THE PARIS CLUB GLOSSARY

Agreed Minute
Document signed by creditors and debtor setting forth the terms and conditions of the rescheduling; it has no binding legal force as the signatories "recommend" to their respective governments to conclude bilateral agreements in order to implement the Agreed Minute.

Bilateral Agreement
Agreement under international law between the debtor government and the government of one of the participating creditor governments implementing the Agreed Minute; the only elements not covered by the Agreed Minute are the moratorium interest rate and the reconciliation of the debts to be included in the Bilateral Agreement.

Blended Payments
Repayment of rescheduled amounts in fixed or progressive annuities; no or very short grace periods; the scheme was developed for middle-income countries; it is also part of the repayment conditions governing the rescheduling of debts owed by the so-called "Trinidad-Countries". (see "Trinidad-Terms")

Burden Sharing
One of the basic Paris-Club principles; debt relief granted by one creditor shall not be used by the debtor to pay off another; burden sharing is at the root of the multilateral approach; it also determines the relationship between Paris-Club creditors and other categories of creditors, i.a. commercial banks.

Conditionality
Creditors' willingness to grant debt relief is tied to the debtor's commitment to adjustment and reform; the breathing space thus provided is to be used to finance the debtor's return to creditworthiness.(see "IMF-conditionality")

Consolidation
Synonym for "Rescheduling" or "Restructuring".(see "Rescheduling" and "Restructuring")

Consolidation Period
In Paris-Club practice, subject to debt relief are not the outstanding stock of debt (see "stock of debt"), but arrears as of a certain date and maturities falling due within a given period, this period being generally co-terminous with the duration of an adjustment programme supported by the IMF. (see "IMF-Conditionality")

Cut-off date
The date of the conclusion of the credit contract or any other financial arrangement giving rise to payment obligations to foreign creditors;only credits or arrangements concluded prior to the cut-off date are subject to rescheduling (see "pre-cut-off date debt"); creditors generally refuse to move the cut-off date forward in a successive rescheduling so as to protect new lending. (see "post-cut-off date debt")

Debt Swap
On a voluntary basis, creditors can offer two types of swaps: - debt-for-equity swaps (conversion of debts into equity) - debt-for-aid swaps or debt-for-nature swaps (conversion of debts into local currency to be used for the financing of aid projects) The debt-swap option is available for low-income countries (see "Toronto Terms") and lower-middle income countries.

Default
Cessation of debt service. (see "Imminent Default")

De-Minimis
Threshold determining whether a creditor is a participating creditor or an observer; de-minimis creditors are those creditors whose claims subject to rescheduling do not exceed 1 Mio SDR; amounts due to these creditors have to be paid at due date; payments in arrears are to be paid up to deadline usually fixed three to six months after the signing of the Agreed Minute; for low-income countries the threshold is usually fixed at 500,000 SDR, or, in extreme cases, at 250,000 SDR. De-minimis creditors do not sign the Agreed Minute.

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