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International Bank for Reconstruction and Development
1818 H Street, N.W.
Washington 25, D. C.

Gentlemen:

With reference to the Guarantee Agreement^[1] of even date between the Government of Japan and your Bank, we have pleasure in confirming the following matters of agreed understanding between us:

1. As regards Article III, Section 3.01, that:

(a) there is existing legislation consistent with the Japanese Constitution which enables the Government of Japan to control the external borrowings of its agencies, its political subdivisions and their agencies, and of the Bank of Japan so as to oblige them to obtain the consent of the Government of Japan to any external borrowing and to the terms thereof whether as to security or otherwise;

(b) the Government of Japan will make the undertaking contained in Section 3.01 effective with respect to liens on the assets of the Bank of Japan.

2. As regards Section 3.06, that the Government of Japan will not permit any political subdivision of Japan or any agency of the Government of Japan or of any such political subdivision to take any such action as is therein referred to.

Very truly yours,

No. 4611