Paris Club
An informal group of major creditor states that has negotiated since 1956 the restructuring of bilateral public debts of countries in difficulty, whose agreements determine recovery on claims guaranteed by public agencies.
The Paris Club is an informal group of creditor states, with a secretariat provided by the French Treasury, that has met since 1956 to find coordinated solutions to debtor countries' payment difficulties toward their bilateral public creditors. It does not deal with bonds held by private investors, but with claims held by states themselves, a large share of which comes from export credits guaranteed by their public agencies: when a public agency indemnifies an exporter unpaid by a foreign state, it becomes that state's creditor, and it is within the Club that the claim is rescheduled or reduced. Its principles are creditor solidarity, consensus, conditionality linked to an International Monetary Fund program, and comparability of treatment, which requires the debtor to obtain equivalent concessions from other creditors. The rise of public creditors that are not members has weakened this framework, and the G20 created a Common Framework in 2020 to bring all bilateral creditors together. For the political risk insurer, the Club is where it is decided, years after the loss, what it will recover.
Zambia, in default on its external debt since November 2020, concluded in October 2023 a memorandum of understanding with its bilateral public creditors under the G20 Common Framework, bringing together Paris Club members and non-member creditors. The creditor public export credit agencies thus learned, nearly three years after the default, the terms of their recovery.
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