Prsentation PowerPoint

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Paris Clubs role in orderly debt settlements
Thomas Courbe - Secretary general of the Paris
Club 6th UNCTAD Debt Management Conference
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Outline

• Introduction
• 1- Paris Clubs approach of sovereign debt
  settlements
• 2- New challenges for debt settlements and debt
  sustainability

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1- Paris Clubs approach to sovereign debt
settlements
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What is the Paris Club ?

• 50 years of debt treatment
• An informal group of 19 creditor countries
• Participation of IMF and World Bank to all
  meetings
• Debts treated Public or publicly guaranteed
  debts
• Flow and Stock treatments

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5 Principles

• Consensus of participating creditors
• Solidarity between creditors
• Conditionality no debt treatment without an IMF
  agreement
• Case-by-case approach
• Comparability of treatment asked from non-Paris
  Club creditors

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Standard debt treatments
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HIPC initiative

• The Paris Club is the only group of creditors to
  have provided all expected debt relief
• All members of Paris Club go beyond the
  requirements of HIPC and provide additional
  bilateral debt relief
• Since January 2007, 4 new Agreements were
  concluded in the framework of the HIPC initiative

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3 levels of debt relief for HIPCs(figures for
post-completion point countries)
Paris Club debt treatments in the framework of
the HIPC initiative 10.7 billion dollars (NPV
2006)
Additional bilateral efforts from Paris Club
creditors 7 billion dollars (NPV 2006)
MDRI 37.6 billion dollars (in nominal terms)

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Evian approach

• The Evian approach was launched in 2003
• It extends debt sustainability analyses to debt
  treatments of non-HIPC countries
• The debt sustainability of the debtor country is
  assessed before the negotiation on the basis of
  the IMF DSA
• The principle of case-by-case treatment is
  central to the Evian approach

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8 COUNTRIES HAVE BEEN TREATED UNDER THE EVIAN
APPROACH SO FAR

• Sustainable cases
• Kenya (January 2004)
• Dominican Republic (April 2004)
• Moldova (May 2006)

• Unsustainable cases
• Iraq (November 2004)
• Kyrgyz Rep. (March 2005)

• Sustainable cases with goodwill clauses
• Gabon (June 2004)
• Georgia (July 2004)
• Grenada (May 2006)

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2 New challenges for debt settlements and debt
sustainability

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New challenges

• Ensure the full delivery of HIPC debt relief
• Contribute to debtor countries active debt
  management operations
• Increase inter-creditor coordination
• Promote debt sustainability

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Full delivery of HIPC debt relief

• Comparability of treatment is crucial
• for creditors (fairness)
• for the debtor (benefit of treatment is greater)
• Specific problems in the HIPC initiative
• no debt relief from some bilateral creditors non
  members of the Paris Club and some private
  creditors
• litigating creditors.
• Paris Club reactions

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Active debt management

• Better financial situation in emerging countries
  early repayments
• 2 methods
• Prepayment at par
• Buyback at market value
• 4 early repayments this year Macedonia, Peru,
  Gabon and Jordan

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Paris Club creditors look forward increased
inter-creditor coordination

• Paris Club creditors acknowledge
• the rising role of private creditors as the major
  creditor
• the role of other important bilateral creditors
• Paris Club creditors already have regular
  contacts with representatives of the private
  sector
• Some non Paris Club creditors participate
  regularly to Paris Club negotiations.
• A further dialogue is needed with other emerging
  lenders.

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The Paris Club supports the prevention of
unsustainable debt situations

• Paris Club knows by experience that a new debt
  crisis would be very costly for creditors and for
  debtors
• Responsible lending and borrowing policies are
  the only ways to prevent a new debt crisis
• Paris Club members support the DSF as a common
  reference for all creditors
• The Paris Club encourages HIPC countries to adopt
  commitments regarding responsible borrowing after
  completion point/MDRI.

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For more information www.clubdeparis.org