Can they just ignore the debt like it never existed? Are there real reprucussions for the government or impacts to the econony?
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Similar to a person who doesn’t pay of their debts, they will find it very hard, or more expensive to borrow in the future. But also with a lot more ramifications, depending on size. But it does happen. African developing countries tend to have higher interest rates when they borrow because they’re seen as not as stable as developed countries, and so they might just not pay back their debts. But it happens to rich countries as well, here in the UK we defaulted on our debts in the 70’s, and had to be bailed out by the IMF, which made our interest higher for the next decade or so, and the US recently a couple of times, has come close to defaulting (not because they couldn’t pay, but for political reasons, debt ceilings and closing of government for some reason, I’ll need an Americans help to fully explain) the repercussions of that would have been very bad, as the US dollar is used around the world as the backup or pegged currency, both officially and unofficially. Greece tried to ignore its debts during the Euro crisis, but realised that the repercussions would be disastrous, and eventually accepted austerity instead.
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