## pr214-com-version-japan-2020-borrowing-agreements

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### Purposes and Loan Amounts
- Japan agrees to lend to the Fund an SDR-denominated amount up to the equivalent of US$60,000 million (the “Loan Amount”).
- Upon the effectiveness of the increase in the credit arrangement of Japan under the Fund’s New Arrangements to Borrow (the “NAB”) as part of the NAB Reform, the Loan Amount will be automatically reduced to an SDR-denominated amount up to the equivalent of US$25,847 million (the “Rolled Back Loan Amount”).
- Agreement basis: Article VII, Section 1(i) of the Fund’s Articles of Agreement; considered in light of the Guidelines for Borrowing by the Fund.

### Definitions and Framework
- “2020 Borrowing Agreement”: this agreement and other bilateral borrowing agreements entered into or amended pursuant to the borrowing framework approved by the Fund in March 2020.
- “2016 Borrowing Agreement”: each bilateral borrowing agreement entered into pursuant to the borrowing framework approved by the Fund in August 2016.
- “Bilateral Borrowing Agreements”: the 2020 Borrowing Agreements and the 2016 Borrowing Agreements collectively.

### Term, Activation Thresholds and Conditions
- Term end date: December 31, 2023.
- Extension option: Fund may extend term for one further year through December 31, 2024 by Executive Board decision and with the consent of Japan.
- Activation threshold: modified FCC is below SDR 100 billion.
- Activation conditions:
  - NAB is activated as of the time of the notification, or there are no available uncommitted resources under the NAB as of that time; and
  - Activation approved by creditors representing at least 85 percent of the total credit amount committed under the 2020 Borrowing Agreements by creditors eligible to vote on such activation.
- Creditor voting: Managing Director proposes activation in writing and requests creditors’ vote; creditors whose 2020 Borrowing Agreement is not effective or whose currency is not included in the Financial Transactions Plan are ineligible to vote.
- Managing Director may approach creditors before modified FCC is below activation threshold in extraordinary circumstances.

### Deactivation and Permitted Uses During Activation
- Automatic deactivation: 2020 Borrowing Agreements deactivated whenever the NAB is no longer activated, unless there are no available uncommitted NAB resources.
- Deactivation also occurs if Managing Director notifies Executive Board that modified FCC (excluding Bilateral Borrowing Agreements) has risen above the activation threshold and:
  - (i) Executive Board determines activation no longer necessary; or
  - (ii) six months elapse after notification and modified FCC (excluding Bilateral Borrowing Agreements) has not fallen below the activation threshold.
- Permitted uses during activation:
  - (i) fund any outright purchases made from the GRA during the term of this agreement; and
  - (ii) approve, during the term of this agreement, commitments of GRA resources under Fund arrangements whose purchases could be funded by drawings under this agreement at any time during the period of such commitments, including after expiration of the term of this agreement; commitments covered under (ii) include any commitment whose approval caused the activation threshold to be reached.
- Resources may be used to fund early repayment of claims under other 2020 Borrowing Agreements if relevant creditors request early repayment per paragraph 8.
- Drawings for early repayment of other creditors’ claims may be made so long as claims under the 2020 Borrowing Agreements remain outstanding, including after expiration of the term or during periods when this agreement is not activated.
- Drawing goal: achieve over time broadly balanced positions among creditors under all Bilateral Borrowing Agreements relative to their commitments.

### Estimates, Notices, and Limits on Drawings
- Prior to each plan period, the Fund shall provide Japan with best estimates of expected drawing amounts for the forthcoming period and revised estimates as warranted.
- Japan excluded from periodic plan, and no drawings made under this agreement, if Japan is not included and not being proposed for inclusion in the Financial Transactions Plan for transfers of its currency.
- No drawings if Japan was included in the periodic plan but, at time of drawing, Japan’s currency is not being used in transfers under the Financial Transactions Plan because of Japan’s balance of payments and reserve position.
- If Japan was not included in the Financial Transactions Plan at the time of the vote but is subsequently included, drawings may be made to fund purchases and commitments during activation unless Japan notifies the Fund it does not wish to be drawn upon.
- Notice requirements:
  - At least five business days’ (Tokyo) notice of intention to draw.
  - Payment instructions at least two business days (Fund) prior to value date by rapid authenticated means (e.g., SWIFT).
  - Exceptional circumstances: at least three business days’ (Tokyo) notice if five business days not possible; Japan to make best efforts to meet such a call.

