PARIS FORUM: THE 12^TH ANNUAL CONFERENCE OF THE PARIS CLUB ADRESSES IMPROVING DEBT CRISES PREVENTION AND RESOLUTION

The 12^th edition of the Paris Club annual meeting, known as the Paris Forum, took place on 25 June 2025, at the French Ministry for Economy, Finance and Industrial and Digital Sovereignty, with the support of the South Africa Presidency of the G20.

The Forum is aimed at facilitating open discussions on debt challenges and share potential solutions to prevent and address debt crises in developing countries. This edition, titled Improving debt crises prevention and resolution, provided an opportunity to discuss (i) the current sovereign debt context and the associated challenges; (ii) opportunities for improvement of the existing debt resolution framework, including the Common Framework; (iii) strengthening debt crisis prevention by addressing the liquidity constraints faced by developing and emerging economies and promoting sustainable lending and borrowing practices. A technical session was also dedicated to the use and possibilities offered by the World Bank International Debt Statistics (ISD) database, which is a critical tool for transparency.

The Paris Forum is a unique platform for exchanges among creditors (both private and public, Paris Club and other official creditors), borrowing countries, international institutions, academics and NGOs on sovereign debt. The event saw the participation of around twenty borrowing countries as well as academics, NGOs, and representatives from around forty private sector organisations, mainly banks and asset managers exposed in frontier markets. The event wrapped up with a high-level panel featuring Ajay Banga, President of the World Bank Group, Kristalina Georgieva, Managing Director of the International Monetary Fund (video), Éric Lombard, Minister of Economy, Finance and Industrial and Digital Sovereignty of France, Mathias Cormann, Secretary General of the Organisation for Economic Cooperation and Development (OECD) and Carlos Cuerpo, Minister of Economy, Trade and Business of Spain.

The Paris Club remains steadfast in its commitment to promoting sustainable debt practices and coordinated solutions in cases where debt treatments become necessary. This commitment will persist within various relevant fora, primarily within creditor committees, which are responsible for negotiating restructurings. As part of its unwavering commitment, the Paris Club will also continue to actively contribute to the work with the G20. This year’s Paris Forum was a stopover for discussing sovereign debt issues on the road to Sevilla which host the 4^th International Conference on Financing for Development (FfD4).

Background notes

1. The Paris Club was formed in 1956. It is an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by borrower countries.

2. The 22 members of the Paris Club are: Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, Korea, the Netherlands, Norway, Russian Federation, Spain, Sweden, Switzerland, the United Kingdom and the United States of America. South Africa has been a prospective member since 2022.

Credits Photo : @Chamilton Oliveira et @GezelinGree

Paris Club secretariat contribution to the Sevilla conference on financing for development

The Paris Club is a group of major sovereign creditors that has provided coordinated debt restructuring operations for almost 70 years. The Club is therefore an important stakeholder in international debates on external debt, which will be one of the major areas discussed at the upcoming Financing for Development conference (Sevilla, 30 June – 3 July 2025).

The Paris Club secretariat has therefore decided to prepare a contribution to the conference which reflects the secretariat’s views on external debt issues, drawing on the general sentiment expressed by Paris Club members as well as its own practical experiences.

OFFICIAL AND PRIVATE CREDITORS DISCUSSED ONGOING DEBT RESTRUCTURING PROCESSES, COORDINATION BETWEEN THE PUBLIC AND THE PRIVATE SECTOR
AND MOBILIZING PRIVATE CAPITAL IN DEVELOPING COUNTRIES

The 21th Annual Meeting of the Paris Club and the Institute of International Finance (IIF) was held on 7 November 2024 at the French Ministry of Economy, Finance and Industry. Delegates discussed a range of issues including ongoing debt restructuring processes in countries eligible and not eligible for the G20-Paris Club Common Framework for debt treatment and key topics, including the use of state-contingent instruments in debt restructuring, comparability of treatment, and enhancing coordination between public and private creditors. Participants also considered Multilateral Development Bank’s incentives and tools to catalyze private financing, coordination between public and private financing in a context of liquidity challenges and enhancing the investment environment for transition financing in developing countries.

