The Paris Club
What is the Paris Club?
The Paris Club is an informal group of official creditors whose role is to find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor nations. Paris Club creditors agree to reschedule debts due to them. Rescheduling is a means of providing a country with debt relief through a postponement and, in the case of concessional rescheduling, a reduction in debt service obligations. Since its first meeting in 1956, the Paris Club, or ad hoc groups of Paris Club creditors, have reached 369 agreements concerning 78 debtor countries. Since 1983, the total amount of debt covered in these agreements has been $410 billion.
The Paris Club meets in Paris once a month (except February and August). The meetings are chaired by the French Ministry of Finance. Meetings usually have two parts - a Tour d'Horizon (the main meeting) and, if necessary, negotiations with individual debtor countries to reschedule their debts. The Tour each month is an opportunity to share information about debtor countries and to deal with issues that have arisen with previous debt treatments.
The Evian Approach
The Paris Club adopts a flexible approach to debt treatments. Deals are not based on pre-defined terms, but instead, are adapted to meet a country's individual circumstances. The Paris Club looks at the sustainability of a debtor country’s long-term debt position, rather than focusing solely on its short-term cash needs. This is known as the 'Evian Approach'.
DFID's Role
The UK is represented by an official from HM Treasury (HMT). Support is provided by Export Creditor Guarantee Department (ECGD) who hold the vast majority of existing UK debt. The Paris Club is a good opportunity to raise any concerns the UK might have about a country's economic or broader development progress. It is also a chance to find out other creditor nations' views on particular points of concern or interest. HMT also find it useful to have some background on DFID's involvement in the countries in question.
Last updated: 13 December 2007
