(Note: The text reproduced hereunder is the text of Appendix 3 to the Report of the Conference on German External Debts with such changes as were required to achieve uniformity in the three languages. Supplementary understandings reached by the parties with respect to this Annex after the close of the Conference are attached hereto as Sub-Annexes A to E.)

Agreed Recommendations for the Settlement of Reich debts and debts of other public authorities

A. Debts of the Reich

The Government of the Federal Republic of Germany (hereafter referred to as the Federal Government) will undertake to offer to the Bondholders to pay and transfer the following amounts:

1. The 7 per cent. External (Dawes) Loan 1924

(a) As on the first coupon date following 31st March, 1953, interest at 5½ per cent. per annum on the American Issue and 5 per cent. per annum on the other Issues.

(b) As on the first coupon date following 31st March, 1958, a sinking fund of 3 per cent. per annum on the American Issue and 2 per cent. per annum on the other Issues shall be added to the above interest payments and constitute with them a cumulative annuity.

(c) The maturity date shall be extended to the year 1969.

(d) Arrears of interest outstanding shall be recalculated at 5 per cent. simple interest, and in respect of the resulting total the Federal Government will issue 20-year Bonds carrying 3 per cent. per annum interest and after 5 years 2 per cent. sinking fund. On Bonds for so much as represents arrears due to 31st December, 1944, payment will be made as from 15th April, 1953: Bonds for the balance will not be issued until the unification of Germany when payment on these Bonds will begin.

(e) In all respects other than those indicated above, the terms of the original Loan contracts shall be maintained.

(f) All expenses incidental to carrying out the above modifications of the original contracts shall be borne by the Government of the Federal Republic.

2. The 5½ per cent. International (Young) Loan 1930

(a) As on the first coupon date following 31st March, 1953, interest at 5 per cent. per annum on the American Issue and 4½ per cent. per annum on the other Issues.

(b) As on the coupon date following 31st March, 1958, a sinking fund of 1 per cent. per annum shall be added to the above interest payments and constitute with them a cumulative annuity.

(c) The maturity date shall be extended to the year 1980.

(d) Arrears of interest outstanding shall be recalculated at 4½ per cent. simple interest and in respect of the resulting total the Federal Government will issue 20-year Bonds carrying 3 per cent. per annum interest and after 5 years 1 per cent. sinking fund. On Bonds for so much as represents arrears due to 31st December, 1944, payment will be made as from 15th April, 1953.

(1) It has now been agreed that the second sentence of paragraph 2 (d) shall read as follows:

“On bonds for so much as represents arrears due to 31st December, 1944, payment of a first coupon representing six months' interest will be made on 1st June, 1953.”

Bonds for the balance will not be issued until the unification of Germany, when payment on these Bonds will begin.

(e) The amounts due in respect of the various issues of the 5½ per cent. International Loan 1930 are payable only in the currency of the country in which the issue was made. In view of the present economic and financial position in Germany, it is agreed that the basis for calculating the amount of currency so payable shall be the amount in U.S. dollars to which the payment due in the currency of the country in which the issue was made would have been equivalent at the rates of exchange ruling when the Loan was issued. The nominal amount in U.S. dollars so arrived at will then reconverted into the respective currencies at the rate of exchange current on 1st August, 1952.

Should the rates of exchange ruling any of the currencies of issue on 1st August, 1952, alter thereafter by 5 per cent. or more, the instalments due after that date, while still being made in the currency of the country of issue, shall be calculated on the basis of the least depreciated currency (in relation to the rate of exchange current on 1st August, 1952) reconverted into the currency of issue at the rate of exchange current when the payment in question becomes due.

(f) In all respects other than those indicated above, the terms of the original Loan contracts shall be maintained.

(g) All expenses incidental to carrying out the above modifications of the original contracts shall be borne by the Government of the Federal Republic.

3. The 6 per cent. External (Match) Loan 1930

(a) As on the first coupon date following 31st March, 1953, interest at 4 per cent. per annum.

(b) As on the first coupon date following 31st March, 1958, a sinking fund of 1¼ per cent. shall be added to the above interest payments and constitute with them a cumulative annuity.

(c) Arrears of interest to be recalculated at 4 per cent. simple interest but otherwise to receive the same treatment as the arrears in respect of the Young Loan.

(d) The maturity date shall be extended to the year 1994.

(e) As long as the service of the Match Loan is effected according to the provisions of this Settlement Plan, the Payment for interest and amortisation of the Loan will be made at the office of the Skandinaviska Banken in Stockholm, Sweden, in Swedish Kronor equivalent to the amount due in U.S. Dollars at the rate of exchange on the due date.

(f) In all other respects other than collateral the Match Loan shall have the same treatment as the Young Loan.

4. Konversionskasse Bonds

The Federal Government will undertake to make the following payments in respect of Konversionskasse Bonds and Scrips:

(a) As on the first coupon or interest date following after 31st March, 1953, interest at the original contractual rates;

(b) as on the first coupon date following after 31st March, 1958, a sinking fund of 2 per cent. per annum shall be added to the above interest payments and constitute with them a cumulative annuity;

(c) the maturity dates of these bonds shall be extended by 17 years from the existing maturity dates;

(d) two-thirds of the arrears of interest calculated at the contractual rates shall be waived. The remaining one-third shall be funded and carry the same interest and sinking fund as the original Bonds;

(e) in all other respects the original contracts of these Bonds shall be maintained;

(f) all expenses incidental to carrying out the above modifications of the original contracts will be borne by the Federal Government;

(g) Reichsmark Bonds and Scrip will be converted into Deutsche Mark at the rate of 10 : 1.

5. Certain small liabilities of the Reichsbahn and the Reichspost in foreign currencies other than those covered by Annex IV will be the subject of negotiation between the Federal Government and the creditors.

6. Debts in Reichsmarks of the Reich, the Reichsbahn, the Reichspost and the State of Prussia

In response to the request of the creditors' representatives the Federal Government will undertake

(a) to extend at their request and in application of the principle of national treatment to foreign creditors the benefit of the advantages and compensations which have been or may ultimately be granted in connection with the monetary reform to German creditors;

(b) to extend to foreign creditors at the time of the enactment of any future German law relative to the conversion and settlement of debts the benefit of the most favourable treatment provided by this law for German creditors;

(c) if the law mentioned in paragraph (b) above is not promulgated before 1st January, 1954, or does not cover all categories of debts, to open before 1st April, 1954, negotiations with the foreign creditors' representatives in course of which these representatives reserve the right to ask for a special settlement of these debts.