Cologne Terms

Cologne Terms

A form of debt relief for heavily indebted poor countries in which the present value of payments is reduced by up to 90%. The Cologne terms were introduced by the HIPC Initiative in 1999. This form of debt relief is a type of concessional restructuring.
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Contents Introduction Background Paris Club Terms Classic Terms Houston Terms Naples Terms Cologne Terms The Evian Approach U.S.
They are, in increasing degree of concessionality: Classic Terms, the standard terms available to any country eligible for Paris Club relief; Houston Terms, for highly-indebted lower to middle-income countries; Naples Terms, for highly-indebted poor countries; and Cologne Terms, for countries eligible for the IMF and World Bank's Highly Indebted Poor Countries Initiative (HIPC).
Cologne terms were created at the June 1999, G-8 Summit in Cologne, Germany.
Prior to the Evian Approach's introduction, debt cancellation was restricted to countries eligible for IDA loans from the World Bank under Naples Terms or HIPC countries under Cologne terms. Many observers believe that strong U.S.
HIPC countries will continue to receive assistance under Cologne terms, which sanction up to 90% debt cancellation.
In contrast, the 1999 Cologne terms allow for some debt servicing to be suspended upon completion of the first SAP, though the original servicing terms apparently can be reinstated if the second SAP is not implemented to the IMF's satisfaction.