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Definition: Debt-reduction option

External debt - IMF

Option under concessional Paris Club debt restructurings where creditors effect the required debt reduction in present value terms through a reduction of the principal of the consolidated amount. A commercial interest rate and standard repayment terms apply to the remaining amounts.
International Monetary Fund (IMF), "External Debt Statistics: Guide for Compilers and Users; Appendix III. Glossary of External Debt Terms", Washington D.C., 2003