chapter  4
The Creditor Clubs: Paris and London
WithChristine A. Kearney
Pages 16

Multilateral external debt reschedulings are often conducted under the auspices of creditor clubs, quasi-institutional arenas for refinancing accumulated debts, the most prominent of which are the Paris and London clubs. Loans and credits extended by government or official creditors are renegotiated in the Paris Club regardless of the borrower's status. The traditional participants in Paris Club debt reschedulings include the debtor country government and the governments of its major official creditors. The Paris and London clubs are fundamentally similar in that "they are both ad hoc groups of creditors without any formal mandate or rules of procedure." The Paris Club generally negotiates only credits already in force, whereas the London Club is willing to negotiate new credits. In addition, the Paris Club tries to avoid consolidation periods longer than one year, whereas the London Club is generally open to multiyear consolidation periods when extended relief is deemed necessary.