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 and 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