The sovereign default or in English "sovereign default" refers to the failure of a country to meet its financial obligations. Since countries are not subject to bankruptcy laws, they can evade liability without legal penalties. However, sovereign defaults are rare, as it will be more expensive to borrow from money funds after a default. It should be noted that one of the causes of a default is the economic crisis. Countries are often evasive when it comes to defaulting on their debts, as it will be difficult and expensive to borrow funds after a default event. However, sovereign countries are not subject to normal bankruptcy laws and have the opportunity to escape liability for debts without legal consequences. Therefore it can be said that sovereign default is about one or more governments committing defaults.
Sovereign default can be accompanied by a formal declaration by a government not to pay, partially pay its debts, or de facto cessation of payments due. Most authorities will limit the use of "default" in the sense of not complying with the terms of bonds or other debt instruments. Countries have sometimes escaped the real burden of part of their debt through inflation.
After the great crisis that occurred in the eighties, the great economists have been in charge of studying sovereign defaults in a meticulous way; There are various reasons why this issue is of utmost importance for the economy, for example, precisely because they are sovereign, governments do not resemble the average debtor at all. Investors in sovereign debt closely study the financial condition and political temperament of sovereign borrowers in order to determine the risk of sovereign default.
