Standard terms of treatment: Classic terms, Houston, Naples, Cologne, Toronto, London, Lyon
Eligibility
Paris Club treatments are defined individually, by consensus of all creditor countries. Most treatments fall under the following pre-defined categories, listed below by increased degree of concessionality.
Eligibility for the different terms is assessed on a case-by-case basis by Paris Club creditors, taking into account the track record of the debtor country with the Paris Club and the IMF and various criteria, notably per-capita income, level of indebtedness and of debt service. Any debtor country declared eligible for specific terms by Paris Club creditors may decline these terms in favour of a less concessional set of terms, notably if it considers them to have a negative impact for its creditworthiness.
Step 1: Request
The debtor country seeks assistance and has an IMF program in place
Step 2: Negotiation
Paris Club members meet to negotiate appropriate terms of treatment
Step 3: Implementation
Bilateral agreement signed between the debtor country and every creditor
THE TERMS
Classic Terms
Standard terms applied to a debtor country coming to the Paris Club
- 61 countries
- Program with the IMF showing the need for Paris Club debt relief
- Rescheduling of Official Development Assistance (ODA) or non-Official Development Assistance (non-ODA) credits at the appropriate market rate
- Repayment profile negotiated on a case-by-case basis
Houston Terms
Treatment of the debt of the lower middle-income countries
- 21 countris
- Non-ODA credits: repayment periods lengthened to or beyond 15 years
- ODA credits: repayment periods lenghened up to 20 yars with a maximum of 10-year grace, at a concessional rate
- Debt swaps conducted on a bilateral and voluntary basis
Naples Terms
Treatment of the debt of the poorest countries
- 33 countries
- Cancellation of 50% to 67% of eligible non-ODA credits
- Stock treatments on a case-by-case basis for countries having established a satisfactory track record with both the Paris Club and the IMF
- Only eligible for IDA financing from the World Bank
Cologne Terms
Initiative for "Heavily Indebted Poor Countries" (HIPC)
- 39 countries
- Eligible for Naples Terms
- Cancellation up to 90% or more on non-ODA creditrs
- Rescheduling of ODA credits: 40 years with 16-year grace and progressive repayment
Previous Terms
Other terms had been defined in previous Paris Club treatments. Though they are no longer used, a part of the outstanding debt owed by debtor countries was treated according to these terms:
- "Toronto Terms" (replaced by "Naples Terms")
- "London Terms" (replaced by "Naples Terms")
- "Lyon Terms" (replaced by "Cologne Terms")