### Evidence of Indebtedness
- Outstanding drawings will be included in Japan’s position statements published monthly by the Fund.
- At Japan’s request, Fund shall issue non-negotiable instruments evidencing the Fund’s indebtedness; upon full repayment and accrued interest, instrument returned for cancellation; if partially repaid, instrument returned and new instrument for remainder substituted with same maturity date.

### Maturity, Extensions and Repayment Mechanics
- Standard maturity: three months from the drawing date for each drawing, except as provided in paragraph 5 and paragraph 8.
- Fund may elect to extend maturity by additional three-month periods after initial maturity; such election deemed automatic for all drawings outstanding unless Fund notifies Japan at least five business days (Fund) before a maturity date that it does not elect to extend for a particular drawing or portion.
- Limits on extensions:
  - (i) maturity date of any drawing to fund purchases from the GRA shall not be extended later than the tenth anniversary of the date of such drawing; and
  - (ii) maturity date for any drawings to fund early repayments of other creditors’ claims shall be a single common maturity date that is the longest remaining maximum maturity of any claim for which such early repayment has been requested or the tenth anniversary of the date of the relevant drawing to fund early repayment, whichever is earlier.
- Executive Board determination of exceptional circumstances may allow, with Japan’s agreement, extension of maximum maturity up to an additional five years.
- Repayment: principal payable on maturity date applicable to drawing or part thereof.
- Early repayment: Fund may make early repayment after consultation with Japan, with at least five business days (Fund) notice.
- Repayments restore pro tanto the amount that can be drawn; extension of maturity does not reduce drawable amount.
- If maturity date not a business day where payment is to be made, payment date is next business day there; interest accrues up to the payment date.

### Rate of Interest and Interest Payments
- Interest rate: SDR interest rate established by the Fund pursuant to Article XX, Section 3 of the Fund’s Articles of Agreement.
- Exception: if Fund pays a higher interest rate on outstanding balances from any other comparable Article VII, Section 1(i) borrowing, the interest rate payable under this agreement shall be equivalent to that higher rate while it remains in effect.
- Interest calculation: on outstanding amount of the drawing; accrues daily and paid promptly after each July 31, October 31, January 31, and April 30.

### Denomination, Media and Modalities of Drawings and Payments
- Denomination: each drawing and corresponding repayment denominated in SDRs.
- Payment modalities:
  - Japan to pay the SDR equivalent amount of Japanese yen to the Fund’s account at the designated depository of Japan on the value date specified.
  - For drawings under paragraph 2(e), Japan shall ensure that balances drawn that are not balances of a freely usable currency can be exchanged for a freely usable currency of its choice, and for balances that are of a freely usable currency, shall collaborate with the Fund and other members to enable exchange for another freely usable currency.
- Japan’s obligations under Article V, Section 3(e) and Article V, Section 7(j) apply to purchase and repurchase transactions involving its currency used in drawings and repayments.
- Repayment of principal, except as provided in paragraph 8, shall be made, as determined by the Fund, in:
  - the currency borrowed whenever feasible, in Japanese yen, in special drawing rights (provided it does not increase Japan’s holdings of SDRs above the limit under Article XIX, Section 4 unless Japan agrees to accept SDRs above that limit), in freely usable currencies, or with Japan’s agreement in other currencies included in the Fund's Financial Transactions Plan.
- Interest payments normally in SDRs; Fund and Japan may agree interest payments be made in Japanese yen.
- Payment mechanics:
  - Payments in Japanese yen to account specified by Japan or by debiting Fund’s account with designated depository of Japan.
  - Payments in SDRs by crediting Japan’s account in the Special Drawing Rights Department.
  - Payments in any other currency to an account specified by Japan.

