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(1)

A.I.D. Loan No. 497-T-054

AMENDMENT NO. 1 TO

LOAN AGREEMENT BETWEEN THE

REPUBLIC OF INDONESIA

and the

UNITED STATES OF AMERICA

for

SEDERHANA (SIMPLE) IRRIGATION

and

LAND DEVELOPMENT II

(2)

-is entered into between the REPUBLIC OF INDONESIA ("Borrower")

and the UNITED STATES OF AMERICA, acting through the AGENCY

FOR INTERNATIONAL DEVELOPMENT ("A.I . D.").

WITNESSETH:

WHEREAS, the Borrower and A. I.D. entered into a

loan agreement, designated as A.I.D. Loan 497-T-054, on

August 31, 1978, ("Loan Agreement"), whereby A. I.D.agreed

to lend to the Borrower up to Fourteen Million Seven Hundred

Thousand United States Dollars ($14,700,000) to assist the

Borrower in carrying out a program to plan and implement

Sederhana (Simple) Irrigation and Land Development Systems;

to increase food crop production; and to increase income

and employment opportunities in the rural areas included

within the project; and

WHEREAS, the Borrower and A.I.D. desire to amend

the Loan Agreement to reflect an increase of $10,300,000

in t he amount of the Loan from $14,700,000 to $25,000,000;

NOW, THEREFORE, the Borrower and A.I.D . hereby

agr e e that the Loan Agreement for A. I. D. Loan No. 497-T-054

is h e reby amended as follows:

(3)

-2-amended by substituting the words "twenty-five million

United States ("U .S." ) dollars ($25,000,000)" for the words

"fourteen million seven hundred thousand United States

("U.S.") dollars ($14,700,000)."

2.

Section 3.2 (b) of the Loan Agreement is

hereby amended by substituting "U.S. $20,700,000" for

"U.S. $12,200,000."

3 .

Section 4.1 of the Loan Agreement is hereby

amended to read as follows:

"Section 4.

1.

Interest

(a)

The Borrower will pay to A.I.D. interest on the

first $14,700,000 of Principal which will accrue at the

rate of two percent (2%) per annum for ten (10) years

following the date of the first disbursement of the first

$14,700,000 of Principal hereunder and at the rate of

three percent (3%) per annum thereafter on the outstanding

balance of the first $14,700,000 of Principal and on any

due and unpaid interest on said balance of Principal.

Interest on the outstanding balance of the first

$14,700,000 of Principal will accrue from the date (as

defined in Section 8.5) of each respective disbursement

thereof, and will be payable semiannually.

The first

payment of interest on the first $14,700,000 of Principal

will be due and payable no later than six (6) months after

(4)

hereunder on a date to be specified by A.I.D.

(b) The Borrower will pay to A.I.D. interest on the

balance of Principal in excess of the first $14,700,000 of

Principal (remaining balance) which will accrue at the rate

of two percent (2%) per annum for ten (10) years following

the date of the first disbursement of the remaining balance

and at the rate of three percent

(3%)

per annum thereafter on the outstanding remaining balance and on any due and

unpaid interest thereon. Interest on the outstanding

remaining balance will accrue from the date (as defined

in Section 8.5) of each respective disbursement thereof,

and will be payable semiannually. The first payment of

interest on the remaining balance will be due and payable

no later than six (6) months after the first disbursement

of the remaining balance hereunder on a date to be specified

by A.I. D."

4. Section 4.2 of the Loan Agreement is hereby

amended to read as follows:

"Section 4.2. Repayment.

(a) The Borrower will repay to A.I.D. the first

$14,700,000 of Principal within thirty (30) years from

the date of the first disbursement of the first $14,700,000

of Principal under the Loan in forty-one (41) approximately

(5)

-4-The first installment of the first $14,700,000 of Principal

will be payable nine and one-half ＨＹｾＩ＠ years after the date

on which the first interest payment is due on the first

$14,700,000 of Principal in accordance with Section 4.1.

(b) The Borrower will repay to A.I.D. the remaining

balance of Principal in excess of the first $14,700,000 of

Principal within forty (40) years from the date of the

first disbursement of such remaining balance of Principal

under the Loan in sixty-one (61) approximately equal

semi-annual installments of Principal and interest . The first

installment of the remaining balance of Principal in excess

of the first $14,700,000 of Principal will be payable nine

and one-half ＨＹｾＩ＠ years after the date on which the first interest payment is due on such remaining balance in

accordance with Section 4.1.

(c) A.I.D. will provide the Borrower with amortization

schedules in accordance with this Section after final

dis-bursement under the Loan."

5. A new Section 5.1-A is added to the Loan

Agreement to read as follows:

"Section 5.1-A . First Disbursement Under Amendment No. 1

to the Loan Agreement. Prior to the first disbursement or

to the issance by A.I.D., of documentation pursuant to

(6)

under Amendment No. 1 to the Loan Agreement, the Borrower

will, except as the Parties may otherwise agree in writing,

furnish to A.I.D. in form and substance satisfactory to

A.I.D. an opinion of the Minister of Justice of the Borrower

that this Amendment No. 1 to the Loan Agreement has been

duly authorized and/or ratified by, and executed on behalf

of . the Borrower, and that it constitutes a valid and legally

binding obligation of the Borrower in accordance with all

of its terms."

"Section 5.6-A. Notification Under Amendment No. 1 to the

Loan Agreement. A.I.D. shall notify the Borrower upon

determination by A.I.D. that the condition precedent to

first disbursement specified in Section 5.1-A has been met."

"Section 5.7-A. Terminal Dates for Meeting Condition Precedent

to Disbursement Under Amendment No. 1 to the Loan Agreement .

If the condition specified in Section 5.1 - A shall not have

been met within 90 days from the date of this Amendment No. 1,

or such la ter date as A.I.D. may agree to in writing, A.I . D.,

at its option, nay terminate this Amendment No. 1 by giving

(7)

-6-8. Except as hereinabove expressly amended, the

Loan Agreement remains in full force and effect in accordance

with all of its terms .

IN WITNESS WHEREOF , the Borrower and the United

States of America, each acting through its respective duly

authorized representative, have caused this Amendment No. 1

to be signed in their names and delivered as of the day and

year first above written .

REPUBLIC OF INDONESIA

Signed

By:

M. Panggabean

Minister for Foreign Affairs, ad interim