debt crises

A debt crisis occurs when a country or organization cannot meet its debt obligations, leading to potential default or insolvency. This often happens when borrowing becomes unsustainable due to high-interest payments, reduced income, or economic downturns. In such situations, the entity may struggle to pay back loans, resulting in damaged credit ratings, reduced investor confidence, and economic instability. This can also lead to austerity measures, social unrest, and a need for international assistance to manage the fallout. Essentially, a debt crisis reflects a critical imbalance between what is owed and the ability to repay.