The meeting convened all 23 Paris Club members including South Africa as prospective member, as well as three ad hoc participants, China, India and Hungary. It also gathered representatives from the IMF, the World Bank, and more than sixty organizations from the private sector. Since 2001, this annual meeting has provided a unique opportunity to foster dialogue and cooperation among all creditors, both official and private, while also providing insights into recent developments and longer-term trends in the field of sovereign debt policy.

More than three years after its implementation, the Common framework has produced concrete results in enhancing creditor coordination in an increasingly complex debt landscape, but progress is still needed to reduce delays in debt treatments.  At the same time, new challenges have gained prominence with increasing financing pressures for many developing countries, highlighting the need to mobilize both public and private financing in these countries.

In light of this context, participants engaged in discussions on how to facilitate orderly and timely sovereign debt restructurings to help restore debt sustainability for debtor countries, notably through enhanced creditor coordination and information sharing. Participants also discussed best practices in the use and design of state contingent instruments in debt restructuring, as well as the assessment of comparability of treatment when using such contingent-instruments.  Additionally, participants explored ways to build resilience and mobilize private capital in developing countries, including coordination across public and private financing as well as the use of credit enhancements to crowd in new financing.

Credit Photo @Emily Taylor

The Paris Club is pleased to release its annual report for 2023, which highlights its main contributions and outcomes of the past year. This exercise is part of the Paris Club's commitment to greater transparency in its actions and work.

First, the report provides an overview of the current international sovereign debt environment. The successive shocks which have hit the global economy in recent years have continued to reverberate in 2023. However, the first few months of 2024 have also seen more positive developments, with a return of Eurobond issuances in Sub-Saharan Africa for the first time since April 2022, low-income country debt levels stabilizing, and a possible inflection point reached in the global interest rate cycle as markets expect rates to begin falling. The perspective of another major debt crisis is slowly receding but vigilance remains high – at a time when many borrowers have significant external repayments falling due, limited fiscal space and large investment needs.

Second, the report presents the ongoing cases from different perspectives – borrowers from Zambia and Ghana, Paris Club secretariat, Paris Club creditors (Japan and Italy in conversation with Brad Setser) and G20 creditors (China) and Paris Club Chair. It takes stock of the lessons learnt over the past four years and suggests avenues for improvement. The past few months has been productive for the official bilateral creditors and borrowers’ community, in light of the debt treatments agreed with Zambia, Ghana and Sri Lanka. Given the diversification of the sovereign debt landscape over the last few decades, this section reflects the strengthened coordination between the Paris Club and other creditors, in particular G20 non-Paris Club members, with whom the Paris Club has committed to implementing the Common Framework.

Finally, given its role in designing and negotiating debt treatments, the Paris Club is at the forefront of thinking and discussions on the major issues driving the international sovereign debt community. This third and final part of the annual report aims to illustrate how the Paris Club contributes to these debates on comparability of treatment, restructuring of domestic debts, the nexus between sovereign debt and climate vulnerability, data transparency, countries facing temporary liquidity problems, and more. This section presents various discussions the Paris Club participates to, including meetings of the Institute of International Finance (IIF); the Global Sovereign Debt Roundtable (GSDR) created at the initiative of the G20 Presidency, the IMF and the World Bank; the Paris Club's Paris Forum which addresses the most topical issues of the moment. The report also presents a contribution by the Finance Development Lab, whose first president and founder Professor Daniel Cohen passed away in August 2023.

Background notes

1. The Paris Club was formed in 1956. It is an informal group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by borrower countries.

2. The 22 members of the Paris Club are: Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, Korea, the Netherlands, Norway, Russian Federation, Spain, Sweden, Switzerland, the United Kingdom and the United States of America. South Africa has been a prospective member since 2022.

Credit Photo : @PBagein