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When a debtor country first meets with Paris Club creditors, the "cut off date" is defined and is not to be changed in subsequent Paris Club treatments. Credits granted after this cut off date are not subject to future rescheduling.
The cut off date aims at protecting credits granted by Paris Club creditors after a rescheduling. Thus, the cut off date helps restore access to credit for debtor countries facing a liquidity crisis.
The cut off date is defined for the internal purposes of Paris Club treatments. In particular, it is not taken into consideration when assessing the comparability of treatment provision for private creditors.
The cut off date is based on commitments, and not on disbursements: it refers to the signature or mutual approval of the conditions, both commercial and financial, of an arrangement. It does not imply that the drawings have actually been made at this date ; these drawings may be staged during the entire life of the contract. Practically this means that the restructuring applies to commitments made before the cut off-date even if the implementation (i.e. disbursement of the credit in case of a buyer's credit, or delivery of the product in case of a supplier's credit) takes place after this date.
The general philosophy of the rescheduling is that old commitments must be "trapped" in on an equal footing and that new commitments must be preserved to help the recovery of the debtor country. Thus, the protection of the cut-off-date only applies to credit agencies which cover operations formally concluded after this date.
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