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International rating agency Fitch Ratings, says a debt moratorium extended by the Paris Club, deferring external debt service for an as yet unspecified period could lead to an unintended bunching of repayments and more generalised debt service difficulties at a later date. Making its observation before the Paris Club meeting Fitch says that the G7 external debt relief initiative under the auspices of the Paris Club is a unique response to a special situation that should provide some financial relief to the Tsunami-affected countries.

Fitch says that it views this as an unsolicited offer from official creditors and it does not expect it to affect external debt obligations to private creditors.

However, the agency is concerned that the modalities of this relief need to be given careful consideration, if they are not to have unintended consequences from a sovereign rating perspective.

Initial international deliberations have centred on proposals for an immediate moratorium on external debt repayments to the Paris Club group of official bilateral creditors, as well as some multilateral creditors like the IMF and the World Bank.

Fitch says official creditors will need to clarify a number of matters including the duration and extent of any moratorium, the