Paris Club members welcome the staff-level agreement (SLA) concluded between Sri Lankan authorities and IMF staff for a 48-month arrangement under the Extended Fund Facility (EFF). This agreement represents an important step to restore macroeconomic stability and public debt sustainability.

We note the IMF’s assessment for the need for a debt treatment in the context of the IMF program. The Paris Club is ready to start the debt treatment process and reiterates its willingness to coordinate with non-Paris Club official bilateral creditors to provide the necessary financing assurances in a timely manner and ensure fair burden sharing, as already proposed to the largest other official bilateral creditors.

The Paris Club remains at the disposal of Sri Lankan authorities and non-Paris Club official bilateral creditors to further discuss the next steps of the debt treatment process.

 
Background notes

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.

Second Meeting of the Creditor Committee for Zambia under the Common Framework for Debt Treatments beyond the DSSI

Statement

July 18, 2022

The creditor committee for Zambia formed by countries with eligible claims on Zambia, and co-chaired by China and France (South Africa acting as a vice-chair) (hereinafter “the creditor committee”) met virtually on July 18, 2022, in presence of the IMF staff and the World Bank staff.

The creditor committee examined the macroeconomic and financial situation of Zambia, including its long-term debt sustainability, and its formal request for a debt treatment under the “Common Framework for Debt Treatments beyond the DSSI” endorsed under the Saudi G20 Presidency in November 2020, which was also endorsed by the Paris Club.

The creditor committee supports Zambia’s envisaged IMF upper credit tranche (UCT) program and its swift adoption by the IMF Executive Board to address Zambia’s urgent financing needs. The creditor committee encourages Multilateral Development Banks (MDBs) to maximize their support for Zambia to meet its long-term financial needs.

Consistent with their national laws and internal procedures, creditor committee members are committed to negotiate with the Republic of Zambia terms of a restructuring of their claims to be finalized in a Memorandum of Understanding (MoU), in accordance with the “Common Framework for Debt Treatments beyond the DSSI”.

The creditor committee stresses that the Zambian authorities are expected to seek from all private creditors and other official bilateral creditors debt treatments on terms at least as favorable as those being considered by the creditor committee, in line with the comparability of treatment principle. Consequently, the creditor committee urges private creditors and other official bilateral creditors to commit without delay to negotiate with Zambia such debt treatments that are crucial to ensure the full effectiveness of the debt treatment for Zambia under the Common Framework.

Background notes

1. The creditor committee for Zambia was formed on June 16, 2022, in application of “Common Framework for Debt Treatments beyond the DSSI” endorsed by the G20 and the Paris Club in November 2020.

2. The members of the creditor committee are representatives of countries with eligible claims on Zambia. China and France co-chair the creditor committee while South Africa acts as a vice-chair.

3. Observers at the meeting were representatives of the International Monetary Fund and the World Bank Group.

The Paris Club welcomes South Africa’s decision to upgrade its participation in the Paris Club from ad hoc participant to prospective member. This status provides countries an enhanced engagement in the work of the Paris Club, with the opportunity to join the Paris Club as a full member in the near term.

It demonstrates both South Africa’s interest to work more closely on sovereign debt issues with Paris Club members as well as the attractiveness of the Paris Club principles for emerging creditors.

South Africa has been playing a growing role as a sovereign creditor over recent years and its decision to join the Club as a prospective member is the continuation of a long story of cooperation with the Paris Club. Since 1982, South Africa has participated in 13 Paris Club negotiations as a creditor; these treatments have benefited 6 debtor countries. South Africa has also participated in the G20 and Paris Club Debt Service Suspension Initiative (DSSI). The Paris Club has highly appreciated the attendance of South Africa at Paris Club meetings on an ad hoc basis since 2015. This has contributed to the establishment of an excellent relationship on sovereign debt issues.

South Africa and the Paris Club share common interest in promoting coordinated solutions to help borrowing countries. The deepening of the relationship between South African and the Paris Club consolidates the role of the Paris Club as the main international forum for sovereign debt restructuring.

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.

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Paris Club creditors agreed on 22 June 2022 with the Republic of Suriname to a restructuring of its external public debt. This agreement follows the financing assurances provided by the Paris Club creditors on 2 September 2021 to support the approval by the International Monetary Fund of an Arrangement under the Extended Fund Facility for the Republic of Suriname on 22 December 2021 and is consistent with IMF program parameters with respect to long-term debt sustainability.

Paris Club creditors will reschedule arrears and all maturities falling due during the IMF program period. The rescheduling is conducted under the following terms: ODA claims are to be repaid over 20 years (including 7 years of grace) and non-ODA claims are to be repaid over 15 years (including 8 years of grace). Under this agreement, all existing arrears as of end-2021 will be repaid in two instalments in 2022 and 2024.

Additionally, based on a future assessment that the Republic of Suriname has fulfilled all its commitments under the agreement, notably the comparability of treatment, and maintaining sound macroeconomic policies consistent with long-term debt sustainability, Paris Club creditors are committed to reschedule all maturities in capital falling due starting on 1 January, 2025. If the 2024 IMF assessment of the macroeconomic situation is consistent with the projections in the current EFF, the repayment schedule will be 17 years (including a 4-year grace period) for ODA claims and 12 years (including a 5-year grace period) for NODA claims from 1 December 2024.