### Early Repayment at Request of Japan
- Japan may request and obtain early repayment at face value of all or part of outstanding drawings if:
  - (i) Japan represents its balance of payments and reserve position justifies such repayment; and
  - (ii) the Fund, giving Japan’s representation the overwhelming benefit of any doubt, determines there is a need for the early repayment in light of Japan’s balance of payments and reserve position.
- After consultation, Fund may repay pursuant to this paragraph in SDRs or a freely usable currency as determined by the Fund or, with Japan’s agreement, in currencies of other members included in the Fund's Financial Transactions Plan.

### Transferability of Claims and Obligations
- General rule: Japan may not transfer obligations or claims resulting from outstanding drawings except with prior consent of the Fund and on Fund-approved terms, except as provided in subparagraphs (b)–(h).
- Japan’s right to transfer at any time all or part of any claim to:
  - any member of the Fund,
  - the central bank or other fiscal agency designated by any member for Article V, Section 1 purposes (“other fiscal agency”),
  - any official entity prescribed as a holder of SDRs pursuant to Article XVII, Section 3.
- Transferee conditions:
  - Transferee assumes Japan’s liabilities regarding extension of maturities per paragraph 5(a) and extension of maximum maturity in exceptional circumstances.
  - Transferred claim held on same terms as by Japan, except:
    - (i) transferee acquires right to request early repayment under paragraph 8 only if it is a member, or the central bank or other fiscal agency of a member, and at time of transfer the member’s balance of payments and reserve position is considered sufficiently strong such that its currency is used in transfers under the Financial Transactions Plan;
    - (ii) if transferee is a member or its central bank/fiscal agency, references to Japanese yen in paragraph 7 deemed to refer to the relevant member’s currency; otherwise deemed to refer to a freely usable currency determined by the Fund;
    - (iii) payments related to transferred claim made to an account specified by the transferee;
    - (iv) references to business days (Tokyo) deemed to refer to business days where the transferee is situated.
- Price of transferred claim: as agreed between Japan and transferee.
- Notification to Fund: Japan shall promptly notify the Fund of the claim being transferred, transferee name, amount transferred, agreed price, and value date.
- Transfer effective in Fund records if in accordance with paragraph 9 terms and conditions; effective as of agreed value date.
- Interest payment on transfer: if claim transferred during a quarterly period as described in paragraph 6(b), Fund shall pay interest to transferee on amount transferred for whole of that period.
- Fund assistance: if requested, Fund shall assist in seeking to arrange transfers.

### Effective Exchange Rate and Valuation of SDR
- Exchange rates: All drawings, exchanges, and payments of principal and interest under this agreement shall be made at the exchange rates for the relevant currencies in terms of the SDR established pursuant to Article XIX, Section 7(a) of the Fund’s Articles of Agreement and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the transfer, exchange or payment.
- If this exchange rate determination date is not a business day in Tokyo, such date shall be the last preceding business day of the Fund that is also a business day in Tokyo.
- For purposes of applying the limit on drawings as specified in paragraphs 1(a), 14(c) and 14(e), the US dollar value of each SDR-denominated drawing shall be determined and permanently fixed on the value date of the drawing based on the US dollar/SDR exchange rate established pursuant to Article XIX, Section 7(a) of the Fund’s Articles of Agreement and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the drawing.
- If this exchange rate determination date is not a business day in Tokyo, such date shall be the last preceding business day of the Fund that is also a business day in Tokyo.
- Changes in method of valuing the SDR:
  - If the Fund changes the method of valuing the SDR, all transfers, exchanges and payments of principal and interest made two or more business days of the Fund after the effective date of the change shall be made on the basis of the new method of valuation.

### Non-Subordination, Settlement of Questions
- Non-subordination: The Fund agrees that it will not take any action that would have the effect of making Japan’s claims on the Fund resulting from outstanding drawings under this agreement subordinate in any way to claims on the Fund resulting from any other borrowing effected pursuant to Article VII, Section 1(i) of the Fund’s Articles of Agreement.
- Settlement of questions: Any question arising under this agreement shall be settled by mutual agreement between Japan and the Fund.

