How could something so simple be so suffocating? As a teacher, you tend to take for granted that taking an oral test - in which you have to ask and answer basic questions - is a breeze. Not necessarily.
But as simple as it may seem, for some just the experience of having to be tested is torture enough, let alone having to ask questions like "What's your name?" and "Where are you from?".
What do you do in a situation like that when the student is visibly falling apart and the butterflies in the stomach have completeley dominated the person?
Yesterday, during a beginner test, one of my students really had a hard time. It wasn't just a case of butterflies in the stomach, she was a nervous wreck!
One more thing: it's a waste of time telling the person to calm down and that everything is gonna be alright. If it was, then the person wouldn't be worried in the first place. Just give the person time to compose herself/himself, and if necessary, give them another go at the test, maybe at another time.
Maybe some professional help would be good.