• case by case
The Paris Club makes decisions on a case-by-case basis in order to tailor its action to each debtor country’s individual situation. This principle was consolidated by the Evian Approach.
• consensus
Paris Club decisions cannot be taken without a consensus among the participating creditor countries.
• conditionality
The Paris Club only negotiates debt restructurings with debtor countries that:
- need debt relief. Debtor countries are expected to provide a precise description of their economic and financial situation,
- have implemented and are committed to implementing reforms to restore their economic and financial situation, and
- have a demonstrated track record of implementing reforms under an IMF program.
This means in practice that the country must have a current program supported by an appropriate arrangement with the IMF (Stand-By, Extended Fund Facility, Poverty Reduction and Growth Facility, Policy Support Instrument). The level of the debt treatment is based on the financing gap identified in the IMF program.
In the case of a flow treatment, the consolidation period coincides with the period when the IMF arrangement shows a need for debt relief. When the flow treatment extends over a long period of time (generally more than one year), the Paris Club agreement is divided into phases. The amounts falling due during the first phase are treated as soon as the agreement enters into force. Subsequent phases are implemented following completion of conditions mentioned in the Agreed Minutes, including non-accumulation of arrears and approval of the reviews of the IMF program.
• solidarity
All members of the Paris Club agree to act as a group in their dealings with a given debtor country and be sensitive to the effect that the management of their particular claims may have on the claims of other members.
• comparability of treatment
A debtor country that signs an agreement with its Paris Club creditors should not accept from its non-Paris Club creditors terms of treatment of its debt less favorable to the debtor than those agreed with the Paris Club.
