Papua New Guinea - Papua New Guinea : Credit 0348 - Smallholder Livestock Credit Project -Letter of Undertaking - Conformed

CONFORMED COPY CREDIT NUMBER 348 PNG Letter of Undertaking (Smallholder Livestock Credit Project) FROM COMMONWEALTH OF AUSTRALIA TO INTERNATIONAL DEVELOPMENT ASSOCIATION CONFORMED COPY CREDIT NUMBER 348 PNG Letter of Undertaking (Smallholder Livestock Credit Project) FROM COMMONWEALTH OF AUSTRALIA TO INTERNATIONAL DEVELOPMENT ASSOCIATION COMMONWEALTH OF AUSTRALIA January 4, 1973 International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Re: Credit No. 348-PNG (Smallholder Livestock Credit Project) Undertakings by the Comimonvealth of Australia Dear Sirs: We refer to the Development Credit Agreement (Smallholder Livestock Credit Project) between the International Development Association (the Association) and The Administration of Papua New Guinea (the Borrower), of even date herewith. It is the policy of the Commonwealth Government in relation to Papua New Guinea to assist towards its economic advancement by providing substantial help through budgetary and other support. So long as the Commonwealth remains responsible for Papua New Guinea this policy will be continued having regard to Papua New Guinea's needs and the level of financial help from other sources. The Commonwealth Government understands that in connection with the above-mentioned Project, arrangements have been made by the Borrower to provide funds in an amount sufficient to meet the cost thereof, presently estimated in the equivalent of US$9,850,000. The equivalent of US$5,000,000 would come from the above-mentioned Credit and the remainder from the Borrower's own resources, including financial assistance from the Commonwealth Government, if necessary. The Commonwealth Government confirms that the funds to be provided from such assistance will be made available to the Borrower promptly as required to enable it to meet the cost of the Project. Should the cost of the Project exceed the equivalent of US$9,850,000, the Commonwealth Government, so long as the Commonwealth remains responsible for Papua New Guinea, will take such action, in consultation with the Association and the Borrower, as shall be appropriate and feasible in the light of all the circumstances to assist the Borrower to obtain the needed funds. If, before the completion of the Project, a constitutional change were made whereby the Commonwealth would no longer be responsible for Papua 4 New Guinea or for any part thereof within which any part of the Project is to be carried out, the Commonwealth Government will, before the effective date of such change, use its best endeavours, in consultation with the Association and the Borrower, to ensure that sufficient funds will be available to Papua New Guinea. We wish to confirm that, (i) pursuant to sub-section (1) of section 75A of the Papua New Guinea Act 1949-1971, where any moneys are borrowed by the Borrower by way of a public loan, as defined in sub-section (2) of said section, the Commonwealth is deemed, by force of the said section, to guarantee the due payment of all moneys (including interest) payable by the Borrower under the terms and conditions in accordance with which the moneys are borrowed and the provisions relating to public loans contained in the laws of Papua New Guinea in force at the time of the borrowing; (ii) pursuant to sub-section (2) of the said section, the above-mentioned Credit will, if authorized, approved or ratified under the laws of Papua New Guinea, qualify as a public loan for purposes of sub-section (1) of the said section; and (iii) so long as the Commonwealth remains responsible for Papua New Guinea, the Commonwealth Government will ensure that any necessary permission is granted to the Borrower to enable it to purchase the currencies required to service the above-mentioned Credit. We also wish to confirm that: 1. The Commonwealth Government will take or cause to be taken all action necessary or appropriate (i) to enable the Borrower to perform all covenants, agreements and obligations of the Borrower set forth in the above-mentioned Development Credit Agreement; and (ii) to enable the Papua and New Guinea Development Bank (PNGDB) to perform all covenants, agreements and obligations of PNGDB set forth in the Project Agreement of even date herewith between the Association and PNGDB and in the Subsidiary Loan Agreement to be entered into between the Borrower and PNGDB; and will not take, or within the limits of the Commonwealth's constitutional powers permit any of its political sub-divisions or agencies to take, any action which would prevent or interfere with the performance by the Borrower or PNGDB of such covenants, agreements and obligations; provided, however, that no amendments are made without the approval of the Commonwealth Government, to the Development Credit Agreement, the Project Agreement and the Subsidiary Loan Agreement, that would substantially increase the obligations of the Commonwealth Government under this paragraph. 2. The principal of, and service charges on, the above-mentioned Credit shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of the Commonwealth or laws in effect in its territories; and 5 3. The above-mentioned Development Credit Agreement and Project Agreement shall be free from any taxes that shall be imposed under the laws of the Commonwealth or laws in effect in its territories on or in connection with the execution, delivery or registration thereof. Very truly yours, COMMONWEALTH OF AUSTRALIA /s / R. Fernandez Authorizec Representatire