debt crisis

A debt crisis occurs when a country or an organization cannot meet its debt obligations, leading to defaults on loans or bonds. This can happen when revenues fall, expenses rise, or both, making it impossible to pay back what is owed. As stakeholders lose confidence, borrowing costs rise, creating a vicious cycle. The effects can ripple through the economy, causing reduced public services, higher taxes, and social unrest. Resolving a debt crisis often requires restructuring debts, seeking aid from international organizations, or implementing austerity measures, which can be painful for the affected population.