Debt Overhang

What does it mean?
A situation where the debt stock of a country exceeds the country's future capacity to repay.

In Other Words...
A debt overhang occurs when the cost of debt is combined with a fall in a country's trade and economic health. As a result there is decreased spending on education, health, and infrastructure which puts the country in even worse economic shape.

Related Links
What Fuels the National Debt? - Gain insight into the functions of the U.S. Treasury by learning how and why it issues debt.

Related Terms
Creditor | Debt

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