The outcome of the negotiation is not a legally-binding agreement between the debtor and each of its creditors but instead a document called Agreed Minutes. These Agreed Minutes are signed by the Chair of the Paris Club, the minister representing the debtor country and the representative of each creditor and constitute a recommendation to the governments of Paris Club creditors and of the debtor country to conclude bilateral agreements implementing the provisions of these Agreed Minutes.
These bilateral agreements give a legal effect to the agreement reached during the negotiating meeting.
The bilateral agreements also set the applicable interest rates, since the Agreed Minutes provide only guidelines on this issue rather than precise, pre-determined rates.
Interest rate guidelines
In practice, Agreed Minutes refer to two kinds of interest rates:
- When reference is made to the appropriate market rate, the interest rate to be set bilaterally is based upon standard interest rates of the currency considered, plus a management fee. This rate may be fixed or variable and does not include a country-risk premium.
- When reference is made to interest rates at least as favourable as the original concessional interest rate, the interest rate to be set bilaterally is the lower of the two following rates: the original concessional rate of the loans restructured in the framework of the Agreed Minutes concerned or the current appropriate market rate.