EXCHANGE OF LETTERS CONSTITUTING AN AGREEMENT BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF PAPUA NEW GUINEA PURSUANT TO ARTICLES 3-5 OF THE TREATY ON DEVELOPMENT CO-OPERATION OF 24 MAY 1989 

(Kavieng, New Ireland, PNG: 9 December 1995) 

ENTRY INTO FORCE: 9 DECEMBER 1995 

[Letter from the Australian Minister for Development Cooperation and Pacific Island Affairs to the Deputy Prime Minister of Papua New Guinea] 
I
Minister for Development Cooperation 
Minister for Pacific Island Affairs 
Parliament House 
CANBERRA ACT 2600 
The Hon Chris Haiveta MP
Deputy Prime Minister and Minister for Finance
Parliament House
WAIGANI NCD
PAPUA NEW GUINEA
Dear Minister
I have the honour to refer to the Joint Declaration of Principles Guiding Relations between Australia and Papua New Guinea signed on 9 December 1987 and the Treaty on Development Cooperation between the Government of Australia and the Government of Papua New Guinea done at Canberra on 24 May 1989 (the Treaty). I also have the honour to refer to the exchange of letters dated 15 September 1995 between the Government of Australia and the Government of Papua New Guinea, concerning the outcomes of the 1995 review of the Treaty.
In pursuance of Article 3(5) of the Treaty and following a review by the Parties pursuant to Articles 4(3) and 5(2) of the Treaty, I am pleased to confirm the agreement of the Government of Australia to extend levels of budget support and jointly programmed aid to the Government of Papua New Guinea under the following arrangements.
a. The level of budget support and the indicative level of jointly programmed aid, in millions of Australian dollars, which the Government of Australia shall provide to the Government of Papua New Guinea for each of the Australian financial years between 1 July 1995 and 30 June 2000 shall be as follows:
Year Budget Support Jointly Programmed Aid 
1995/96 177.8 118.6
1996/97 142.2 154.9
1997/98 106.6 191.2
1998/99 71.0 227.5
1999/2000 35.5 263.8
Subject to Article 5(4) of the Treaty, unexpended programmed or project aid funds shall not be carried over from one Australian financial year to the succeeding year.
b. The level of budget support, in millions of Australian dollars, which the Government of Australia shall provide to the Government of Papua New Guinea for each of the Papua New Guinea financial years between 1 July 1995 and 30 June 2000 shall be as follows:
Year Budget Support
1 July - 31 December 1995 88.90
1996 160.00
1997 124.40
1998 88.80
1999 53.25 
1 January - 30 June 2000 17.75
I propose that the next review of the levels of budget support and jointly programmed aid required under Articles 4(3) and 5(2) of the Treaty be conducted in September 1998.
I have the further honour to propose, Excellency, that if the Government of Papua New Guinea agrees to the foregoing, this letter and your letter in reply thereto in affirmation of your Government's agreement shall constitute an agreement between our two governments, to enter into force on the date of your letter in reply.
Yours sincerely
[Signed:]
(GORDON BILNEY)
MINISTER FOR DEVELOPMENT COOPERATION AND PACIFIC ISLAND AFFAIRS
9 December 1995

[Letter from the Deputy Prime Minister of Papua New Guinea to the Australian Minister for Development Cooperation and Pacific Island Affairs]
II
Deputy Prime Minister
Minister for Finance
The Hon Gordon Bilney MP
Minister for Development Cooperation and Pacific Island Affairs
Parliament House
CANBERRA
Australia 

Dear Minister 
I have the honour to refer to your letter dated 9 December 1995, the full content of which reads as follows:
[Here follows text as printed under I.]
I have further the honour to confirm that the foregoing is acceptable to the Government of Papua New Guinea and to agree that your letter and this letter shall constitute an agreement between our two Governments, which shall enter into force on the date of this reply.

Yours sincerely
[Signed:]
(C S HAIVETA)
DEPUTY PRIME MINISTER