Debt crises

Definition

A debt crisis occurs when a country or sovereign entity cannot meet or is at risk of not meeting the repayment obligations of its borrowed funds, potentially leading to economic instability or collapse. It often involves seeking emergency financial assistance from international institutions or renegotiation of debt terms.

Related terms

Sovereign Debt: Money that is borrowed by governments, which can lead to a debt crisis if repayment becomes unsustainable.

Bretton Woods Institutions: Financial institutions established post-World War II, including the IMF and World Bank, that assist countries in managing their economies and can provide aid during debt crises.

Structural Adjustment Programs: Economic policies and reforms that countries must adopt as a condition for receiving financial aid from international institutions, often implemented during debt crises