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Paris Club

Definition

The Paris Club is a group of officials from major creditor countries whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries. As debtor countries undertake reforms to stabilize and restore their macroeconomic and financial situation, Paris Club creditors provide an appropriate debt treatment. Paris Club creditors provide debt treatments to debtor countries in the form of rescheduling, which is debt relief by postponement or, in the case of concessional rescheduling, reduction in debt service obligations during a defined period or as of a set date.

What is 'Paris Club'

An informal group of creditor nations whose objective is to find workable solutions to payment problems faced by debtor nations. The Paris Club has 19 permanent members, including most of the western European and Scandinavian nations, the United States of America, the United Kingdom and Japan. The Paris Club stresses the informal nature of its existence and deems itself a "non-institution." As an informal group, it has no official statutes and no formal inception date, although its first meeting with a debtor nation was in 1956, with Argentina.

Explaining 'Paris Club'

The members of the Paris Club meet each month in the French capital, except for the months of February and August. These monthly meetings may also include negotiations with one or more debtor countries that have met the Club's pre-conditions for debt negotiation. The main conditions a debtor nation has to meet are that it should have a demonstrated need for debt relief and should be committed to implementing economic reform, which in effect means that it must already have a current program with the International Monetary Fund (IMF) supported by a conditional arrangement.


Further Reading


Determinants of developing country debt: the revolving door of debt rescheduling through the Paris Club and export credits
www.tandfonline.com [PDF]
ESSAYS IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. The Section sponsors this series of publications, but the opinions expressed are those of the authors. The Section welcomes the …

The macroeconomic effects of official debt restructuring: evidence from the Paris ClubThe macroeconomic effects of official debt restructuring: evidence from the Paris Club
academic.oup.com [PDF]
ESSAYS IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. The Section sponsors this series of publications, but the opinions expressed are those of the authors. The Section welcomes the …

The Paris Club, 1978-1983The Paris Club, 1978-1983
heinonline.org [PDF]
ESSAYS IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. The Section sponsors this series of publications, but the opinions expressed are those of the authors. The Section welcomes the …

The IMF and Paris club debt rescheduling: a conflicting role?The IMF and Paris club debt rescheduling: a conflicting role?
onlinelibrary.wiley.com [PDF]
ESSAYS IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. The Section sponsors this series of publications, but the opinions expressed are those of the authors. The Section welcomes the …

The Paris Club and African DebtThe Paris Club and African Debt
onlinelibrary.wiley.com [PDF]
ESSAYS IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. The Section sponsors this series of publications, but the opinions expressed are those of the authors. The Section welcomes the …

Do debt crises boost financial reforms?Do debt crises boost financial reforms?
www.tandfonline.com [PDF]
ESSAYS IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. The Section sponsors this series of publications, but the opinions expressed are those of the authors. The Section welcomes the …

How Sustainable is the Federal Government of Nigeria Debt after the exit from Paris Club?How Sustainable is the Federal Government of Nigeria Debt after the exit from Paris Club?
www.ajol.info [PDF]
ESSAYS IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. The Section sponsors this series of publications, but the opinions expressed are those of the authors. The Section welcomes the …



Q&A About Paris Club


Who coordinates all these activities at each monthly meeting in France ?

The Presidency Committee composed of representatives from all member states who rotate every three months as chairmen .

What are some examples of countries that are members of the Paris Club?

France, Germany, Italy and Spain are some examples.

When was the first meeting held with a debtor nation?

1956 with Argentina.

How many permanent members does the Paris Club have?

19 including most of western European and Scandinavian nations, United States of America, United Kingdom and Japan.

How many meetings do they hold each month in France?

One or more than one depending on whether there are negotiations with one or more debtor countries that have met pre-conditions for debt negotiation.

What is the Paris Club?

The Paris Club is an informal group of creditor nations whose objective is to find workable solutions to payment problems faced by debtor nations.

Where do they meet if February and August fall within their scheduled time period ?

They will meet in another location during those months .

Is the Paris Club a formal institution?

No, it is not.

What conditions must be met before a country can enter into negotiations with the club?

A demonstrated need for debt relief and commitment to implementing economic reform which means that it must already have a current program with IMF supported by conditional arrangement.