Paris Club

 

• Informal group of nations creditors that will meet to reschedule debt of countries in trouble.
• They require an IMF agreement first
• Just for imminent defaults
• meeting is a response to crisis (not to avoid one)
• Imminent default principle rationale is attributed to creditors desire to limit the frequency of requests for debt relief
• Offer short term focus
• temporary relief
• assumes that balance of payments problems are result of inappropriate domestic policies
• reschedulings are conditional upon IMF deal first
• IMF deal assures creditors that debtor country will enact policies that improve its ability to service debts, and they provide a monitoring mechanism to evaluate future requests.
• will ask all other creditors to share burden (except groups like IMF and World Bank)
• Meetings take about 1-2 days
• Results are not immediately binding, but then debtor nation then has to sign bilateral agreement with each creditor (not all of which are there).
• The process has set steps, and everyone knows what to expect. Very formal procedure.