In 1998 76 states remained in default on their foreign bonds, effectively declaring their bankruptcy to the international community. On average, two new states a year have declared bankruptcy during the 1990s. However this rate has fallen throughout the 1990s, with no new states defaulting in 1997, when the level of disputed government debt dropped to $77 billion. In mid-1998, sovereign defaults had declined to approximately 12 percent of total issuance. Some governments, which defaulted in the 1970s, have been in talks with their creditors up until 1998, without any agreement on rescheduling of payments.
Default by a government on a loan results in considerable financial confusion requiring a lengthy remedial process.