (in million of yen equivalent)

　1963 1,861 70% 1,303 469

　1964 4,017 70% 2,812 1,012

　1965 3,975 70% 2,783 1,002

　1966 2,028 70% 812 293

　Total 11,881 7,710 2,776

4. Advances under the above-mentioned loan will be made in convertible Japanese yen, and the disbursement, the repayment of principal and the payment of interest will be effected through a non-resident free yen account (hereinafter referred to as the Account) to be opened by the Banco at an authorized foreign exchange bank in Tokyo, in accordance with the relevant laws and regulations of Japan.

5. Advances will be made in the following manner:

(a) As regards the portions of the debts falling due between 1 January 1963 and 30 November 1964, of which the payment have been made to Japanese creditors before 30 November 1964, to a total amount of 5.109 thousand dollars (five million one hundred and nine thousand dollars), the Eximbank will deposit without delay in the Account, in yen,　upon request of the Banco after the Loan Agreement becomes effective, the amount equivalent to 3.576 thousand dollars (three million five hundred and seventy six thousand dollars), corresponding to 70% (seventy percent) of the above-mentioned total amount;

(b) As regards the portions of debts falling due between 1 January 1963 and 30 November 1964, of which the payment have not yet been effected to Japanese creditors, and the debts falling due between 1 December 1964 and 31 December 1965, the Eximbank, after the coming into effect of the Loan Agreement and upon receipt of monthly notice from the Banco of the payments made during the previous month by Brazilian debtors to Japanese creditors, will confirm the exactness of the said notice, and deposit in the Account, at the request of the Banco, the amount equivalent to 70% (seventy percent) of those payments.

(c) As regards the debts falling due between 1 January 1966 and 31 December 1966, the Eximbank, upon receipt of monthly notice from the Banco of the payments made during the previous month by Brazilian debtors to Japanese creditors, will confirm the exactness of the said notice, and deposit in the Account, at the request of the Banco, the amount equivalent to 40% (forty percent) of those payments.

6. The repayment of advances under the loan shall be effected in accordance with the following schedule:

　Amounts corresponding to commercial debts falling due in:Repayment schedule:

　1963 Twenty equal quarter-annual installments. beginning 15 August 1966.

　1964 Twenty equal quarter-annual installments, beginning 15 February 1967.

　1965 Twenty equal quarter-annual installments, beginning 15 February 1968

　1966 Twenty equal quarter-annual installments, beginning 15 February 1969.

7. The Banco shall pay interest at the rate of 5.75% (five and three quarters percent) per annum to the Eximbank on the balance of principal outstanding from time to time. Such interest shall be paid quarterly.

8. The repayment of principal and the payment of interest shall be guaranteed by the Government of the United States of Brazil.

9. Brazilian taxes and/or similar levies. as well as any other financial expenses in connection with the disbursement, the repayment of principal and the payment of interest shall be borne by the Banco.

10. The Banco shall expedite the settlement of all deferred payment commercial debts which are the objects of financing under the Loan Agreement and the Government of the United States of Brazil shall guarantee the free transferability of the payments thereof.

11. It is understood that the loan to be provided in pursuance of the principles set forth in the preceding paragraphs shall be made available in accordance with the Loan Agreement.

12. The Government of the United States of Brazil shall accord to Japan treatment not less favourable than that accorded to any other creditor country for the consolidation of debts of the same nature and of comparable amount.

13. The Government of the United States of Brazil will take necessary steps to expedite the liquidation of the outstanding commercial arrears to Japan.

14. The Government of the United States of Brazil will seek with the Government of Japan, without delay, a solution to the problems of maritime transport.

15. The two Governments shall consult each other in respect to any matter that may arise from or in connection with the present understanding.

　I should be grateful if you would kindly confirm the foregoing understanding on behalf of the Government of the United States of Brazil.

　Please accept, Sir, the renewed assurance of my high consideration.

　(Signed) Akira Nishiyama

　Director, 
  of Economic Cooperation Bureau, 
  Ministry of Foreign Affairs.

　Mr. Joao Baptista Pinheiro,Minister-Counsellor,Charge d'Affaires ad interim, 

(Brazilian Note)

　Tokyo, 19 February 1965.

　Sir,I have the honour to acknowledge receipt of your note of today's date which reads as follows:

"(Japanese Note)"

　I have further the honour to confirm the understanding stated in your note, on behalf of the Government of the United States of Brazil.

　Please accept, Sir, the renewed assurance of my high consideration.

　Minister-Counsellor,Brazilian Embassy, 
  Charge d'Affaires ad interim, 

　Director of Economic Cooperation Bureau, (Signed) Joao Baptista Pinheiro

　Ministry of Foreign Affairs,Mr. Akira Nishiyama