In itself the renegotiation is not that bad, and often works out. What makes it worse is that the government openly admits that it has a very big problem in sta

In itself the renegotiation is not that bad, and often works out. What makes it worse is that the government openly admits that it has a very big problem in staying solvent. This makes it harder for them to get new loans in the future. Also other financial institutions will lose trust in that country, causing money to flow out and devaluation of the currency. This in turn makes it harder for that country to do business with others. In the end, hard measures will have to be taken so that trust can be restored.