At the meetings of the Paris Club, the debtor country and the relevant creditor countries negotiate a framework agreement. This agreement sets the frameworks governing which debt payments may be postponed and how a new payment plan is to be prepared for them. The Swedish delegation, which includes EKN, is led by the Ministry of Finance.
The following actions are taken when a country is unable to pay its debts:
- The country enters into an agreement with the International Monetary Fund (IMF), which stipulates that the country receives financial assistance from the Fund and undertakes to implement a restructuring program to create balance in its external payments.
- The finance ministry and central bank of the country negotiate with the creditor countries in the Paris Club (for public lenders and publicly guaranteed loans).
- The negotiations in the Paris Club lead to a multilateral debt rescheduling agreement, which is referred to as a debt consolidation agreement. In this agreement, the debtor country and the relevant creditor countries determine the frameworks governing which debt payments are to be made later and a new payment plan for them.
- The debtor country enters into bilateral agreements with each creditor country. The agreements specify which claims are subject to the rescheduling and what interest rates will apply.
- In certain cases, the Paris Club may also grant write-downs and write-offs of debts.