Governments have a long history of borrowing abroad and not repaying their debts. The first recorded sovereign default was in the 4th century bc when ten Greek cities failed to honour loans from the temple of Delos. Yet there are still no clear rules governing what happens when sovereigns do not pay up. The murkiness was highlighted this week when Argentina seemed to offer, under duress, to negotiate with the 8% of its bondholders who refused to accept any losses after a huge default in 2001. At the same time the imf released a plan to revamp its lending policies, which may in the long run help to provide some clarity and consistency.
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