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A Laymans Glossary on Debt
By Tanya Serdiuk

Group of Seven/Eight (G7/ G8). The sevenleading industrialised nations comprised of the United States, Canada, GreatBritain, France, Germany, Japan, and Italy, who meet annually to discuss globaleconomic issues. A few years ago Russia was admitted to the group due to itsstill significant geopolitical influence and nuclear capability, thusconstituting the G8. The G8 is an intergovernmental summit that meets frequentlyto formulate common economic policies and solve conflicts arising from politicaland economic disputes. It is the most influential group of developed countriesin terms of its role in setting up policies for the international financialsystem.

  London Club

A committee of bankers representing a debtor country's commercial bank lenders”often called the "London Club"”was typically set up in parallel with the Paris Club when countries faced debt service problems. The aim of the London Club was to ensure equal treatment was provided to all bank lenders while providing rescheduling terms to help the country return to creditworthiness. It has no fixed membership and no permanent secretariat.


  Paris Club

The forum in which creditor governments meet to negotiate the rescheduling of the debts owed to them “ mainly aid loans and guaranteed export credits. It is also a meeting place for lending and borrowing nations, hosted by the French finance ministry, to negotiate Third World debts to government lenders. The Paris Club originated in 1956 as an ad hoc group to discuss the rescheduling of Argentina's debt. It remained a very informal arrangement until the late 1970s, with rescheduling terms decided on an ad hoc basis for each country, on the basis of the debtor country's needs and the precedents established by previous cases. Since then, however, and as rescheduling has become more frequent, the Paris Club's meetings have become more regular and its procedures and terms more standardised. The Paris Club agrees on the basic terms of the rescheduling “ the consolidation period, the cut-off date, the grace period, the repayment period and the coverage of the agreement. The rescheduling is actually put into effect by a series of bilateral agreements negotiated separately by each creditor some time after the Paris Club agreement.


  Multi-lateral debt

Refers to debt owed to a consortium of creditors like the World Bank or a regional development bank. Multilateral institutions normally extend loans to Third World countries, especially Africa for development projects and programmes. These multilateral institutions include the International Monetary Fund (IMF), the Bank for International Settlements, International Bank for Reconstruction and Development (IBRD), the European Monetary Institute, the Organisation for Economic Co-operation and Development (OECD) as well as regional organisations such as the African Development Bank (ADB) and the Asian Development Bank.

  Odious Debt Debt resulting from loans secured through corruption, usurious loans, and certain debts incurred under inappropriate structural adjustment conditions. For a debt to be considered odious: 1) the money must have been borrowed without the nation's consent; 2) the funds borrowed must have been contracted and spent in a manner that is contrary to the nation's interests, and; 3) the creditor must be aware of these facts.


  Millennium Development Goals (MDGs) These are development goals that all the 189 United Nations Member States have pledged to work towards and attain by 2015.These include eradicating extreme poverty and hunger; achieving universal primary education; promoting gender equity and empowering women; reducing child mortality; improving maternal health and combating HIV/AIDS, malaria and other diseases. Most important are the goals of reducing by half the proportion of people living on less than one US dollar a day, reducing by two thirds the mortality rate among under-five children and reducing maternal mortality by three quarters.

  (NOTE: This glossary is based on one provided by AFRODAD “ www.afrodad.org)