From Debt Collection to Relief Provision: 60 Years of Official Debt Restructurings Through the Paris Club

50 Pages Posted: 24 May 2017

See all articles by Gong Cheng

Gong Cheng

European Stability Mechanism

Javier Díaz-Cassou

Banco de España

Aitor Erce


Date Written: December 2016


Despite the frequency of official debt restructurings, little systematic evidence has been produced on their characteristics and implications. Using a dataset covering more than 400 Paris Club agreements, this paper aims to fill that gap. It provides a comprehensive description of the evolving characteristics of these operations and studies the economic dynamics surrounding them. The progressive introduction of new terms of treatment gradually turned the Paris Club from a mere debt collector into a provider of sequential debt relief. The study finds that more generous restructuring conditions involving nominal relief are associated with higher economic growth. In contrast, agreements including only NPV relief have no positive impact on growth. However, the countries that get these restructuring conditions turn out to be more likely to pursue a prudent fiscal policy after the event than those receiving a nominal haircut. In other words, when deciding upon the type of relief to be granted through debt restructuring, the official sector faces a trade-off between the objectives of stimulating growth and fostering fiscal sustainability.

Keywords: Official debt, Sovereign debt restructuring, Paris Club

JEL Classification: F33, F34, F36, F53, H63

Suggested Citation

Cheng, Gong and Díaz-Cassou, Javier and Erce, Aitor, From Debt Collection to Relief Provision: 60 Years of Official Debt Restructurings Through the Paris Club (December 2016). European Stability Mechanism Working Paper No. 20, Available at SSRN: or

Gong Cheng (Contact Author)

European Stability Mechanism ( email )

6a Circuit de la Foire Internationale

Javier Díaz-Cassou

Banco de España ( email )

Alcala 50
Madrid 28014


Aitor Erce

UPNA ( email )


Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics