In the downturn, revenues and subsidies from the central government collapsed and the bills came due.

Almost 80 per cent of Africa's debt is owed to official institutions, about one third of which is multilateral debt owed mainly to the International Monetary Fund (IMF) and World Bank.

Debt to troop and equipment contributors is also expected to rise again.

The best way to get rid of debt (short of default) is to grow out of it.

Unsustainable private debt problems must be resolved by defaults, debt reductions, and conversion of debt into equity.

John Maynard Keynes predicted accurately that all of these debts would end up in default.

public provision of credit to the solvent parts of the corporate sector in order to avoid a short term debt refinancing crisis for solvent but illiquid corporations and small businesses

Certainly, a key part of the solution is to allow more banks to fail, ensuring that depositors are paid off in full, but not necessarily debt holders.

In the 1990 s, its corporate sector was plagued by triangular debts (when a manufacturer that has not been paid for its product is unable to pay its suppliers, which in turn struggle to pay their suppliers).

The official line so far has been no default, meaning no sovereign default or that of any bank can be considered.

The costs of default depend on how messy things become when payments stop. What are the legal difficulties?

This is harder to judge than is the solvency of a firm, because a sovereign state possesses the power to tax. In theory, all that is needed in order to get out of debt is to increase taxes and cut spending.

If they go bankrupt, the insurance industry, which is likely a large holder of these debts, would quickly enter a spiral of collapse.

The risk of default or debt restructuring induces creditors to be more careful in their lending decisions.

In some countries Argentina, Ecuador and the Russian Federation the debt crisis led to a suspension of payments or defaults on debt service.

Ordinarily, a sharp rise in oil prices quickly translates into higher inflation expectations, followed by rising interest rates at all maturities.

Until recently, the bond markets treated all euro sovereign debts as virtually equal, not raising interest rates on high debt countries until the possibility of default became clear.

This is harder to judge than is the solvency of a firm, because a sovereign state possesses the power to tax. In theory, all that is needed in order to get out of debt is to increase taxes and cut spending.

Having failed to collect what other countries owed it, Britain continued to pay the US for ten years, suspending debt service only in the depth of the Great Depression.

When you sell more to the world than you buy, you accumulate claims on the rest of the world and you need to decide the form in which you want to hold those claims.

After the subprime crisis erupted, mortgage and consumer debt was paid down by households either with their savings or by default.

The impulse simply to cut the Gordian knot of debt by defaulting on it is much stronger when creditors are remote and unknown.

Certainly, a key part of the solution is to allow more banks to fail, ensuring that depositors are paid off in full, but not necessarily debt holders. But this route is going to be costly and painful.

First, different countries have different capacities to sustain public debt, depending on their initial deficit levels, existing debt burden, payment history, and policy credibility.

The current projection for 2005 is that debt to Member States will be 79 million higher than at the end of 2004.

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Selectivity 4.

Payment

This holds down interest rates on that debt in the short run, but creates even bigger potential losses in the case of potential default.

There would be no write down of principal, or haircut for creditors, only more time for repayment. Banks would be spared having to acknowledge losses.

While the lock law helped to boost the participation rate in the 2005 exchange, holdout creditors remained, and have pursued litigation to force repayment.

But, whatever form the default takes, the current owners of Greek debt will get less than the full amount that they are now owed.

Virtually all of the debt repayments due in the next few years are to the IMF, whose implicit status as senior creditor ensures that it is repaid first. Because Greece is rapidly running out of cash, it will first have to borrow more from either its European neighbors or the IMF itself.

Right to payment

Some were unable others were unwilling.

When the revenue is recognized, it is recorded as a receivable.

Financial markets have reacted as strongly as they have because investors recognize that the sovereign in sovereign debt is an electorate that can simply decide not to pay.

And even before that default occurs, interest rates on Spanish or Italian debt could rise sharply, putting these countries on a financially impossible path.

The 1980 s solution saved the banks (and the bankers) from the debt crisis, but in the long run increased burden of repayment, and in this way decreased living standards in Latin America.

What resulted was a wonderful system for diversifying individual bank risk, but only by magnifying the default risk of all banks that held what came to be called toxic debt.

They have also accumulated large protracted arrears with the international financial institutions.

The credit balance in the tax equalization account at the end of 2005 consisted of 97.3 million due to the United States of America, and 12 million due to other Member States.

This is forcing deficit countries into real exchange rate adjustments via deflation and thus a rising burden of public and private debt that may lead to disorderly defaults.

One reason that banks oppose debt write downs is that many underwater homeowners continue to repay debt rather than default, even while cutting back on other spending.

On the basis of the evidence provided by the claimant, the loss is compensable.