The Paris Club is an informal group of financial officials from 19 of the world's richest countries, which provides financial services such as debt restructuring, debt relief, and debt cancellation to indebted countries and their creditors. Debtors are often recommended by the International Monetary Fund after alternative solutions have failed. Pakistan first went to the Paris Club in January 1999 for rescheduling of bilateral loans, which were contracted up to September 30, 1997. The country was granted debt service relief of $ 3 billion for the first consolidation period,which extended from January 1, 1999 to December 31, 2000.At the end of this period, Pakistan signed a second rescheduling agreement in January 2001, which covered debt service payments due in the period from January 1, 2001 to September 30, 2001.
In 2004, the Club decided to write-off the debts of Iraq, as the rebuilding of Iraq is incomparable. After the 2004 Indian Ocean earthquake, the Paris Club decided to suspend temporarily some of the repayment obligations of the affected countries. In order to secure comparable treatment of its debt due to all its external public or private creditors, Pakistan commits itself to seek promptly from all its external creditors debt reorganization arrangements on terms comparable to those set forth in the present Agreed Minute, while trying to avoid discrimination among different categories of creditors.
Consequently, Pakistan commits itself to accord all categories of creditors -and in particular creditor countries not participating in the present Agreed Minute, and private creditors- a treatment not more favorable than that accorded to the Participating Creditor Countries for credits of comparable maturity.
For the purpose of the comparison between the arrangements concluded by the Islamic Republic of Pakistan with its creditors not listed in the present Agreed Minute 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 participating in the present Agreed Minute, the level of cash payments received by those creditors from the Islamic Republic of Pakistan as compared to their share of the Islamic Republic of Pakistan'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 Islamic Republic of Pakistan and the creditors not listed in the present Agreed Minute.
The Islamic Republic of Pakistan will inform in writing the Chairman of the Paris Club not later than September 1, 2002 of the progress made in negotiations with other creditors, as well as of the contents of the negotiations. the Islamic Republic of Pakistan will further inform in writing regularly the Chairman of the Paris Club of the status of its negotiations with other creditors, as well as of the payments made to them. Pakistan receives economic aid from several sources as loans and grants. The International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), etc provides long term loans to Pakistan. Pakistan also receives bilateral aid from developed and oil-rich countries.
