Political incentives often push leaders toward policies that prioritise short-term gains over long-term benefits. This column argues that the decision to raise public debt plays a key role in shaping political incentives around implementing reforms. Beneficial reforms are more likely if sufficient debt can be raised and if enough of the future gains are of private good nature. Furthermore, soft debt limits are preferable over hard limits for efficient reform provision. Empirical evidence on debt capacity, public investment, and transfers from OECD countries is consistent with the theoretical predictions. […]