### Transitional Arrangements and Sequencing (Paragraph 14)
- Paragraph 14(a):
  - Regardless of whether this agreement is activated or not, the Fund: (i) subject to paragraph 14(b), shall make drawings under this agreement to repay any outstanding claims under Japan’s 2016 Borrowing Agreement, and (ii) may make drawings under this agreement to fund purchases under commitments approved by the Fund during an activation of the 2016 Borrowing Agreements or to fund early repayment of claims under other 2016 Borrowing Agreements in case the creditor represents a balance of payments need;
  - provided that notwithstanding paragraph 5(a) of this agreement the maximum maturity date of the claim from the repayment herein shall be the residual maximum maturity date of the claim that is repaid with drawings under this agreement;
  - and provided further that any claims under this agreement that result from the repayment herein shall be considered claims under the 2016 Bilateral Borrowing Agreements for purposes of funding the early repayment of these claims in case of balance of payments need in accordance with the 2016 Borrowing Agreements, and for purposes of special calls under paragraph 23 of the Fund’s Decision No. 16645-(20/5), adopted January 16, 2020.
- Paragraph 14(b):
  - To the extent that claims under Japan’s 2016 Borrowing Agreement or this agreement are outstanding when the increase in the NAB credit arrangement of Japan’s becomes effective, Japan shall be deemed to request, in accordance with paragraph 23 of the Fund’s Decision No. 11428-(97/6), adopted January 27, 1997 on the NAB, as amended, that the Managing Director make calls under the NAB credit arrangement of Japan up to the maximum available amount, taking into account the Fund’s need for maintaining prudential balances, to fund the repayment of such claims;
  - provided that if the increase in the NAB credit arrangement of Japan and this agreement enter into effect at the same time, the repayment of Japan’s outstanding claims under Japan’s 2016 Borrowing Agreement shall be funded first with calls under Japan’s NAB credit arrangement before drawings are made under this agreement pursuant to paragraph 14(a) above.
- Paragraph 14(c):
  - If following the repayment of outstanding claims under Japan’s 2016 Borrowing Agreement and this agreement as provided in paragraph 14(b) above, Japan’s outstanding claims under these agreements remain in excess of the Rolled Back Loan Amount, as calculated pursuant to paragraph 10(b), the Fund shall repay any outstanding claims under Japan’s 2016 Borrowing Agreement and this agreement in excess of the Rolled Back Loan Amount;
  - provided that claims with shorter remaining maximum maturities shall be repaid before those with longer remaining maximum maturities.
- Paragraph 14(d):
  - After the entry into force of this agreement, the Fund may make no further drawing under Japan’s 2016 Borrowing Agreement.
- Paragraph 14(e):
  - No drawing under this agreement shall be made that would cause total outstanding drawings under both this agreement and the 2016 Borrowing Agreement between Japan and the Fund, at the time of such drawing, to (i) exceed the Loan Amount prior to the effectiveness of the increase in Japan’s NAB credit arrangement, or (ii) exceed the Rolled Back Loan Amount upon and after the effectiveness of the increase in Japan’s NAB credit arrangement, as calculated pursuant to paragraph 10(b);
  - provided that drawings beyond the Rolled Back Loan Amount under (ii) herein are authorized, if within the same day of these drawings any resulting claim that would exceed the Rolled Back Loan Amount is repaid with a special call under Japan’s NAB credit arrangement, and Japan hereby requests the Managing Director to make such calls to fund the repayment in accordance with paragraph 23 of the Fund’s Decision No. 11428-(97/6), adopted January 27, 1997 on the NAB, as amended.

### Final Provisions
- Paragraph 15(a): This agreement may be executed in duplicate counterparts, each of which shall be deemed an original and both of which together shall constitute but one and the same instrument.
- Paragraph 15(b): This agreement shall become effective on the date last signed below or on January 1, 2021, whichever is later.

