Why do countries go bankrupt


    Why do countries go bankrupt

  • 1 Unsustainable debt

    A country can default or go bankrupt when it has a very high unsustainable debt that it cannot pay. This happened to Greece during the Greek crisis in 2015.

  • 2 Extremely high spending

    If the government spending gets extremely high to the extent that the country can't finance its spending or debt, bankruptcy might happen.

  • 3 Very high interest rates

    If the interest rates go so high, the country might fail to pay interest on the public debt and so the country might default.

  • 4 Using debt money unproductively

    If a country doesn't use the debt money productively, it might not be able to meet its obligations and so it might default.

  • 5 Losing a war

    After losing a war, a country might be forced to pay money to other countries or to fix the damage resulting from the war. This could also lead to default.

  • 6 Serious reduction in revenues

    If the revenues of a country falls strongly, it might have problems paying its debt and so it might default.

  • 7 Geo-political instability

    Wars and political instability can force a country to go bankrupt, as the lack of stability directly reduces the countries' income.