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A debt crisis is a situation in which a government (nation, state/province, county, or city etc.) loses the ability of paying back its governmental debt. When the expenditures of a government are more than its tax revenues for a prolonged period, the government may enter into a debt crisis. Various forms of governments finance their expenditures primarily by raising money through taxation. When tax revenues are insufficient, the government can make up the difference by issuing debt. [[File:Government debt in percent of GDP IMF.svg|thumb|upright=1.2|Public debt as a percent of GDP by IMF (2024)
]] A debt crisis can also refer to a general term for a proliferation of massive public debt relative to tax , especially in reference to Latin American countries during the 1980s, the United States and the European Union since the mid-2000s, and the Chinese debt crises of 2015."Who is Handling Debt Crisis Better, United States or Europe" - US News [1]Marsh, Bill (May 1, 2010). "Europe's Web of Debt". The New York Times.Cowen, T., "How's the Argentina Recovery Coming Along?"
The development charity CAFOD states that in current (2024) conditions, more than 50 countries are in debt crisis.Finnerty, M., Jubilee 2025: The new global debt crisis and its solutions, CAFOD, published in December 2024, accessed on 30 June 2025
The 2008 financial crisis began with a crisis in the subprime mortgage market in the United States, and developed into a full-blown international banking crisis with the collapse of the investment bank Lehman Brothers on 15 September 2008. The crisis was nonetheless followed by a global economic downturn, the Great Recession. The European debt crisis, a crisis in the banking system of the European countries using the euro, followed later.
In sovereign debt markets of PIIGS (Portugal, Ireland, Italy, Greece, Spain) created unprecedented funding pressure that spread to the national banks of the euro-zone countries and the European Central Bank (ECB) in 2010. The PIIGS announced strong fiscal reforms and austerity measures, but toward the end of the year, the euro once again suffered from stress.
In 1992, members of the European Union signed the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. However, in the early 2000s, some EU member states were failing to stay within the confines of the Maastricht criteria and turned to Securitization future government revenues to reduce their debts and/or deficits, sidestepping best practice and ignoring international standards. "How Europe's Governments have Enronized their debts", Mark Brown and Alex Chambers, Euromoney, September 2005 This allowed the sovereigns to mask their deficit and debt levels through a combination of techniques, including inconsistent accounting, off-balance-sheet transactions, and the use of complex currency and credit derivatives structures.
From late 2009 on, after Greece's newly elected, PASOK government stopped masking its true indebtedness and budget deficit, fears of sovereign defaults in certain European State developed in the public, and the government debt of several states was downgraded. The crisis subsequently spread to Ireland and Portugal, while raising concerns about Italy, Spain, and the European banking system, and more fundamental imbalances within the eurozone.Paul Belkin, Martin A. Weiss, Rebecca M. Nelson and Darek E. Mix "The Eurozone Crisis: Overview and Issues For Congress", Congressional Research Service Report R42377, 29 February 2012.
2010 January–March - Two more rounds of tough austerity measures are announced by government, and government faces mass protests and strikes.
2010 April–May - The deficit was estimated that up to 70% of Greek government bonds were held by foreign investors, primarily banks. After publication of GDP data which showed an intermittent period of recession starting in 2007, credit rating agencies then downgraded Greek bonds to junk status in late April 2010. On 1 May 2010, the Greek government announced a series of austerity measures.
2011 July – November - The debt crisis deepens. All three main credit ratings agencies cut Greece's to a level associated with substantial risk of default. In November 2011, Greece faced with a storm of criticism over his referendum plan, PM Papandreou withdraws it and then announces his resignation.
2012 February - December - The second bailout programme was ratified in February 2012. A total of was to be transferred in regular tranches through December 2014. The recession worsened and the government continued to dither over bailout program implementation. In December 2012 the Troika provided Greece with more debt relief, while the IMF extended an extra €8.2bn of loans to be transferred from January 2015 to March 2016.
2014 - In 2014 the outlook for the Greek economy was optimistic. The government predicted a structural surplus in 2014, opening access to the private lending market to the extent that its entire financing gap for 2014 was covered via private bond sales.
2015 June – July - The Greek parliament approved the referendum with no interim bailout agreement. Many Greeks continued to withdraw cash from their accounts fearing that capital controls would soon be invoked. On 13 July, after 17 hours of negotiations, Eurozone leaders reached a provisional agreement on a third bailout programme, substantially the same as their June proposal. Many financial analysts, including the largest private holder of Greek debt, private equity firm manager, Paul Kazarian, found issue with its findings, citing it as a distortion of net debt position.
2017 - The Greek finance ministry reported that the government's debt load is now €226.36 billion after increasing by €2.65 billion in the previous quarter. In June 2017, news reports indicated that the "crushing debt burden" had not been alleviated and that Greece was at the risk of defaulting on some payments.
2018 - Greek successfully exited (as declared) the bailouts on 20 August 2018.
In February 2012, it was reported that 20,000 Greeks had been made homeless during the preceding year, and that 20% of shops in the historic city centre of Athens were empty.
The 1998–2002 Argentine great depression was an economic depression in Argentina, which began in the third quarter of 1998 and lasted until the second quarter of 2002. It almost immediately followed the 1974–1990 Great Depression after a brief period of rapid economic growth.
Argentine agricultural products were rejected in some international markets for fear that they might have been damaged by the chaos. The US Department of Agriculture put restrictions on Argentine food and drug exports.
Bondholders who had accepted the 2005 swap (three out of four did so) saw the value of their bonds rise 90% by 2012, and these continued to rise strongly during 2013.
2010 On 15 April 2010, the debt exchange was re-opened to bondholders who rejected the 2005 swap; 67% of these latter accepted the swap, leaving 7% as holdouts. Holdouts continued to put pressure on the government by attempting to seize Argentine assets abroad, and by suing to attach future Argentine payments on restructured debt to receive better treatment than cooperating creditors.
The government reached an agreement in 2005 by which 76% of the defaulted bonds were exchanged for other bonds at a nominal value of 25 to 35% of the original and at longer terms. A second debt restructuring in 2010 brought the percentage of bonds out of default to 93%, but some creditors have still not been paid. Foreign currency denominated debt thus fell as a percentage of GDP from 150% in 2003 to 8.3% in 2013.
On 19 January 2023, the United States again reached the debt ceiling. In February 2024, the total federal government debt grew to $34.4 trillion after having grown by approximately $1 trillion in both of two separate 100-day periods since the previous June.
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