Despite progress in recent years the process for helping over-indebted countries restructure their public debts needs further improvement, the Paris Club said Tuesday.
The Paris Club brings together 22 mostly Western creditor nations which negotiate together on the terms to reduce the debt burden of countries that can no longer pay back their loans.
The group, in its annual report, said better coordination among creditors, more transparency and better information sharing could help improve the process, AFP reported.
In 2020, the Paris Club and the G20 nations launched a so-called Common Framework to streamline the debt restructuring of eligible low-income countries.
"Over the course of five years, the Common Framework has delivered significant results in practice," the Paris Club's co-chairman, Thomas Revial, said in the report.
He noted that more than $45 billion of external debt has been restructured under the framework.
"Negotiation timeframes have been compressed between each successive case: it took one year to Ethiopia and its official bilateral creditors" to reach a preliminary agreement restructuring $8.4 billion of debt in March 2025.
He noted however that Zambia hasn't fully restructured its debt six years after starting the process, when bilateral deals should be completed within a year of a preliminary agreement being reached.
The Paris Club members negotiate only their bilateral debts with over-indebted countries, but they require that private creditors don't receive more favorable terms, thus helping nations achieve better results.
Revial said one way to facilitate the process further would be to allow debtor countries to share information on the official creditor's debt treatment to its other creditors, without non-disclosure agreements.
"The Common Framework should eventually become the standard framework for sovereign debt restructurings beyond low-income countries," said Revial.
"It is indeed apparent that a lack of coordination of official bilateral creditors can lead to stalemate and prevent debtor countries from recovering," he added.
The Paris Club, which is housed in the French Treasury, celebrates its 70th anniversary this year.
