The Paris Club (French: Club de Paris) is an informal group of financial officials from 19 of some of the world’s biggest economies, which provides financial services such as debt restructuring, debt relief, and debt cancellation to indebted countries and their creditors. Debtors are often recommended by the International Monetary Fund after alternative solutions have failed.
It meets every six weeks at the French Ministry of the Economy, Finance, and Industry in Paris. It is chaired by a senior official of the French Treasury, currently the Director General of the Treasury and Economic Policy Department Xavier Musca.
The club grew out of crisis talks held in Paris in 1956 between the nation of Argentina and its various creditors. Its principles and procedures were codified at the end of the 1970s in the context of the North-South Dialogue.
In the 1990s, the club began to treat the HIPC (Heavily-Indebted Poor Countries) and non-HIPCs differently. The club began to grant increasingly larger debt reductions for the HIPCs. For the non-HIPCs, the club engaged less in debt reductions and moved towards encouraging the absorption of non-HIPCs’ financial losses by bondholders and other private creditors.
In 2004, the Club decided to write-off the debts of Iraq, as the rebuilding of Iraq is incomparable. After the 2004 Indian Ocean earthquake, the Paris Club decided to suspend temporarily some of the repayment obligations of the affected countries.
In April 2006, Nigeria became the first African country to fully pay off its debt (estimated $30 billion) owed to the Paris Club.
On September 2, 2008, President Cristina Fernandez de Kirchner of Argentina announced plans to pay off the entirety of debt owed to the Paris Club, which ammounted to roughly $6.7 billion. Political pressures ensued and though the government officially insists its intention to repay, government officials have stated that this is unlikely until global credit conditions improve.
On September 16, 2010, the Paris Club canceled 1.26 billion dollars of Liberia’s debt, 100% of the Paris Club’s share of a World Bank-IMF poverty reduction program.
- International Monetary Fund (IMF)
- World Bank
- Organisation for Economic Co-operation and Development (OECD)
- United Nations Conference on Trade and Development (UNCTAD)
- European Commission
- African Development Bank
- Asian Development Bank
- European Bank for Reconstruction and Development (EBRD)
- Inter-American Development Bank (IADB)
(Text Source: Wikipedia, the Free Encyclopedia)