*Source: pr214-com-version-japan-2020-borrowing-agreements (PDF chapter/section).*

### 1. Purposes and Amounts.

### pr214-com-version-japan-2020-borrowing-agreements - 1. Purposes and Amounts.

### Purposes and Loan Amounts
- Japan agrees to lend to the Fund an SDR-denominated amount up to the equivalent of US$60,000 million (the “Loan Amount”).
- Upon the effectiveness of the increase in the credit arrangement of Japan under the Fund’s New Arrangements to Borrow (the “NAB”) as part of the NAB Reform, the Loan Amount will be automatically reduced to an SDR-denominated amount up to the equivalent of US$25,847 million (the “Rolled Back Loan Amount”).
- Agreement basis: Article VII, Section 1(i) of the Fund’s Articles of Agreement; considered in light of the Guidelines for Borrowing by the Fund.

### Definitions and Framework
- “2020 Borrowing Agreement”: this agreement and other bilateral borrowing agreements entered into or amended pursuant to the borrowing framework approved by the Fund in March 2020.
- “2016 Borrowing Agreement”: each bilateral borrowing agreement entered into pursuant to the borrowing framework approved by the Fund in August 2016.
- “Bilateral Borrowing Agreements”: the 2020 Borrowing Agreements and the 2016 Borrowing Agreements collectively.

### Term of the Agreement and Activation Conditions
- Term end date: December 31, 2023.
- Extension option: Fund may extend term for one further year through December 31, 2024 by Executive Board decision and with the consent of Japan.
- Activation threshold: modified FCC is below SDR 100 billion.
- Activation conditions:
  - NAB is activated as of the time of the notification, or there are no available uncommitted resources under the NAB as of that time; and
  - Activation approved by creditors representing at least 85 percent of the total credit amount committed under the 2020 Borrowing Agreements by creditors eligible to vote on such activation.
- Creditor voting: Managing Director proposes activation in writing and requests creditors’ vote; creditors whose 2020 Borrowing Agreement is not effective or whose currency is not included in the Financial Transactions Plan are ineligible to vote.
- Managing Director may approach creditors before modified FCC is below activation threshold in extraordinary circumstances.

### Deactivation and Use of Resources
- Automatic deactivation: 2020 Borrowing Agreements deactivated whenever the NAB is no longer activated, unless there are no available uncommitted NAB resources.
- Deactivation also occurs if Managing Director notifies Executive Board that modified FCC (excluding Bilateral Borrowing Agreements) has risen above the activation threshold and:
  - (i) Executive Board determines activation no longer necessary; or
  - (ii) six months elapse after notification and modified FCC (excluding Bilateral Borrowing Agreements) has not fallen below the activation threshold.
- If deactivated under above, and modified FCC later falls below activation threshold, paragraph 2(b) applies.
- Permitted uses during activation:
  - (i) fund any outright purchases made from the GRA during the term of this agreement; and
  - (ii) approve, during the term of this agreement, commitments of GRA resources under Fund arrangements whose purchases could be funded by drawings under this agreement at any time during the period of such commitments, including after expiration of the term of this agreement; commitments covered under (ii) include any commitment whose approval caused the activation threshold to be reached.
- Resources may be used to fund early repayment of claims under other 2020 Borrowing Agreements if relevant creditors request early repayment per paragraph 8.
- Drawings for early repayment of other creditors’ claims may be made so long as claims under the 2020 Borrowing Agreements remain outstanding, including after expiration of the term or during periods when this agreement is not activated.
- Drawing goal: achieve over time broadly balanced positions among creditors under all Bilateral Borrowing Agreements relative to their commitments.

### Estimates, Notices, and Limits on Drawings
- Prior to each plan period, the Fund shall provide Japan with best estimates of expected drawing amounts for the forthcoming period and revised estimates as warranted.
- Japan excluded from periodic plan, and no drawings made under this agreement, if Japan is not included and not being proposed for inclusion in the Financial Transactions Plan for transfers of its currency.
- No drawings if Japan was included in the periodic plan but, at time of drawing, Japan’s currency is not being used in transfers under the Financial Transactions Plan because of Japan’s balance of payments and reserve position.
- If Japan was not included in the Financial Transactions Plan at the time of the vote but is subsequently included, drawings may be made to fund purchases and commitments during activation unless Japan notifies the Fund it does not wish to be drawn upon.
- Notice requirements:
  - At least five business days’ (Tokyo) notice of intention to draw.
  - Payment instructions at least two business days (Fund) prior to value date by rapid authenticated means (e.g., SWIFT).
  - Exceptional circumstances: at least three business days’ (Tokyo) notice if five business days not possible; Japan to make best efforts to meet such a call.

