The article discusses sovereign debt issues, focusing on a country's ability and willingness to pay back debts. It explores the need for debt reduction when a country struggles to pay, but also the challenges in implementing debt relief plans. The study highlights that penalties for not repaying debts play a crucial role in determining repayment outcomes. Different types of penalties can affect a country's decision to default on its debt. Moreover, unequal distribution of default costs can lead to a cycle of accumulating debt and defaulting.