A debt crisis occurs when:

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A debt crisis occurs when a government cannot repay its loans, leading to default and potentially triggering economic instability. This can result from a range of factors, including excessive borrowing, fiscal mismanagement, and economic downturns. While consumer debt and interest rates can contribute to financial instability, a debt crisis typically refers to a situation where a sovereign entity is unable to meet its debt obligations. Bond markets can also play a role in exacerbating a debt crisis, as investors may become hesitant to lend to countries with high levels of debt or uncertain economic prospects.

A Debt Crisis Occurs When