§ The Government of Canada and the Government of the United Kingdom of Great Britain and Northern Ireland agree as follows:
§ Article I. Credit.
§ The Government of Canada will extend to the Government of the United Kingdom a credit of 1,250,000,000 dollars which may be drawn upon at any time prior to December 31st, 1951.
§ Article 2. Purpose of the Credit.
§ The purpose of the credit is to facilitate purchases by the United Kingdom of goods and services in Canada and to assist in making it possible for the United Kingdom to meet transitional post-war deficits in its current balance of payments, to maintain adequate reserves of gold and dollars and to assume the obligations of multilateral trade.
§ Article 3. Amortization and interest.
§ (i) The amount of the credit drawn by December 31st, 1951, shall be repaid in 50 annual instalments beginning on December 31st, 1951, with interest at the rate of 2 per cent. per annum. Interest for the year 1951 shall be computed on the amount outstanding on December 31st, 1951, and for each year thereafter interest shall be computed on the amount outstanding on January 1st of each such year.
Forty-nine annual instalments of principal repayments and interest shall be equal, calculated at the rate of 3,182,300 for each 100,000,000 dollars of the credit
drawn by December 31st, 1951, and the fiftieth annual instalment shall be at the rate of 3,184,073,665 dollars for each such 100,000,000 dollars. Each instalment shall consist of the full amount of the interest due and the remainder of the instalment shall be the principal to be repaid in that year. Payments required by this article are subject to the provisions of Article 4.
(ii) The Government: of the United Kingdom may accelerate repayment of the amount drawn under this credit.
§ Article 4. Waiver of interest payments.
§ In any year in which the Government of the United Kingdom requests the Government of Canada to waive the amount of the interest due in the instalment of that year the Government of Canada will grant the waiver if:
- (a) the Government of the United Kingdom finds that a waiver is necessary in view of the present and prospective conditions of international exchange and the level of its gold and foreign exchange reserves; and
- (b) the International Monetary Fund certifies that the income of the United Kingdom from home-produced exports plus its net income from invisible current transactions in its balance of payments was on the average over the five preceding calendar years less than the average annual amount of United Kingdom imports during 1936–1938, fixed at 866 million pounds as such figure may be adjusted for changes in the price level of these imports. If waiver is requested for an interest payment prior to that due in 1955, the average income shall be computed for the calendar years for 1950 through the year preceding that in which the request is made; and
- (c) interest payments due in that year on any credit made available to the Government of the United Kingdom to which a similar provision for waiver of interest applies are also waived.
§ Article 5. Exchange and Import Arrangements.
§ The Government of the United Kingdom and the Government of Canada agree that in respect of (a) the operation 1219 of exchange controls and arrangements and (b) quantitative import restrictions each will grant to the residents and products of the other, treatment not less favourable than that provided for in any instrument of agreement with the Government of any other country signed prior to the date of this Agreement.
§ Article 6. Outstanding Interest-Free Loan.
§ The two Governments agree that the interest-free provision of the loan made to the Government of the United Kingdom under the War Appropriation (United Kingdom Financing) Act, 1942, will continue until January 1st, 1951, and that the other arrangements with regard to the loan will continue as at present until that date. The two Governments agree to enter into discussions before January 1st, 1951, with regard to the question of interest on, and the terms of repayment of, any balance of the loan then outstanding.
§ Article 7. British Commonwealth Air Training Plan.
§ The Government of Canada agrees to cancel the amount owing by the Government of the United Kingdom to the Government of Canada with respect to the British Commonwealth Air Training Plan, which amount the two Governments agree is 425,000,000 dollars.
§ Article 8. Consultation on Agreement.
§ The two Governments agree that they will consult with each other as they may deem necessary on the working of any provision of this Agreement and that if in the opinion of either Government reconsideration of this Agreement is justified by the prevailing conditions of international exchange or by any major change in the international financial situation which materially alters the prospective benefits and obligations flowing from this Agreement they will forthwith consider what changes in its provisions they should agree to make. Any changes agreed upon by the two Governments will be subject to such legislative approval as may be necessary.
§ Article 9. Entry into Force.
§ This Agreement is made subject to such legislative approval as may be necessary and shall enter into force in whole or in part at such time or times 1220 as may be agreed between the two Governments.
§ In witness whereof the undersigned being duly authorized thereto by the respective Governments have signed this Agreement.
§ Signed in duplicate at Ottawa this Sixth day of March, 1946.
§ For the Government of Canada,
§ J. L. ILSLEY,
§ Minister of Finance.
§ For the Government of the United Kingdom of Great Britain and Northern Ireland,
§ MALCOLM MACDONALD,
§ High Commissioner for the United Kingdom.