### Evidence of Indebtedness
- Outstanding drawings will be included in Japan’s position statements published monthly by the Fund.
- At Japan’s request, Fund shall issue non-negotiable instruments evidencing the Fund’s indebtedness; upon full repayment and accrued interest, instrument returned for cancellation; if partially repaid, instrument returned and new instrument for remainder substituted with same maturity date.

### Maturity and Repayment Terms
- Standard maturity: three months from the drawing date for each drawing, except as provided in paragraph 5 and paragraph 8.
- Fund may elect to extend maturity by additional three-month periods after initial maturity; such election deemed automatic for all drawings outstanding unless Fund notifies Japan at least five business days (Fund) before a maturity date that it does not elect to extend for a particular drawing or portion.
- Limits on extensions:
  - (i) maturity date of any drawing to fund purchases from the GRA shall not be extended later than the tenth anniversary of the date of such drawing; and
  - (ii) maturity date for any drawings to fund early repayments of other creditors’ claims shall be a single common maturity date that is the longest remaining maximum maturity of any claim for which such early repayment has been requested or the tenth anniversary of the date of the relevant drawing to fund early repayment, whichever is earlier.
- Executive Board determination of exceptional circumstances may allow, with Japan’s agreement, extension of maximum maturity up to an additional five years.
- Repayment: principal payable on maturity date applicable to drawing or part thereof.
- Early repayment: Fund may make early repayment after consultation with Japan, with at least five business days (Fund) notice.
- Repayments restore pro tanto the amount that can be drawn; extension of maturity does not reduce drawable amount.
- If maturity date not a business day where payment is to be made, payment date is next business day there; interest accrues up to the payment date.

### Rate of Interest
- Interest rate: SDR interest rate established by the Fund pursuant to Article XX, Section 3 of the Fund’s Articles of Agreement.
- Exception: if Fund pays a higher interest rate on outstanding balances from any other comparable Article VII, Section 1(i) borrowing, the interest rate payable under this agreement shall be equivalent to that higher rate while it remains in effect.
- Interest calculation: on outstanding amount of the drawing; accrues daily and paid promptly after each July 31, October 31, January 31, and April 30.

### Denomination, Media and Modalities of Drawings and Payments
- Denomination: each drawing and corresponding repayment denominated in SDRs.
- Payment modalities:
  - Japan to pay the SDR equivalent amount of Japanese yen to the Fund’s account at the designated depository of Japan on the value date specified.
  - For drawings under paragraph 2(e), Japan shall ensure that balances drawn that are not balances of a freely usable currency can be exchanged for a freely usable currency of its choice, and for balances that are of a freely usable currency, shall collaborate with the Fund and other members to enable exchange for another freely usable currency.
- Japan’s obligations under Article V, Section 3(e) and Article V, Section 7(j) apply to purchase and repurchase transactions involving its currency used in drawings and repayments.
- Repayment of principal, except as provided in paragraph 8, shall be made, as determined by the Fund, in:
  - the currency borrowed whenever feasible, in Japanese yen, in special drawing rights (provided it does not increase Japan’s holdings of SDRs above the limit under Article XIX, Section 4 unless Japan agrees to accept SDRs above that limit), in freely usable currencies, or with Japan’s agreement in other currencies included in the Fund's Financial Transactions Plan.
- Interest payments normally in SDRs; Fund and Japan may agree interest payments be made in Japanese yen.
- Payment mechanics:
  - Payments in Japanese yen to account specified by Japan or by debiting Fund’s account with designated depository of Japan.
  - Payments in SDRs by crediting Japan’s account in the Special Drawing Rights Department.
  - Payments in any other currency to an account specified by Japan.

