Paris Club

The Paris Club is an informal, consultative group of official creditors (governments of mainly OECD countries), that was established in 1956 in order to help settle external debts of debtor countries that are experiencing payment difficulties, including debts on export credits that are reinsured by the Dutch government.

The Paris Club creditors conclude so-called multilateral debt rescheduling agreements in the Paris Club with the debtor countries. These agreements enable debtor countries to reschedule their debts due to the Paris Club creditors. In most cases this involves debt relief through postponement and reduction in debt service obligations. In close cooperation with the IMF and the World Bank, the Paris Club is prepared to discharge the poorest countries of part of their debts under certain conditions. One of the conditions for rescheduling debts is that the debtor country must establish a track record of reform and sound policies through IMF-supported programs.

An important principle of the Paris Club is the equal treatment of creditors. This implies that, if a country in debt wishes to reach a debt settlement with creditors that are not represented in the Paris Club (e.g. banks, bondholders, private creditors, etc.), this settlement must take place under the same conditions that fully correspond to the conditions agreed upon with the Paris Club creditors.

The Paris Club meets about ten times a year. The Ministry of Finance represents the Netherlands at these meetings. If there are countries on the agenda that are entitled to be discharged of their debts, the Minister of Foreign Affairs is also present. Atradius, that is present as well at these meetings, has an advisory role. Atradius will furthermore workup the multilateral agreements into bilateral debt gescheduling agreements and is also responsible for the conclusion of these agreements with the respective debtor countries. Furthermore, Atradius handles the administration of the rescheduled debts, the collection of payments and its distribution among the State on the one hand and the insured on the other hand, as far as these payments relate to the insured’s own risk.

Since its foundation in 1956, the Paris Club has concluded 400 multilateral agreements with 80 debtor countries. The total sum of the rescheduled debts covers approximately USD 500 billion. The Netherlands has taken part in approximately half of these agreements, whereby more than EUR 4 billion of debts has been rescheduled.

For more information on the Paris Club you can visit the following website:

http://www.clubdeparis.org.