Topping-up

In the context of a Paris Club concessional agreement, some debts that were previously reduced may be further reduced under a concessional treatment with an increased level of cancellation. In this case, there is a topping-up from the previous concessional treatment to the new one.

Different rates of topping-up are computed for each debt treatment and are made available to both the creditors and the debtor.

The following table gives a hypothetical example of topping-up:
First step: Country X received a treatment under London terms in 1993. This involved the cancellation of part of the debt with a 50% debt reduction level. In this context, Creditor Y used the "commercial option", whereas other creditors chose the "DR" option.
Second step: Country X receives a new treatment from the Paris Club under Lyon terms in 1999 (i.e. 80%). As a result of the negotiation, the debt treated in 1993 is treated again in the 1999 agreement. This implies that Creditor Y cancels 80% of debt rescheduled in 1993 under London terms. For other creditors, who has already cancelled 50% of the debt in 1993, they cancel 60% of the non-ODA treated debt.

The 60% ratio is computed as follows:

More complex rules apply for stock treatments. In this case, creditors that had previously chosen the "DSR" option also have to cancel an increased share of their debt relative to the share cancelled by creditors that had chosen the "DR" option, in order to take into account the effort already provided by "DR" creditors. The Paris Club Secretariat provides an "equivalent-debt-reduction" ("eDR") that makes it possible for each individual creditor and debtor to compute the additional effort to be made by DSR creditors.