Paris, June 30, 2016 – For the 16th consecutive year, the Paris Club and the Institute of International Finance jointly organized a meeting between official and private creditors, with the participation of representatives from the International Monetary Fund and the World Bank. Since its first edition in 2001, this forum has been a major event for dialogue between official and private creditors.

Public and private sector participants welcomed the opportunity to reflect on the joint efforts to improve the international system for sovereign debt restructuring. They emphasized the importance of open dialogue and transparency between sovereign debtors and all their creditors, underscoring the role of creditor-debtor cooperation for a successful prevention and resolution of sovereign debt crises.

Sovereign and private creditors reviewed the economic and financial outlook for developing and low-income countries. They exchanged, with the input of the International financial institutions, on the ongoing situation in Venezuela, and the ways in which the international community can be prepared to contribute to fostering recovery. Creditors extensively discussed the rising external indebtedness of developing countries, mostly through bond issuance over the past decade, which calls for enhanced creditor coordination – including through collective action clauses – in order to promote an efficient and timely sovereign debt resolution process when needed. They also underscored the challenges around the issue of data transparency, highlighting the role of uniform accounting and disclosure standards in reducing uncertainty while preventing potential debt buildup that could lead to crisis.

Public and private sector participants exchanged views regarding the ongoing initiatives to strengthen the contractual approach to sovereign debt restructuring and to promote resiliency in sovereign debt markets through the development of new instruments, with a special emphasis on GDP-linked bonds and on environmental contingencies.

Based on input by the IMF on the upcoming reform of its policy towards countries in arrears vis-à-vis private creditors, participants, finally, reviewed past experience and the challenges ahead to ensure the efficiency of sovereign debt restructurings through effective cooperation between public and private sector creditors, including through the annual IIF-Paris Club meeting.

The Paris Club welcomes the Republic of Korea’s decision to join as its twenty-first member, and will now initiate its accession process.

The accession of Korea to the Paris Club will come as a recognition of its growing role as a sovereign creditor, and of its involvement in the discussions of the Paris Club, which provides a multilateral framework that helps creditors recover their claims in arrears and allows for an efficient and timely resolution of debt crises.

As a member, Korea will be able to better influence the international financial agenda and to have more say in future Paris Club negotiations of sovereign debt restructurings. Korea’s integration will be based upon the full commitment to the Paris Club’s six principles, designed as a framework for fostering open and constructive dialogue among sovereign creditors.

The Paris Club's unique experience and track record of 433 successful negotiations with 90 countries, along with its openness and flexibility, will allow it to continue playing a pivotal role in the international financial system as the world’s only organized forum to achieve coordination amongst official bilateral creditors in restructuring sovereign debt.

Background notes

1. The Paris Club was formed in 1956. It is an informal group of creditor governments from major creditor countries.

2. The members of the Paris Club are representatives of the governments of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Ireland, Israel, Japan, the Netherlands, Norway, the Russian Federation, Spain, Sweden, Switzerland, the United Kingdom and the United States of America.

The representatives of the Group of Creditors of Cuba and of the Government of the Republic of Cuba met from 10 December to 12 December and agreed on 12 December 2015 on an arrangement to clear USD 2.6 billion of debt in arrears due to the Group of Creditors of Cuba over an 18-year period.

This arrangement offers a framework for a sustainable and definitive solution to the question of arrears due by the Republic of Cuba to the Group of the Creditors of Cuba covering a total stock of debt of USD 11.1 billion, including late interest, as of 31 October 2015.

During the meeting, the delegation of the Republic of Cuba provided a description of the economic and financial situation of its country and presented the measures taken by the Government of the Republic of Cuba aimed at supporting the Cuban economic development.

The Group of Creditors of Cuba welcomed progress made by the Republic of Cuba towards the normalization of its relations with creditors and the international financial community.