### Early Repayment at Request of Japan
- Japan may request and obtain early repayment at face value of all or part of outstanding drawings if:
  - (i) Japan represents its balance of payments and reserve position justifies such repayment; and
  - (ii) the Fund, giving Japan’s representation the overwhelming benefit of any doubt, determines there is a need for the early repayment in light of Japan’s balance of payments and reserve position.
- After consultation, Fund may repay pursuant to this paragraph in SDRs or a freely usable currency as determined by the Fund or, with Japan’s agreement, in currencies of other members included in the Fund's Financial Transactions Plan.

### Transferability of Claims and Obligations
- General rule: Japan may not transfer obligations or claims resulting from outstanding drawings except with prior consent of the Fund and on Fund-approved terms, except as provided in subparagraphs (b)–(h).
- Japan’s right to transfer at any time all or part of any claim to:
  - any member of the Fund,
  - the central bank or other fiscal agency designated by any member for Article V, Section 1 purposes (“other fiscal agency”),
  - any official entity prescribed as a holder of SDRs pursuant to Article XVII, Section 3.
- Transferee conditions:
  - Transferee assumes Japan’s liabilities regarding extension of maturities per paragraph 5(a) and extension of maximum maturity in exceptional circumstances.
  - Transferred claim held on same terms as by Japan, except:
    - (i) transferee acquires right to request early repayment under paragraph 8 only if it is a member, or the central bank or other fiscal agency of a member, and at time of transfer the member’s balance of payments and reserve position is considered sufficiently strong such that its currency is used in transfers under the Financial Transactions Plan;
    - (ii) if transferee is a member or its central bank/fiscal agency, references to Japanese yen in paragraph 7 deemed to refer to the relevant member’s currency; otherwise deemed to refer to a freely usable currency determined by the Fund;
    - (iii) payments related to transferred claim made to an account specified by the transferee;
    - (iv) references to business days (Tokyo) deemed to refer to business days where the transferee is situated.
- Price of transferred claim: as agreed between Japan and transferee.
- Notification to Fund: Japan shall promptly notify the Fund of the claim being transferred, transferee name, amount transferred, agreed price, and value date.
- Transfer effective in Fund records if in accordance with paragraph 9 terms and conditions; effective as of agreed value date.
- Interest payment on transfer: if claim transferred during a quarterly period as described in paragraph 6(b), Fund shall pay interest to transferee on amount transferred for whole of that period.
- Fund assistance: if requested, Fund shall assist in seeking to arrange transfers.

*Source: https://www.imf.org/-/media/files/news/press-release/2021/pr214/pr214-com-version-japan-2020-borrowing-agreements.pdf*

### 10. Effective Exchange Rate.

### 10. Effective Exchange Rate

### 10. Effective Exchange Rate — key provisions
- All drawings, exchanges, and payments of principal and interest under this agreement shall be made at the exchange rates for the relevant currencies in terms of the SDR established pursuant to Article XIX, Section 7(a) of the Fund’s Articles of Agreement and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the transfer, exchange or payment.
- If this exchange rate determination date is not a business day in Tokyo, such date shall be the last preceding business day of the Fund that is also a business day in Tokyo.
- For purposes of applying the limit on drawings as specified in paragraphs 1(a), 14(c) and 14(e), the US dollar value of each SDR-denominated drawing shall be determined and permanently fixed on the value date of the drawing based on the US dollar/SDR exchange rate established pursuant to Article XIX, Section 7(a) of the Fund’s Articles of Agreement and the rules and regulations of the Fund thereunder for the second business day of the Fund before the value date of the drawing.
- If this exchange rate determination date is not a business day in Tokyo, such date shall be the last preceding business day of the Fund that is also a business day in Tokyo.

### 11. Changes in Method of Valuation of SDR
- If the Fund changes the method of valuing the SDR, all transfers, exchanges and payments of principal and interest made two or more business days of the Fund after the effective date of the change shall be made on the basis of the new method of valuation.

### 12. Non-Subordination of Claims
- The Fund agrees that it will not take any action that would have the effect of making Japan’s claims on the Fund resulting from outstanding drawings under this agreement subordinate in any way to claims on the Fund resulting from any other borrowing effected pursuant to Article VII, Section 1(i) of the Fund’s Articles of Agreement.

### 13. Settlement of Questions
- Any question arising under this agreement shall be settled by mutual agreement between Japan and the Fund.

