The Paris Club is pleased to release its annual report. Presented at the Paris Forum, this 2022 annual report highlights its main contributions over the year. The report is published on the Paris Club’s website and hard copies are handed out to interested parties, including creditor and borrower countries, journalists, academics, NGOs etc. This practice is part of the Paris Club's commitment to greater transparency.

The year 2022 was impacted by significant shocks. Persistent inflationary pressures and tighter financial conditions exacerbated fiscal and financial imbalances in numerous countries, thereby intensifying pre-existing vulnerabilities. The impact of the deteriorating international environment on the economic and financial conditions of the most vulnerable nations has resulted in an increase in activity for the Paris Club.

In this challenging environment, the Paris Club successfully concluded two negotiations in 2022. Suriname and the Club reached a debt restructuring agreement in June 2022, following discussions that began in 2021, when the country faced severe economic difficulties due to the COVID-19 crisis. The second agreement was achieved with Argentina in October, putting an end to a three-year long arrears’ situation.

In addition to a significant rise in vulnerabilities, the sovereign debt landscape has witnessed notable changes in the past few decades – due, among other things, to Heavily Indebted Poor Countries (HIPC) initiative massive debt cancellations and all-time low interest rates in the late 2000s. These developments have compelled the Paris Club to enhance its coordination efforts with other creditors, both public and private. As has been the case for several years, coordination efforts constituted a substantial part of the Club's activities in 2022. This includes the implementation of the Common Framework, such as the agreement with Chad and negotiations with Ethiopia, Ghana, and Zambia. Additionally, outside of this framework, significant work has been undertaken in recent months to find a coordinated solution to the difficulties faced by Sri Lanka.

The Club's fundamental mission in debt management is complemented by an ongoing process of monitoring and reflection. This process aims improve mutual understanding of key concepts, facilitate the implementation of innovative approaches and promote data sharing. In 2022, Paris Club creditors, partners and the Secretariat have undertaken various initiatives: the development of Climate Resilient Debt Clauses (CRDCs), the introduction of Majority Voting Provisions (MVPs) in syndicated loan contracts, data sharing with the World Bank and stocktaking exercise on data shared by public creditors with the international financial institutions.

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.

THE PARIS CLUB IN THREE VIDEOS

30 June 2023

HOW THE PARIS CLUB WORKS AND HAS EVOLVED OVER THE PAST 70 YEARS

For nearly 70 years, the Paris Club has played a crucial role in supporting countries facing challenges in repaying their debt. These informative videos shed light on the invaluable contributions of this informal group of sovereign creditors within the international financial architecture.

The first video provides a comprehensive overview of how the Paris Club functions, emphasizing its primary missions and the guiding principles that underpin its operations. You can watch it at: https://youtu.be/vVwkm9Sx8o8.

In the second video, the focus shifts towards three pivotal moments in the Club’s recent history. It explores how the landscape of sovereign debt evolved following the implementation of the Heavily Indebted Poor Countries (HIPC) initiative, ultimately leading to the establishment of the Common Framework between the Paris Club and the G20 in 2020: https://youtu.be/O5x8Yclq3FE.

Lastly, the third video delves into the intricacies of a debt treatment negotiated by the Paris Club and implemented by its member creditors: https://youtu.be/s1_RA-zIZF4.

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

PARIS FORUM: THE 10^th ANNUAL CONFERENCE OF THE PARIS CLUB ADDRESSES PUBLIC DEBT RESTRUCTURING COORDINATION IN A CHALLENGING ENVIRONMENT

The 10^th edition of the Paris Club annual meeting, known as the Paris Forum, was held on 21 June 2023, at the Ministry for Economy, Finance and Industrial and Digital Sovereignty, with the support of the G20 India’s Presidency. This edition, titled Coordinating Sovereign Debt Restructurings in a Complex Environment, gathered over 200 participants representing 80 countries and institutions.

The Forum aims to facilitate open and transparent discussions on debt challenges and share potential solutions to prevent and address debt crises in developing countries. It gathers practitioners and specialists in the field. This year, the Forum took place against the backdrop of the Presidential Summit for a New Global Financing Pact, with the specific objective of emphasizing sovereign debt issues as the foundation for broader discussions on global financing challenges.

The Forum also took place in a challenging environment, as many developing countries grapple with high levels of vulnerability. According to the IMF and the World Bank's Debt Sustainability Framework for Low-Income Countries, 36 countries are currently at high risk of debt distress or in a situation of debt distress. This marks a notable rise compared to the 21 countries recorded a decade ago.

In addition to Paris Club creditors, the 10^th edition of the Forum brought together non-member creditor countries including India, China, and Saudi Arabia. The event also saw the participation of around twenty borrowing countries, represented by a dozen ministers, as well as academics, NGOs, and representatives from around twenty private sector organisations. The 2023 edition of the Paris Forum covered a diverse range of topics, encompassing macro-level discussions, including creditor coordination – both within and outside of the Common Framework – and the ways to improve it. These discussions are crucial given the current sovereign debt landscape. The Forum also addressed pressing challenges, such as the nexus between debt sustainability and resilience against climate change. Furthermore, technical aspects, including domestic debt restructuring and debt data transparency, were thoroughly discussed.

