What does it mean by a country has defaulted?
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It means they have contracts, typically to repay bonds, which they did not comply with. When you don’t pay your bills, you are in default, and others can use the courts to compel you to pay them what they are owed.
Most countries spend more than they take in from taxes, and they borrow to pay the difference. If they can’t pay these amounts borrowed when they are due, they have “defaulted.” The big problem with this is that they will continue to need to borrow money to pay for education, infrastructure maintenance, health care, military, etc., but now their lenders will charge them much higher interest to lend that money, require big cuts to spending, or potentially refuse to lend them more money, so defaulting can be very expensive and destabilizing. Imagine, for example, that the health care budget has to be cut by 30% because it’s the only way a country can balance the books.
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