### 14. Transitional Arrangements — provisions and sequencing
- Paragraph 14(a):
  - Regardless of whether this agreement is activated or not, the Fund: (i) subject to paragraph 14(b) below, shall make drawings under this agreement to repay any outstanding claims under Japan’s 2016 Borrowing Agreement, and (ii) may make drawings under this agreement to fund purchases under commitments approved by the Fund during an activation of the 2016 Borrowing Agreements or to fund early repayment of claims under other 2016 Borrowing Agreements in case the creditor represents a balance of payments need;
  - provided that notwithstanding paragraph 5(a) of this agreement the maximum maturity date of the claim from the repayment herein shall be the residual maximum maturity date of the claim that is repaid with drawings under this agreement;
  - and provided further that any claims under this agreement that result from the repayment herein shall be considered claims under the 2016 Bilateral Borrowing Agreements for purposes of funding the early repayment of these claims in case of balance of payments need in accordance with the 2016 Borrowing Agreements, and for purposes of special calls under paragraph 23 of the Fund’s Decision No. 16645-(20/5), adopted January 16, 2020.
- Paragraph 14(b):
  - To the extent that claims under Japan’s 2016 Borrowing Agreement or this agreement are outstanding when the increase in the NAB credit arrangement of Japan’s becomes effective, Japan shall be deemed to request, in accordance with paragraph 23 of the Fund’s Decision No. 11428-(97/6), adopted January 27, 1997 on the NAB, as amended, that the Managing Director make calls under the NAB credit arrangement of Japan up to the maximum available amount, taking into account the Fund’s need for maintaining prudential balances, to fund the repayment of such claims;
  - provided that if the increase in the NAB credit arrangement of Japan and this agreement enter into effect at the same time, the repayment of Japan’s outstanding claims under Japan’s 2016 Borrowing Agreement shall be funded first with calls under Japan’s NAB credit arrangement before drawings are made under this agreement pursuant to paragraph 14(a) above.
- Paragraph 14(c):
  - If following the repayment of outstanding claims under Japan’s 2016 Borrowing Agreement and this agreement as provided in paragraph 14(b) above, Japan’s outstanding claims under these agreements remain in excess of the Rolled Back Loan Amount, as calculated pursuant to paragraph 10(b), the Fund shall repay any outstanding claims under Japan’s 2016 Borrowing Agreement and this agreement in excess of the Rolled Back Loan Amount;
  - provided that claims with shorter remaining maximum maturities shall be repaid before those with longer remaining maximum maturities.
- Paragraph 14(d):
  - After the entry into force of this agreement, the Fund may make no further drawing under Japan’s 2016 Borrowing Agreement.
- Paragraph 14(e):
  - No drawing under this agreement shall be made that would cause total outstanding drawings under both this agreement and the 2016 Borrowing Agreement between Japan and the Fund, at the time of such drawing, to (i) exceed the Loan Amount prior to the effectiveness of the increase in Japan’s NAB credit arrangement, or (ii) exceed the Rolled Back Loan Amount upon and after the effectiveness of the increase in Japan’s NAB credit arrangement, as calculated pursuant to paragraph 10(b);
  - provided that drawings beyond the Rolled Back Loan Amount under (ii) herein are authorized, if within the same day of these drawings any resulting claim that would exceed the Rolled Back Loan Amount is repaid with a special call under Japan’s NAB credit arrangement, and Japan hereby requests the Managing Director to make such calls to fund the repayment in accordance with paragraph 23 of the Fund’s Decision No. 11428-(97/6), adopted January 27, 1997 on the NAB, as amended.

### 15. Final Provisions
- Paragraph 15(a):
  - This agreement may be executed in duplicate counterparts, each of which shall be deemed an original and both of which together shall constitute but one and the same instrument.
- Paragraph 15(b):
  - This agreement shall become effective on the date last signed below or on January 1, 2021, whichever is later.

*Source: pr214-com-version-japan-2020-borrowing-agreements (PDF chapter/section).*

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_Source: https://www.imf.org/-/media/files/news/press-release/2021/pr214/pr214-com-version-japan-2020-borrowing-agreements.pdf_