Paris Club Explained

[VanessaL4100]

I'm sorry if this was already posted, but a lot of people are asking about the Paris Club. So I wanted to help out and look it up. This is one of the recent articles I have found that explains it. Hope it helps someone.

* Paris Club debt canceling came with STIFF IMF stipulations

December 21st, 2010 07:40 pm · Posted in NEWS

Paris Club debt canceling came with STIFF IMF stipulations.

Is this a good thing or a bad thing?

IN PLAIN ENGLISH: Revalue your currency when you become a sovereign nation or all bets are off and you will owe us every penny we ever loaned you.

Here are quotes from an article written by Ryan Harvey.

The IMF’s role in Iraq is not to help the Iraqi people get back on their feet, but to facilitate the passing of Iraq’s entire economy over to private-companies, starting with the oil.

The main mechanism the financial vultures created to suck Iraq dry of it’s chief export, and the majority of it’s economic power, is the Hydrocarbon Law (“The Oil Law”).

The Iraqi unions oppose both the corporate-backed Oil Law and the IMF’s agenda.

Paris club started to reduce Iraqi debt once Iraq began meeting the qualifications set out by the IMF. And what are those qualifications? According to a 2009 interview with Iraqi vice-president Tareq al-Hashemi, arguing against the general IMF stipulations, “The policy of (the World Bank and IMF) is that the economy must be 100 percent left to the private sector”.

The Oil Law puts Iraqi officials in the Executive Branch in charge of deciding on what types of contracts to sign with foreign oil companies, taking future decision-making on contracts out of the hands of the Legislative branch. This will make it easier for foreign oil companies and their governments to secure lucrative Profit Sharing Agreements, or PSA’s, which they prefer. These PSAs ensures profits for big business and give a disproportionate amount of money to the private-sector: If the Oil Law goes through, two thirds of Iraq’s oil fields, previously state-run, will be controlled by multinationals.

--I posted a link but it won't work. Perhaps someone else can help me out??? Sorry, first time posting in news.

[djgabrielie]

just select the link in your ie of Firefox browser.... ctrl-c (copy) then edit your post. Click in the screen and type ctrl-v (paste)... if you need more help, send me a message.

Thanks for the post.

[keepmwlknfny]

I have yet to see any proof that the paris club has to do with Iraq RVing by end of year.....its just another reason the gurus threw out there to hang on for a RV by end of year.....its just simply that if they dont have all projects in place to be implemented then the left over money will have to be returned.....

[Joe P]

I have yet to see any proof that the paris club has to do with Iraq RVing by end of year.....its just another reason the gurus threw out there to hang on for a RV by end of year.....its just simply that if they dont have all projects in place to be implemented then the left over money will have to be returned.....

That's incorrect Walking and Talking Funny. The return of "uncommitted loans" has nothing to do with the Paris Club Agreement. What you are referring to is the International Donation Program. See below.

http://www.sigir.mil/files/quarterlyreports/July2010/App_D_-_July_2010.pdf

When calling out gurus make sure you're speaking correctly. Cause this time...not so correct.

Now, regarding proof of the Paris Club Agreement being in default if not RV by 12-31, that's a $64k dollar question. We do know that the first payment expect by Iraq to the Paris Club is scheduled for May/June 2011. I will not state that the PCA must have an RV by 12-31, because proof is impossible to find. That part of your state is Correctamundo and I agree.

Just wanted to clear the air on the other half.

BTW...pretty dissappointed that you did not defend someone while chatting with Sonny1. Very dissappointing. You were classier than that months ago.

Joe P

[keepmwlknfny]

That's incorrect Walking and Talking Funny. The return of "uncommitted loans" has nothing to do with the Paris Club Agreement. What you are referring to is the International Donation Program. See below.

http://www.sigir.mil/files/quarterlyreports/July2010/App_D_-_July_2010.pdf

When calling out gurus make sure you're speaking correctly. Cause this time...not so correct.

Now, regarding proof of the Paris Club Agreement being in default if not RV by 12-31, that's a $64k dollar question. We do know that the first payment expect by Iraq to the Paris Club is scheduled for May/June 2011. I will not state that the PCA must have an RV by 12-31, because proof is impossible to find. That part of your state is Correctamundo and I agree.

Just wanted to clear the air on the other half.

BTW...pretty dissappointed that you did not defend someone while chatting with Sonny1. Very dissappointing. You were classier than that months ago.

Joe P

Oh well so I got it mixed up....hahaha never paid alot of attention to the details of the paris club because it doesnt affect any chance of a RV.....I was just speaking a reason why people are thinking they must RV by the 31st....and people throw in the part about money having to be paid back from left over projects or something of that nature.....probly why I got it all mixed together! What is this your speaking of that I did not defend someone?? You lost me on that one....please do explain....

[hf328]

So if the first payment is due May/June 2011, 12/31/10 would make sense...isn't there a 6 month grace period built into the debt repayment to the Paris Club? That would mean Iraq should have all their ducks in a row pronto...or they would owe the full amount on demand, with no debt forgiveness. I could be wrong, but that seems to fall in line with other posts I've read today.

Also isn't it $64 billion USD...and after all requirements are met it would reduce it to a bit over $7 billion?

