Sovereign Debt Crises

A sovereign debt crisis occurs when a country struggles to repay or refinance its national debt because its financial resources or economic conditions worsen, leading to doubts among investors about its ability to pay. This can cause borrowing costs to rise, reduce investor confidence, and sometimes force the country to seek international help or default on its obligations. Such crises can trigger economic instability, inflation, and social hardship, as governments may need to cut spending or raise taxes to manage their debt. Essentially, it’s a situation where a country's debt becomes unsustainable, threatening its economic stability and growth.