This debt treatment will eventually allow the creditors to make additional efforts including through the conclusion of debt swaps, on a voluntary and bilateral basis, to support the country’s efforts in favour of environmental, social and governance goals.

The Republic of Suriname has committed to seek debt treatments at least as favourable from all other bilateral and external commercial creditors.

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 reorganization were representatives of the Governments of Italy, France, the Netherlands, Israel and Sweden.

Observers at the meeting were representatives of the Governments of Australia, Belgium, Canada, Denmark, Germany, Ireland, Japan, the Republic of Korea, the Russian Federation, Spain, Switzerland, the United Kingdom and the United States of America, as well as of the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), the Inter-American Development Bank, the European Commission, the Organisation for Economic Cooperation and Development (OECD) and the Secretariat of the United Nations Conference on Trade and Development (UNCTAD).

3. The delegation of the Republic of Suriname was headed by Mr. Armand ACHAIBERSING, Minister of Finance and Planning. The meeting was chaired by Mr. William ROOS, Co Chairman of the Paris Club, Assistant Secretary at the Directorate-General of the Treasury of the French Ministry of Economy, Finance and Industrial and Digital Sovereignty.

Technical notes

1. The Republic of Suriname’s economic program is supported by an Extended Fund Facility (EFF) approved by the Executive Board of the International Monetary Fund (IMF) on 22 December 2021.

2. The total stock of the Republic of Suriname’s debt was estimated as of 31 December 2021 to be US$ 3,383 million and the stock of debt owed to Paris Club creditors was estimated to be US$ 98.3 million (source: Paris Club creditors).

3. The cut-off-date is used by Paris Club creditors for the sole internal purpose of the Paris Club agreement. When a debtor country first meets with Paris Club creditors, the "cut-off-date" is defined and is not changed in subsequent Paris Club treatments and credits granted after this cut-off- date are not subject to future rescheduling. Thus, the cut-off-date helps restore access to credit for debtor countries facing liquidity problems. Concerning the Republic of Suriname, the cut-off date was set at 29 April 2021.

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The 2021 annual report of the Paris Club is now available on the Paris Club website.

In 2021, the Paris Club continued to be very active in promoting coordinated multilateral solutions to sovereign debt problems around the world. Its considerable efforts were reflected in the exceptional measure adopted by the G20 and the Paris Club in April 2020 and extended until the end of 2021 to provide support to 73 low-income countries during the COVID-19 crisis, by implementing the extensions of the Debt Service Suspensions Initiative (DSSI). From 1 May 2020 to 31 December 2021, the Paris Club has signed agreements to suspend approximately USD 4.6 billion in debt service owed by 42 low-income countries that requested the DSSI support.

With the expiration of the DSSI at the end of December 2021, and in order to address the significant debt-related vulnerabilities in low-income countries, the Paris Club creditors continue to affirm their commitment to implement the Common Framework for Debt Treatment beyond the DSSI. The Common Framework, endorsed by the members of G20 and the Paris Club, provides a coordinated response to all eligible countries that request and need debt treatment within the parameters of an IMF upper credit tranche programme. For the three countries - Chad, Ethiopia and Zambia - that have formally requested a debt treatment under the Common Framework, the Paris Club is committed to making significant and timely progress in the ongoing negotiations and appreciates the fruitful cooperation established with China and Saudi Arabia, respectively co-chairs of the creditor committees for Ethiopia and Chad.

The support to low-income countries was also provided through the implementation of the Enhanced Initiative for Heavily Indebted Poor Countries (HIPC), the Paris Club signed on 15 July 2021 a multilateral agreement with Sudan. However, after the removal of the Transitional Government of Sudan by the military forces, the signature of the bilateral agreements implementing this multilateral one is suspended until the situation improves and the implementation of the IMF program resumes. The Paris Club continues to monitor carefully the situation, in close collaboration with the IMF and the World Bank Group.

In 2021, the Paris Club also provided assistance to emerging countries in need of a debt treatment. In particular, the Paris Club played a leading role by providing financing assurances in a timely manner which paved the way for Suriname to have access to IMF financial support.

Last year, Paris Club creditors have pursued their regular and constructive engagement with private creditors. Furthermore, they have continued to support greater debt transparency.

Background notes

1. The Paris Club was formed in 1956. It is an informal group of creditor governments whose main role is to coordinate official creditors during debt restructuring.

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.

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 2021 Paris Club annual report comprises six main chapters:

-- a chapter on the successful implementation of the Debt Service Suspension Initiative (DSSI) by the Paris Club,

-- a chapter on the strong support of the Paris Club and the implementation of the G20 and Paris Club Common Framework for Debt Treatments beyond the DSSI,

-- a chapter on the Paris Club's agreement with the Republic of the Sudan to restructure its external debt in the framework of the Enhanced Initiative for Heavily Indebted Poor Countries,

-- a chapter on the Paris Club's support to the approval of an IMF program for Suriname,

-- a chapter on the Paris Club's engagement with the private sector,

-- a chapter on the Paris Club's promotion of greater debt transparency.

In addition to these six main chapters, the annual report includes a presentation of the role of the Paris Club as well as its current claims on sovereign borrowers.

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