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 of the G20's International Financial Architecture Working Group.

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 @PBagein

First meeting of the Creditor Committee for Sri Lanka

Statement

9 May 2023

On May 9^th, 2023, 17 countries have formally formed an official creditor committee, co-chaired by India, Japan and France, to discuss the Sri Lankan authorities’ request for a debt treatment. The committee includes Paris Club creditors as well as other official bilateral creditors. This first meeting occurred after the successful launch of the debt restructuring process for Sri Lanka led by the co-chairs on April 13^th, 2023.

The Sri Lankan authorities attended the meeting and formally presented their request for a debt treatment. They reiterated their commitment to transparency and comparability of treatment towards their official bilateral creditors. The IMF and World Bank representatives presented the latest macroeconomic developments regarding Sri Lanka and the current status of their relationship with the country.

The creditor committee takes note of the open letter addressed by the President of Sri Lanka to all its official bilateral creditors on March 14, 2023 assuring transparency and comparability of treatment for all external creditors and ensuring that no side arrangements inconsistent with comparability of treatment will be made with any creditor. The committee welcomes passage of the resolution for implementation of the IMF-supported programme by the Sri Lankan Parliament on April 28, 2023.

The creditor committee for Sri Lanka will pursue its work to find an appropriate solution to Sri Lanka’s external debt vulnerabilities, consistent with the parameters of the IMF program. It stresses the importance for private creditors and other official bilateral creditors of Sri Lanka to provide a debt treatment on terms at least as favorable as the ones agreed by this creditor committee, in line with the comparability of treatment principle. It reiterates its invitation to other bilateral official creditors to formally join the creditor committee.

Background notes

1. The members of the creditor committee are representatives of countries with eligible claims on Sri Lanka.
2. Paris Club members with no eligible claims as well as China, Saudi Arabia and Iran attended the meeting as observers.
3. Representatives of the International Monetary Fund and the World Bank Group attended the meeting as well.

The representatives of Paris Club creditors and of the Government of the Argentine Republic met on 27 and 28 October 2022 and amended the Joint Declaration dated 29 May 2014 to clear the remaining debt in arrears due to Paris Club creditors over a six-year period. This follows the financing assurances provided by the Paris Club creditors on 21 March 2022 to support the approval by the International Monetary Fund of an Arrangement under the Extended Fund Facility (EFF) for the Argentine Republic on 25 March 2022 and is consistent with IMF program parameters with respect to long-term debt sustainability.

The scheme offers a framework for a sustainable solution to the question of arrears due by the Argentine Republic to Paris Club creditors, covering a total estimated stock of arrears of USD 1.972 billion, as of end September 2022. The amendment consists of a rescheduling of 100% of the total amounts of principal and interest due and not paid as of 30 May 2022 inclusive and a reduction of the interest applicable after 30 May 2022.

During the meeting, the delegation of the Argentine Republic described the economic and financial challenges faced by its country and demonstrated the strong determination of Argentine authorities to reduce the economic and financial imbalances and to reach the targets of the program supported by an Arrangement with the IMF under the Extended Fund Facility (EFF).

The Government of the Argentine Republic is committed to obtain the provision by its other official bilateral creditors of new disbursements in line with the assumptions of its financial program. The Government of the Argentine Republic will work regularly with the Paris Club on the progress in such front.

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 members of the Paris Club which participated in the rescheduling were representatives of the Governments of Austria, Belgium, Canada, Denmark, Finland, France, Germany, Israel, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom, and the United States of America.

Observers at the meeting were representatives of the Governments of Australia, Brazil, Ireland, Korea, Norway and the Russian Federation, as well as the International Monetary Fund, the World Bank, the European Commission, the Inter-American Development Bank, the Organisation for Economic Cooperation and Development (OECD) and the Secretariat of the UNCTAD.

3. The delegation of the Argentine Republic was headed by Mr. Sergio Massa, Minister of Economy, Mr. Leonardo Madcur, Secretary of State and Chief of Staff, Mr. Marco Lavagna, Secretary of State and in charge of the Secretariat of International Economic and Financial Affairs, and Mr. Nicolas Segal, Undersecretary of External Public Debt Sustainability. The meeting was chaired by Mr. Emmanuel Moulin, Chairman of the Paris Club, Director General of the Treasury at the French Ministry of Economy, Finance and Industrial and Digital Sovereignty.

Technical notes

1. The Argentine Republic’s economic program is supported by an Extended Fund Facility (EFF) approved by the Executive Board of the International Monetary Fund (IMF) on 25 March 2022.

2. The total stock of the Argentine Republic’s debt owed to Paris Club creditors was estimated to be USD 1.972 billion as of 30 September 2022.

3. Repayment, denominated in the original loan currencies, by the Argentine Republic of the corresponding sums are to be made in 13 and successive semi-annual instalments, the first one to be made on December 2022, and the last one to be made on September 2028.

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