When a country signs an international treaty, it is not the government but the state that is bound, and the obligation will stand until a subsequent government formally exits the treaty. Exit is presumed to be costly: a government that "repudiates" earlier treaty obligations will suffer reputational harm in its international relations. Moreover, this general background norm of international law applies as well to debt: a government can announce that it is renouncing debt, but it will suffer severe reputational harm in the debt marketplace, much as a government that repudiates public international law obligations suffers a reputational harm. Here, Ginsburg and Ulen talks about the odious debt and odious credit in relation to economic development and democratization.
Tom Ginsburg & Thomas S. Ulen,
Odious Debt, Odious Credit, Economic Development, and Democratization,
70 Law and Contemporary Problems
Available at: http://scholarship.law.duke.edu/lcp/vol70/iss3/7