The debt owed by a country can be divided into various categories. Each organisation compiling and publishing debt figures may have slightly different ways to categorize and to measure debt. The main categorizations used in the framework of the Paris Club are the following:
External debt and domestic debt
External debt is generally defined using a residency criterion: it is debt owed by public and private entities resident in a country to non-residents. This type of debt has a direct impact on the balance of payments of the debtor country. The domestic debt, on the contrary, is debt owed by resident entities to other resident entities in the country.
However, for practical purposes, external debt is sometimes compiled according to the currency of the debt and without using a residency criterion (being then similar to foreign currency debt).
Classification by categories of debtors: Private and public debt
External debt may be owed by public sector entities or by private sector entities of the debtor country. In the first case, it is called public debt, in the second case, private debt. Debt owed by private sector entities but guaranteed by public sector entities is often included in the public debt (which is sometimes called "public and publicly guaranteed debt").
Public debt may be owed by the government or by other public sector entities, including public enterprises.
Classification by creditor: multilateral, bilateral and private debt
Claims granted by international financial institutions (mainly the IMF, the World Bank or regional development banks) constitute multilateral debt.
Official bilateral creditors
Claims granted by official bilateral creditors i.e. States (governments or their appropriate institutions, especially export credit agencies) constitute bilateral debt. The Paris Club brings official bilateral creditors together. Although not all official bilateral creditors are members of the Paris Club, Paris Club creditors hold the majority of official bilateral claims worldwide. Other official bilateral creditors may participate in Paris Club sessions on an ad-hoc basis.
Official bilateral claims result from two types of financing:
- credits guaranteed by the Governments or their institutions. In most cases, these credits were commercial credits granted to finance imports by the debtor country;
- direct loans from the Governments or their institutions to the government or other public entities of the debtor country.
Government loans may be granted under "Official Development Assistance" (ODA) conditions, as defined by the OECD (low interest loans aimed at supporting the development of the debtor country).
All creditors not mentioned as multilateral or official bilateral creditors are considered private creditors. These include suppliers, commercial banks and bondholders.