Following a period of negotiation, the United States of America will offering a loan to the State of Palestine subject to the following agreement conditions:

1. Effective date of the Agreement – The effective date of this Agreement shall be the date on which the Government of the United States of America notifies the Government of the State of Palestine that the Congress of the United States of America has made available the funds necessary to extend to the Government of the State of Palestine the line of credit in accordance with the provisions of this Agreement.

2. Line of credit – The Government of the United States will extend to the Government of the State of Palestine a line of credit of $1,519,000,000 which may be drawn upon at any time between the effective date of this Agreement and December 31, 1957, inclusive.

3. Amortization and interest –

   1. The amount of the line of credit drawn by December 31, 1957, shall be repaid in 50 annual installments beginning on December 31, 1957, with interest at the rate of 2.8 percent per annum. Interest for the year 1957 shall be computed on the amount outstanding on December 31, 1957, and for each year thereafter, interest shall be computed on the amount outstanding on January 1 of each such year.
   2. The Government of the State of Palestine may accelerate repayment of the amount drawn under this line of credit.

4. Waiver of interest payments – In any year in which the Government of the State of Palestine requests the Government of the United States to waive the amount of the interest due in the installment of that year, the Government of the United States will grant the waiver if:

   1. the Government of the State of Palestine 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
   2. the International Monetary Fund certifies that the income of the State of Palestine 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 State of Palestine imports during 1949-51. If waiver is requested for an interest payment prior to that due in 1962, the average income shall be computed for the calendar years from 1957 through the year preceding that in which the request is made.

5. Relation of this line of credit to other obligations – Waiver of interest will not be requested or allowed under section 4 in any year unless the aggregate of the releases or payments in that year of Palestinian dollar balances accumulated to the credit of overseas governments, monetary authorities and banks before the effective date of this Agreement is reduced proportionately, and unless interest payments due in that year on loans referred to in (2) above are waived. The application of the principles set forth in this section shall be the subject of full consultation between the two governments as occasion may arise.

6. Other exchange arrangements –

   1. The Government of the State of Palestine agrees that after the effective date of this Agreement it will not apply exchange controls in such a manner as to restrict (a) payments or transfers in respect of products of the United States permitted to be imported into the State of Palestine or other current transactions between the two countries or (b) the use of Palestinian dollar balances to the credit of residents of the United States of America arising out of current transactions. Nothing in this paragraph (1) shall affect the provisions of Article VII of the Articles of Agreement of the International Monetary Fund when those Articles have come into force.

   2. The Governments of the United States of America and the State of Palestine agree that not later than one year after the effective date of this Agreement, unless in exceptional cases a later date is agreed upon after consultation, they will impose no restrictions on payments and transfers for current transactions. The obligations of this paragraph (2) shall not apply:

      (a) to balances of third countries and their nationals accumulated before this paragraph (2) becomes effective; or

      (b) to restrictions imposed in conformity with the Articles of Agreement of the International Monetary Fund, provided that the Governments of the State of Palestine and the United States of America will not continue to invoke the provisions of Article XIV, Section 2 of those Articles after this paragraph (2) becomes effective, unless in exceptional cases after consultation they agree otherwise; or

      (c) to restrictions imposed in connection with measures designed to uncover and dispose of assets of Germany and Japan.

   3. This section and section 7, which are in anticipation of more comprehensive arrangements by multilateral agreement, shall operate until December 31, 1952.

7. Import arrangements – If either the Government of the United States of America or the Government of the State of Palestine imposes or maintains quantitative import restrictions, such restrictions shall be administered on a basis which does not discriminate against imports from the other country in respect of any product; provided that this undertaking shall not apply in cases in which (a) its application would have the effect of preventing the country imposing such restrictions from utilizing, for the purchase of needed imports, inconvertible currencies accumulated up to December 31, 1952, or (b) there may be special necessity for the country imposing such restrictions to assist, by measures not involving a substantial departure from the general rule of non-discrimination, a country whose economy has been disrupted by war, or (c) either government imposes quantitative restrictions having equivalent effect to any exchange restrictions which that government is authorized to impose in conformity with Article VII of the Articles of Agreement of the International Monetary Fund. The provisions of this section shall become effective as soon as practicable but not later than December 31, 1952.

8. Technical assistance agreements - The United States of America agrees to establish an office of the Technical Assistance Program (TAP) in the city of Jerusalem no later than December 31, 1952, unless adjusted later by joint agreement of the United States of America and the State of Palestine. This office shall assist the Government of the State of Palestine in the modernization and improvement of Palestinian industrial capacity and business organization.

9. Limitations on usage of line of credit - The Government of the State of Palestine agrees to abide by the following conditions for the usage of credit supplied through this agreement, which is to be monitored by the Jerusalem office of the Technical Assistance Program:

   1. Funds provided by the line of credit established by this agreement shall be used solely for internal industrial and agricultural development of the State of Palestine, or on the procurement of American raw materials and industrial goods. Usage of these funds for purposes of debt repayment or the procurement of non-American materials and goods is strictly prohibited.
   2. In line with the developmental purposes of this loan and the established Technical Assistance Program office, burdensome regulations on Palestinian business and production are to be removed in every area found to be unnecessary or an overencumbrance on economic growth. Representatives from the Technical Assistance Program office in Jerusalem will work with councils of local businessmen to determine which regulations are causing economic disruption, while also being mindful of regulations necessary for the protection of the Palestinian market and the people of Palestine.
   3. Representatives from the Jerusalem office of the Technical Assistance Program must play a pivotal role in approving, directing and monitoring the use of credit received through this agreement, both to ensure that no skimming or other corrupt use of these funds will be initiated by the Government of Palestine, as well as to help guide its distribution in a way that maximizes the productivity of the Palestinian economy.

10. Definitions – For the purposes of this Agreement:

    1. The term "current transactions" shall have the meaning prescribed in Article XI X (i) of the Articles of Agreement of the International Monetary Fund.

11. Consultation on Agreement – Either government shall be entitled to approach the other for a reconsideration of any of the provisions of this Agreement, if in its opinion the prevailing conditions of international exchange justify such reconsideration, with a view to agreeing upon modifications for presentation to their respective legislatures.