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In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan.[citation needed]

Sovereign debt default

A sovereign default is defined as the failure of a government to meet a principal or interest payment on the due date (or within the specified grace period). These episodes include instances in which rescheduled debt is ultimately extinguished in terms less favorable than the original obligation.[1]


  1. Carmen M. Reinhart & Kenneth S. Rogoff. This Time Is Different: Eight Centuries of Financial Folly (pdf), Chapter 1, see also the summary page. Referenced 2011-02-17.