The 2017 annual report of the Paris Club is now available on the Paris Club website.

2017 has been a very intense year for the Paris Club, which has demonstrated the crucial role it has to play on sovereign debt issues as an indispensable forum for coordination and information sharing.

In 2017, the Paris Club contributed to the development of sustainable financing practices. An important step has been taken in strengthening the international financial architecture with the adoption by the G20 member countries of operational principles of sustainable financing in March 2017. This issue has irrigated all the works and events organized by the Paris Club during the year, whether in the discussions the Paris Club had with the borrowing countries or in the dialogue it conducted with the official and private creditors.

In addition, the Paris Forum pursued its Outreach initiatives with the organization, in addition to its annual conference which brought together representatives of over forty lenders and borrowers, a regional conference in southern Africa on the issue of sustainable financing. This new format, which has proved its relevance to allow frank and regular exchanges between lenders and borrowers, will be continued in 2018.

Background notes

1. The Paris Club was formed in 1956. It is an informal group of creditor governments. It meets in Paris to coordinate policies, share information, and in some cases to meet with debtor countries to agree on restructuring their debts.

2. The 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.

3. The publication of an annual report, since 2008, is an example of Paris Club creditors’ commitment to enhance the transparency of the Club’s work and functioning.

4. The 2017 Paris Club annual report comprises four main chapters:

-- A chapter on sustainable financing and the prevention of excessive debt levels in low-income countries,

-- A chapter on transparency and information sharing,

-- A chapter on the Paris Club's engagement with the private sector in promoting sustainable financing,

-- A chapter on the first regional conference in Namibia: a new format to promote good practice.

In addition to these four main chapters, the annual report includes detailed annexes on the current claims, function, principles of the Paris Club and the outstanding capital due by debtor countries.

The Paris Forum and Eastern Caribbean Central Bank Partner to host the Second Paris Forum Regional Conference

The Paris Forum and the Eastern Caribbean Central Bank (ECCB) collaborated to host the second regional Paris Forum conference which focused on ways to strengthen financial resilience and improve debt management in Caribbean countries vulnerable to external shocks.

The Conference brought together Financial and Permanent Secretaries and other members of the Ministries of Finance of Caribbean countries, ECCB senior officials, Paris Club members and financial institutions including the Caribbean Development Bank, the International Monetary Fund and the World Bank at the ECCB Headquarters in St Kitts and Nevis on 12 April to share perspectives and experiences on the theme: Financial Resilience and Debt Management.

During the one-day conference, the participants were exposed to presentations and engaged in discussion on the topics: (i) Enhancing Resilience to External Volatility Including Through Financial Innovation; and (ii) Building Domestic Capacities to Manage Public Debt. They reviewed available tools to mitigate the impact of external shocks on public finances for example, fiscal buffers, long term local currency bonds, disaster risk insurance and State contingent debt instruments. The participants also shared views on ways to strengthen public financial management.

Paris Forum calls for improved transparency on debt data from all stakeholders

Representatives of more than 40 countries and of 8 international financial institutions and international organizations met on 16 November 2017 at the 5th Conference of the Paris Forum.

The Paris Forum mission is prevention of sovereign debt crises, a vision shared by all participants. This year’s conference focused on building financial resilience in countries facing external shocks to achieve sustainable development.

Participants highlighted the rising indebtedness of developing countries and stressed the need for better cooperation among all stakeholders. They also agreed on the importance of greater transparency on debt data between official and private creditors and debtors to improve risk assessment, hence prevention.

Participants discussed the possible tools to mitigate the impact of external shocks on debt sustainability, focusing in particular on state contingent debt instruments. They also stressed the necessity of a sound public financial management and consistent technical assistance.
 

The 5th annual conference of the Paris Forum gathered the Paris Club’s 22 permanent members, its ad hoc participant (China), G20 members (Argentina, Indonesia, Mexico, Saudi Arabia), members of Gulf countries (Kuwait), members of the European Union (Czech Republic, Poland), and other countries (Antigua and Barbuda, Cameroon, Chad, Comoros, Côte d’Ivoire, Democratic Republic of Congo, Egypt, The Gambia, Jordan, Niger, Senegal, Sri Lanka and Vietnam). International institutions such as the International Monetary Fund, the World Bank, the African Development Bank, the Asian Development Bank, the European Central Bank, the European Commission, the OECD and the UNCTAD also participated in this Conference. Civil society was invited for the second time and was represented by academics and Non-Governmental Organizations.

Since 2008, the Paris Club has published on an annual basis the amount of its claims on foreign countries.

These claims are held either by the Paris Club member states directly, or through their appropriate institutions (especially export credit or official development aid agencies) on behalf of the member states.

The table contains comprehensive data that cover the full range of claims held on sovereign countries and public entities by Paris Club members, who took part in this global data call. It therefore encompasses very different categories of debtors, roughly half of which have always fully serviced their debt owed to Paris Club full and ad hoc members. Ninety of the debtor countries listed in the table have negotiated an agreement with the Paris Club at some time in the past. Most of the countries listed below are very unlikely to apply for debt relief in the future given their current macroeconomic prospects.

The table published on the Paris Club website shows the total amount of claims as of
31 December 2016 held by Paris Club members on each debtor country, with a split between Official Development Assistance (ODA) claims and non-Official Development Assistance (NODA) claims. The stock of claims is aggregated at each debtor country level.

The total of Paris Club claims, excluding late interest, amounts to USD 301 billion of which USD 151 billion represents ODA claims and USD 150 billion represents NODA claims.

Some amounts on which Paris Club creditors decided to provide debt relief may still appear in this table for technical reasons, especially delays in the signing of bilateral agreements implementing Paris Club agreements.

Workshop on sovereign debt

The Paris Forum gathers both sovereign creditors and debtors in order to foster discussions on pressing sovereign debt issues and with the participation of academics and NGOs; its 5th annual Conference will take place in November 2017.

Opening remarks: Guillaume Chabert, Co-Chairman of the Paris Club

How to prevent a new cycle of indebtedness and foster a sustainable financing of development?

Keynote speaker: Tao Zhang, Deputy Managing Director, IMF

First speaker: Jacques Assahoré Konan, Director General of the Treasury and Public Accounting, Côte d’Ivoire

Against a backdrop of economic and financial vulnerabilities in many low-income countries, the risks of a new cycle of over-indebtedness are real, including for countries that have already benefitted from debt relief initiatives such as HIPC. In that respect, it is vital to promote sound and sustainable financing practices as recognized in the Addis Ababa Action Agenda.

Key questions:

• How to prevent a new cycle of indebtedness?
• What lessons can be drawn by creditors and debtors from the HIPC initiative?
• Why there cannot be a "HIPC initiative 2.0”?

How to ensure that private sector creditors adequately contribute to debt restructurings in the future?

First speaker: Kim Solberg, Ministry of Finance, Netherlands

Over the last decades, many middle- and low income countries have turned to external bond markets to finance their development needs. Since 1970, while the share of their external debt owned by official creditors remained broadly constant (45% vs 47%), commercial banks, who held 37% of their external debt, have largely been replaced by bondholders, who now own 42% of their external debt. This trend has gained momentum since the 2008 financial crisis and has particularly accelerated over the last few years for low-income countries.

Key questions:

• How to deal with situations where only some of the commercial bondholders are covered by CACs?
• How to keep commercial creditors on board during IMF programs and at what conditions?
• How to convince commercial creditors to accept a debt exchange outside of situations of near-default? How to ensure that commercial creditors negotiate in good faith with debtor countries?

Concluding remarks