Realization of payments under a formal commitment of the Republic of Cuba to fully clear its arrears is a necessary and important step for the normalization of financial relationships between the Group of Creditors of Cuba and the Republic of Cuba. The Group of Creditors of Cuba's export credit agencies that wish to do so will resume their export credit activities.

Background note: The Group of Creditors of Cuba includes Australia, Austria, Belgium, Canada, Denmark, Finland, France, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom.

Representatives of Paris Club creditor countries met with representatives of the Government of Grenada on 18 and 19 November 2015 and agreed to reschedule its external public debt. This arrangement follows the International Monetary Fund’s approval of Grenada’s Extended Credit Facility on 26 June 2014 and the assurance by Paris Club creditors to contribute to its financing.

This arrangement reschedules US$ 8 million consisting of arrears (US$ 6 million including late interest) due as of 31 October 2015, half of which will be repaid upfront in two installments, as well as maturities falling due from 1st November 2015 to 30 June 2017 (US$ 2 million); rescheduled amounts will be repaid over 20 years including 7 years of grace for ODA claims and 15 years including 8 years of grace for NODA claims.

Paris Club creditors undertook to consider specific weather events that may impact Grenada’s ability to service its debt by embedding into the agreement a first-ever “hurricane clause”.

The Government of Grenada committed to seek comparable treatment from other creditors. The principle of comparability of treatment aims to ensure a balanced treatment among external creditors of the debtor country.


Background notes

1. The Paris Club was formed in 1956. It is an informal group of creditor governments.

2. The members of the Paris Club which participated in the reorganization of Grenada’s debt were representatives of the governments of France, the Russian Federation, the United Kingdom and the United States of America.

Observers at the meeting were representatives of the governments of Germany, Italy, Japan, the Netherlands, Norway and Spain, as well as the International Monetary Fund (IMF) and the World Bank.

3. The delegation of Grenada was headed by Mr. Timothy ANTOINE, Permanent Secretary, Ministry of Finance. The meeting was chaired by Mr. Guillaume CHABERT, Co-Chairman of the Paris Club.


Technical notes

1. Grenada’s economic program is supported by an Extended Credit Facility approved by the Executive Board of the International Monetary Fund (IMF) on 26 June 2014.

2. Grenada’s public external debt was estimated to be USD 610 million as of end 2014 (source: IMF documents). The debt owed to Paris Club creditors was estimated to be USD 11 million as of 1st November 2015 (source: Paris Club).

Paris, June 23, 2015 – For the 15th consecutive year, the Paris Club and the Institute of International Finance jointly organized a meeting between Paris Club creditors, Paris Club ad hoc participants and private creditors, and representatives from the International Monetary Fund and the World Bank.

Public and private sector participants welcomed the opportunity to discuss and to contribute to the efforts to strengthen the framework for sovereign debt restructuring, highlighting the importance of dialogue between sovereign debtors and their creditors and stressed the importance of coordination among creditors conducive to an efficient system for sovereign debt crisis prevention and resolution.

Creditors reviewed the most recent trends in the global economy, with a special emphasis on emerging and low-income countries. They informally reviewed, with the input of the international financial institutions, ongoing efforts by the international community to financially assist Ukraine, and reviewed external shocks on small island states that jeopardize debt sustainability, and the ways in which the international community can contribute to fostering stability in those areas.

Creditors assessed implementation of the sovereign debt contractual reform, highlighting the benefits of transparency in information covenants to promote orderly sovereign debt restructuring with private creditors. They encouraged sovereign issuers to take full account of recent contractual improvements including aggregated Collective Action Clauses, model pari passu and creditor engagement clauses in sovereign debt contracts to facilitate—when necessary—orderly and fair debt restructuring.

The IMF informed the Paris Club and the IIF on the progress made in their current work stream regarding the strengthening of the contractual approach in sovereign debt restructuring. Private and public creditors discussed and reviewed past experiences and the challenges ahead to ensure the efficiency of sovereign debt restructurings by strengthening coordination between public and private sector creditors, including via the Annual IIF-Paris Club meeting.