Dominic Martin

A government debt is the debt owned by a government in the form of bonds, securities or bills, or in the form of direct loans made to other states and supranational organizations. There is widespread belief among political decision makers, the general public, and finance scholars that such debt ought to be repaid, no matter what. One thinks, for example, of the recent Greek crisis and the strong position taken by the European Union under the leadership of Germany. Other examples include the restructuring of the Argentine debt in 2005, and the cases of many other debtor states of the World Bank or the International Monetary Fund (IMF).

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  1. shinichi Post author

    On the Moral Obligation to Repay a Government Debt

    by Dominic Martin

    In this paper, I will investigate the question of whether a government is always morally obligated to repay its debt. I will leave aside the legal aspect of debt repayment, assuming for most of the cases I will discuss that the indebted governments were legally obligated to repay their debt. However I will explore whether these legal obligations were backed by a moral one. I will show that the moral claims that a government ought to repay a government debt often rest on three questionable views. It is believed, first, that defaulting governments are wrong because they have mismanaged their finances. Second, that there is an obligation to fully reimburse a debt. Third, that creditors are morally entitled to being repaid.

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