Terminal debt

Terminal debtis the point at which the payments on the interest of adebtsurpass the revenues of thedebtor(i.e. the debt becomes fiscally unstable). In simpler terms, terminal debt is the point at which debt payments become more than the debtor can pay back, resulting in additional penalties on top of the already large debt, causing a runaway effect, usually ending inbankruptcyof the debtor.^[1]^[2]

References

^Frederiksen, N.K.Long-Term Fiscal Indicators: Sustainability versus Terminal Debt Constraints,Working Paper 14/2005, Danish Ministry of Finance Archived2012-05-26 at theWayback MachineRetrieved 4 December 2011.
^Eichengreen, BarryInstitutions for Fiscal Stability,CESifo Economic Studies, Oxford University Press, Volume 50, Issue 1 (2004)Retrieved 4 December 2011

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[1] Frederiksen, N.K.Long-Term Fiscal Indicators: Sustainability versus Terminal Debt Constraints,Working Paper 14/2005, Danish Ministry of Finance Archived2012-05-26 at theWayback MachineRetrieved 4 December 2011.

[2] Eichengreen, BarryInstitutions for Fiscal Stability,CESifo Economic Studies, Oxford University Press, Volume 50, Issue 1 (2004)Retrieved 4 December 2011

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