THE PARIS CLUB GLOSSARY (continued)

Down Payment
Debts not subject to rescheduling and payable at due date; down payments may represent either a certain percentage or a specific category of debts, for example contractual interest; the severely constrained debt service capacity of the majority of debtors has led creditors to respond to their need for comprehensive debt relief and hence to include 100 percent of both principal and interest.

Equal Treatment
Debt relief is meaningful only if it helps finance the debtor's policy of reform and adjustment; it is therefore imperative that all creditors provide relief in respect of debts owed to them; creditors attach the utmost importance to the debtor not using debt alleviation to pay off other creditors or, from a Paris Club perspective, other groups of creditors.

Extended Arrangement
Credit arrangement with the IMF involving the use of the Fund's resources in the upper credit tranches; Extended Arrangements usually have a term of three to four years; yearly tranches are subject to the completion of reviews, i.e. the attainment of targets agreed under the arrangement.

Extended Fund Facility
see "Extended Arrangement"

Exit Rescheduling
Once and for all rescheduling of the stock of outstanding foreign debt; up to now Paris-Club creditors have rescheduled the stock of a country's outstanding debt only in the case of Poland and Egypt; exit reschedulings differ from standard reschedulings in that the latter are limited to arrears and debt service obligations falling due within the consolidation period; under the Toronto Terms, exit reschedulings may be granted after a three-year waiting period subject to the debtor's satisfactory performance under Paris-Club agreed Minutes and IMF-supported adjusted programmes. (see "stock of debt")

Goodwill Clause
Paris-Club creditors' willingness to consider the matter of a debtor's debt servicing obligations falling due after the expiration of the consolidation period under a previous rescheduling agreement; this willingness is conditional upon all the bilateral agreements under a previous Agreed Minute having been signed and implemented and the debtor continuing to have an appropriate arrangement with the IMF in the upper credit tranches.

Grace Period
Period during which the debtor pays moratorium interest only and does not amortise his debt. Grace periods range from four to six years for middle-income countries, are limited to eight years under the Houston Terms granted to lower-middle-income countries; there are no grace periods under the blended-payments scheme; grace periods under the Trinidad-Terms range from 0 (debt service reduction) to six years (debt reduction). (see "Trinidad-Terms")

IMF-Conditionality
Official creditors refuse to grant debt relief unless the debtor country is committed to implement an economic reform programme supported by the IMF. (see "conditionality")

IDA-Only Countries
Countries not qualifying for ordinary World-Bank lending due to impaired creditworthiness; IDA resources have long repayment periods (40 years and carry a concessional rate of interest 0.75 percent p.a.); IDA-only-countries are eligible for a concessional treatment of their debt under the Toronto Terms. (see "Toronto Terms")

Imminent Default
Acute balance-of-payment or budgetary constraint preventing the debtor form servicing his foreign debt as contractually agreed; Paris-club creditors only grant debt relief if the debtor, usually in the context of an IMF-supported adjustment programme, provides sufficient evidence of being in an imminent-default situation.

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