A sovereign debt crisis occurs when a country is unable to meet its debt obligations, leading to a default on loans or bonds. This situation can arise from various factors, including economic mismanagement, excessive borrowing, or external shocks. When a country defaults, it can face severe consequences, such as loss of access to international credit markets and a decline in investor confidence. The impact of a sovereign debt crisis often extends beyond the affected country, potentially destabilizing regional economies and financial systems. Governments may implement austerity measures to regain fiscal stability, which can lead to social unrest and economic hardship for citizens.