Paris Club
The Paris Club is an international negotiating forum for rescheduling the debts (restructuring the obligations) of over-indebted countries. Debt rescheduling negotiations take place in the Paris Club when a debtor country is unable to meet its payment obligations. In each case an ad hoc group of creditor country and rescheduling country representatives and representatives from the International Monetary Fund (IMF), the World Bank, UNCTAD and the OECD is formed.
The aim of debt rescheduling is to redistribute debt burdens, with creditor countries participating as equals in restructuring a country's external debt. As a rule, debt rescheduling involves agreeing on long-term payment schedules for existing debts as the debtor country takes the steps needed to sustainably eliminate the underlying causes of payment difficulties.
Debt relief in the form of debt reductions (interest rate reductions, debt forgiveness) may also be agreed as an additional measure (concessional rescheduling) for the poorest of debtor countries.
Version: 12.08.2008