Sovereign Debt Default
Typology
Jerome Roos:
"To begin with, we should note that defaults come in many forms and guises — and not all of them are the debtor’s fault. In my own research on the political economy of sovereign debt, I identify at least four types of default: (1) negotiated reschedulings; (2) voluntary restructurings; (3) unilateral moratoriums; and (4) outright debt repudiations.
What is interesting about sovereign debt in general (and about international lending in particular) is the almost wholesale absence of repudiation. By and large, countries try extremely hard to repay their debts in full and on time — even when they cannot. In the worst case scenarios, they may be able to negotiate a rescheduling or restructuring of the debt with their lenders. In exceptional cases, countries can declare a moratorium on repayments. While this was very common prior to World War II, it is extremely rare today." (http://roarmag.org/2015/07/greece-debt-default-imf/)
Example
Greece
Jerome Roos:
"In this respect, the first thing to note is that Greece clearly did not repudiate its debts outright: despite the preliminary conclusions of the Greek parliamentary debt audit committee, which found much of the country’s debt to be odious, illegitimate and illegal, the Syriza/ANEL government still formally recognizes the legally binding character of the debt contracts. Its IMF default therefore looks more like an undeclared moratorium: Greece could still settle its arrears with the Fund at a later stage if it somehow managed to secure new credit.
The second thing to note is that Greece clearly cannot repay its debts in full: even the IMF recognizes that it needs serious debt relief to make its debts sustainable. Still, the country’s left-led government committed itself to remaining current on its obligations even under the most difficult circumstances imaginable. Over the past five months, Syriza basically did the impossible: it continued to repay foreign creditors even though it didn’t receive a dime in foreign financing.
So how did it find the money for these practically unsustainable debt payments? Well, it generated them domestically from taxes and budget cuts — along with a de facto default on government suppliers. Long before Greece defaulted on the IMF, it defaulted on its own people and on the private sector firms that do business with the government, just so it could keep servicing its external debts." (http://roarmag.org/2015/07/greece-debt-default-imf/)