How do we work?

The Paris Club activity is organized around monthly sessions.
These sessions are prepared by a Secretariat General.
The Chair and the General Secretariat of the Paris Club are run by senior officials from the French Treasury.

1. MONTHLY MEETINGS, TOUR D'HORIZON

Paris Club creditor countries generally meet each month (in principle, except in February and August) in Paris. Each monthly session includes a one-day meeting called a “Tour d'Horizon” during which Paris Club creditors discuss among themselves the external debt situation of borrower countries, or methodological issues regarding the debt of developing countries.

The session may also include negotiation meetings with one or more borrower countries that have met all conditions for a negotiation.

A borrower country is invited to a negotiation meeting with its Paris Club creditors when it has concluded an appropriate programme with the International Monetary Fund (IMF) that demonstrates that the country is not able to meet its external debt obligations and thus needs a new payment arrangement with its external creditors (conditionality principle). Paris Club creditors link the debt restructuring to the IMF programme because the economic policy reforms are intended to restore a sound macroeconomic framework that will lower the probability of future financial difficulties.

The twenty two permanent members of the Paris Club may participate in the negotiation meetings, as participating creditors if they have claims towards the invited borrower country, as observers if not.

Other official bilateral creditors may be invited to attend negotiation meetings on an ad-hoc basis, subject to the agreement of permanent members and of the borrower country.

Representatives of international institutions, notably the IMF, the World Bank and the relevant regional development bank also attend the meeting as observers.

The borrower country is usually represented by the Minister of Finance. He/she generally heads a delegation comprising officials from the Ministry of Finance and the Central Bank.

2. STEPS IN A NEGOTIATION MEETING FOR A DEBT TREATMENT

After a few words from the chairman to welcome everybody and to open the meeting, the official meeting begins with a statement by the minister of the borrower country, who presents in particular the requested debt treatment.

This statement is followed by statements by the IMF and the World Bank, and, if appropriate, by representatives of other international institutions.

The representatives of creditor countries may then request additional information or clarification from the minister regarding the situation in the borrower country.

After responding to any questions, the delegation of the borrower country then leaves the main room and stays in another room during the entire session. 

Creditors then discuss among themselves a proposed debt treatment. Once creditors agree on a treatment, the chairman of the meeting will then present this proposed treatment to the delegation of the borrower country. If the borrower country disagrees and asks for amendments to the creditors' proposal, the chairman will then convey this request to the creditors, who discuss it and consider a new proposal. This process continues until a common agreement between creditors and the borrower country is reached.

Once an agreement is reached on the terms of the treatment, a document called the Agreed Minutes formalizes the accord in writing in French and in English.  This agreement is drafted by the Paris Club Secretariat and then approved by the creditors and the borrower country.

The delegation of the borrower country then returns to the main room and the Agreed Minutes are signed by the Chairman, the minister of the borrower country and the head of delegation of each participating creditor country.

A press release mutually agreed to by the creditors and the borrower country representatives is released for publication upon completion of the negotiation session.

3. IMPLEMENTATION IN LEGALLY BLINDING BILATERAL AGREEMENTS

The outcome of the negotiation is not a legally-binding agreement between the debtor and each of its creditors but instead a document called Agreed Minutes. These Agreed Minutes are signed by the Chair of the Paris Club, the minister representing the debtor country and the representative of each creditor and constitute a recommendation to the governments of Paris Club creditors and of the debtor country to conclude bilateral agreements implementing the provisions of these Agreed Minutes.

These bilateral agreements give a legal effect to the agreement reached during the negotiating meeting.

The bilateral agreements also set the applicable interest rates, since the Agreed Minutes provide only guidelines on this issue rather than precise, pre-determined rates.