Conformed Copy - L4422 - LGU Urban Water and Sanitation Project - Guarantee Agreement

Page 1 CONFORMED COPY LOAN NUMBER 4422 PH Guarantee Agreement (LGU Urban Water and Sanitation Project) between REPUBLIC OF THE PHILIPPINES and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated January 29, 1999 LOAN NUMBER 4422 PH GUARANTEE AGREEMENT AGREEMENT, dated January 29, 1999, between REPUBLIC OF THE PHILIPPINES (the Guarantor) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Guarantor has developed a program designed to ensure access to sustainable water supply, sanitation and drainage services for the greater portion of the population in approximately two hundred fifty cities and municipalities outside of Metro Manila in the Philippines (the Program), as set forth in a letter to the Bank, dated September 28, 1998, and is committed to the execution of said Program; (B) the Guarantor has requested that the Bank support the execution of the Program through a series of loans over a period of approximately eight years to be utilized in the implementation of the Program; (C) the Guarantor and Development Bank of the Philippines (the Borrower), having been satisfied as to the feasibility and priority of the Project described in Schedule 2 to the Loan Agreement, which Project forms the first phase of the Program, have requested the Bank to assist in the financing of the Project; (D) The Borrower intends to seek from the Nordic Development Fund a loan in amount equivalent to five million Special Drawing Rights (SDR 5,000,000) (the NDF Loan) to assist in the financing of Part C of the Project on the terms and conditions set forth in an agreement (the NDF Loan Agreement) to be entered into between the Page 2 Nordic Development Fund and the Borrower; (E) the Guarantor intends to seek from the European Union a grant (the European Union Grant) in an amount equivalent to one million ECU (ECU 1,000,000) to assist in financing Part B of the Project on the terms and conditions set forth in an agreement (the European Union Grant Agreement) to be entered into between the Guarantor and the European Union; and (F) by the Loan Agreement of even date herewith between the Bank and the Borrower, the Bank has agreed to extend to the Borrower a loan in the amount of twenty three million three hundred thousand dollars ($23,300,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that the Guarantor agree to guarantee the obligations of the Borrower in respect of such loan as provided in this Agreement; and WHEREAS the Guarantor, in consideration of the Bank