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.
Classic and Houston terms offer debt rescheduling while Naples and Cologne terms provide debt reduction.
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.
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.