<blockquote>
<p>Has there ever been a time when a government defaulted on its due to a country's economic state, such as hyperinflation, or for some national or international political issue?</p>
</blockquote>
<p>Yes, since default leads to increased cost of borrowing and often also to capital flight, and host of other economic issues, countries do not default on their debt just for fun but only when they are in economic difficulties. Hyperinflation, is often a way how countries try to avoid default but when country decides that cost of hyperinflation is worse than cost of default it might decide to default.</p>
<p>Here are some examples of countries defaulting from <a href="https://www.researchgate.net/publication/5188928_The_Forgotten_History_of_Domestic_Debt" rel="nofollow noreferrer">Reinhart and Rogoff 2011</a>:</p>
<p><a href="https://i.sstatic.net/jQS5y.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/jQS5y.jpg" alt="enter image description here" /></a></p>
<blockquote>
<p>When Lebanon prevented Lebanese citizens from withdrawing their money from banks, did it also stop paying its government bonds?</p>
</blockquote>
<p><a href="https://www.fitchratings.com/research/sovereigns/lebanon-22-09-2023#:%7E:text=Eurobond%20Default%20Continues%3A%20Lebanon%20remains,of%20Eurobonds%20pending%20a%20restructuring." rel="nofollow noreferrer">Lebanon did default</a> on their Eurobond on 9 March 2020. Lebanon started with <a href="https://www.state.gov/reports/2020-investment-climate-statements/lebanon/#:%7E:text=Since%20October%202019%2C%20Lebanon%27s%20financial,banks%20are%20denominated%20in%20dollars." rel="nofollow noreferrer">capital controls on 2019</a> so it did not happened at the same time, however, capital controls are typical instrument governments close to default implement to prevent capital flight.</p>

CC BY-SA 4.0
2024-02-18T14:48:29.357Z
2024-02-18T14:48:29.357Z
1muflon1
<p>Recently, some countries have experienced hyperinflation such as Lebanon, Zimbabwe, and Venezuela.</p>
<p>Has there ever been a time when a government defaulted on its treasure bond payments due to a country's economic state, such as hyperinflation, or for some national or international political issue? By default, I mean failing to pay local and international treasury bondholders.</p>
<p>When Lebanon prevented <a href="https://www.youtube.com/watch?v=QcGVGoO6WaI" rel="nofollow noreferrer">Lebanese citizens from withdrawing their money from banks</a>, did it also stop paying its government bonds?</p>

<macroeconomics><inflation><bonds><price-level>
Have governments ever defaulted on its public domestic debt or treasury bonds?
Jude Zambarakji
# Have governments ever defaulted on its public domestic debt or treasury bonds?

(Asked by: username_0 on 2024-02-18)

Recently, some countries have experienced hyperinflation such as Lebanon, Zimbabwe, and Venezuela.

Has there ever been a time when a government defaulted on its treasure bond payments due to a country's economic state, such as hyperinflation, or for some national or international political issue? By default, I mean failing to pay local and international treasury bondholders.

When Lebanon prevented [Lebanese citizens from withdrawing their money from banks](https://www.youtube.com/watch?v=QcGVGoO6WaI), did it also stop paying its government bonds?

**Tags:** macroeconomics, inflation, bonds, price-level

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## 1 answers

### Answer by username_1 on 2024-02-18. Score: 2 | Accepted answer

> Has there ever been a time when a government defaulted on its due to a country's economic state, such as hyperinflation, or for some national or international political issue?

Yes, since default leads to increased cost of borrowing and often also to capital flight, and host of other economic issues, countries do not default on their debt just for fun but only when they are in economic difficulties. Hyperinflation, is often a way how countries try to avoid default but when country decides that cost of hyperinflation is worse than cost of default it might decide to default.

Here are some examples of countries defaulting from [Reinhart and Rogoff 2011](https://www.researchgate.net/publication/5188928_The_Forgotten_History_of_Domestic_Debt):

[![enter image description here](https://i.sstatic.net/jQS5y.jpg)](https://i.sstatic.net/jQS5y.jpg)

> When Lebanon prevented Lebanese citizens from withdrawing their money from banks, did it also stop paying its government bonds?

[Lebanon did default](https://www.fitchratings.com/research/sovereigns/lebanon-22-09-2023#:%7E:text=Eurobond%20Default%20Continues%3A%20Lebanon%20remains,of%20Eurobonds%20pending%20a%20restructuring.) on their Eurobond on 9 March 2020. Lebanon started with [capital controls on 2019](https://www.state.gov/reports/2020-investment-climate-statements/lebanon/#:%7E:text=Since%20October%202019%2C%20Lebanon%27s%20financial,banks%20are%20denominated%20in%20dollars.) so it did not happened at the same time, however, capital controls are typical instrument governments close to default implement to prevent capital flight.


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