[JCOUTEE]

Paris Club Debt Rescheduling

Pak, Italy govts agree to cancel 50% of Pak debt

Staff Report

ISLAMABAD: On the basis of the Paris Club Debt Rescheduling agreement of 2001, the government of Pakistan and Italy agreed to cancel 50% of the debt owed by Pakistan for the expenditure already incurred on Afghan refugees. The remaining 50% of the debt ($26.52 million & 58.74 million euros) was agreed to be swapped for the jointly agreed social and developmental projects under a “Debt for Development Swap Agreement” signed on November 4, 2006.

Debt conversion was to be effective in five annual tranches on June 30th of each year. Each annual tranche equal to 1/5th of the total debt amount shall be converted in Pak rupees at the exchange rate quoted by State Bank of Pakistan on that day and deposited in a counterpart fund operated through an assignment account. First tranche was deposited in 2007 and so far four tranches have been deposited. Estimated total funds under the debt swap are Rs 8.067 billion.

Funds under the debt swap agreement are to be utilised on jointly agreed projects aiming at socioeconomic development in the priority sectors of agriculture, health, education and basic infrastructure. To manage and oversee the utilisation of funds, a management committee has been established Co-chaired by Italian Ambassador and Secretary EAD with representation from all the provinces, Ministry of Finance, Planning Commission and Ministry of Foreign Affairs.

Utilisation of funds has been 33% of the existing projects in its first year i.e. by June 30, 2010 totaling an amount of Rs 940.91 million. Management committee, which is to be co-chaired by the Italian Ambassador, endorsed cancellation of this amount in its meeting held on August 11, 2010.

Third management committee meeting was held on August 11-19, 2010, which approved 23 projects worth Rs 3.137 billion. Terms of reference have been signed with 15 of them and the first semester. First semester installment for the projects with which the terms of reference have been signed, amounts to Rs 222.38 million.

http://www.dailytimes.com.pk/default.asp?page=2010\12\15\story_15-12-2010_pg5_6

Thats the only thing I could find recent on anything doing with it ...... All others are off other forums like this one !!

And it still dosnt have anything to do with an RV ... but I`ll keep looking ....

[prettybaby]

What does this have to do with an RV?

[JCOUTEE]

What does this have to do with an RV?

Read everything on the post ,,, I clearly put this has nothing to do with the RV and that was the only thing I could find that was even close !!!!!!!! Geesh !!!

[quadraph0nic]

This is very old pdf file from paris club and I'm not sure if this no longer applies but to my understanding the IMF continues to advise Iraq per their country info link on IMF website so Iraq is still part of the program. In the paragraph below it says under this staged approach iraq would only recieve the full benefits of debt relief if it makes substantial economic reforms through the treatment process.

Are they still in a treatment process? Is this info so old it no longer applies? There is nothing i can find or see that says they have to do this by dec 31 (MYTH) but I'm just trying to understand because part of this agreement drags the IMF into this. thanks

fpc.state.gov/documents/organization/44019.pdf

At such time (between one and three years) when there is a performance record of

Iraqi compliance with IMF loan conditions and on-time payments to Paris Club creditors,

the second stage would begin. This stage includes a second arrangement with the IMF.

For countries with debt sustainability problems that are treated under the Evian Approach,

none of the Paris Club’s standard terms would be used. A full range of treatment options

from additional rescheduling to debt reduction would be considered. In the third stage,

after successful implementation of the subsequent IMF program, the debt treatment would

be completed. Under this staged approach, Iraq would only receive the full benefits of

debt relief (at stage three) if it makes substantial economic reforms throughout the

treatment process.16

http://www.clubdeparis.org/sections/pays/irak/viewLanguage/en

[zantac]

First Reduction : cancellation of 30% of the debt stock as of the date of the signature of the agreement.

Second Reduction : cancellation of 30% of the initial debt stock as soon as an Arrangement with the IMF in the upper credit tranches is approved, implemented on 23 December 2005.

Third Reduction : cancellation of 20% of the initial debt stock as soon as the last review of an Agreement with the IMF in the upper credit tranches is approved, implemented on 22 December 2008.

payment of non-consolidated amounts before June 01, 2005

Comparability of treatment provision In order to secure comparable treatment of its debt due to all its external public or private creditors, the Government of the Republic of Iraq commits to seek promptly from all its external creditors debt reduction and reorganization arrangements on terms comparable in net present value to those set forth in the present Agreed Minutes for credits of comparable maturity. Comparability of treatment for debt reduction in net present value is assessed not only on the basis of the reduction in the face value of the debt but also on the terms of repayment of the debts not cancelled. Consequently, the Government of the Republic of Iraq commits to accord all categories of creditors -and in particular creditor countries not participating in the present Agreed Minutes, commercial banks and suppliers- a treatment not more favorable than that accorded to the Participating Creditor Countries.

For the purpose of the comparison between the arrangements concluded by the Government of the Republic of Iraq with its creditors not listed in the present Agreed Minutes on the one hand, and with the Participating Creditor Countries on the other hand, all relevant elements will be taken into account, including the real exposure of the creditors not listed in the present Agreed Minutes, the level of cash payments received by those creditors from the Government of the Republic of Iraq as compared to their share in the Republic of Iraq's external debt, the nature and characteristics of all treatment applied, including debt buy backs, and all characteristics of the reorganized claims and in particular their repayment terms whatever forms they take and in general the financial relations between the Government of the Republic of Iraq and the creditors not listed in the present Agreed Minutes.

link

http://www.clubdeparis.org/sections/traitements/irak-20041121/viewLanguage/en