Debt Overhang

Debt overhang occurs when a company or country has so much existing debt that future profits are primarily used to pay existing obligations rather than fund new growth or investments. This situation discourages borrowing and investment, as stakeholders fear that any additional gains will mostly go toward debt repayment, making new projects seem unprofitable or risky. Essentially, overwhelming debt acts as a barrier to future progress, slowing down economic development or business expansion despite potential opportunities.