Why Debt Crises Are Governance Crises
Institutions, incentives, and moral hazard
I’ve just shared a new set of teaching materials focused on the governance of sovereign debt restructuring—and on a question that sits at the core of today’s debates: how to deliver debt relief without amplifying moral hazard.
Debt crises are not only financial events. They are deeply shaped by institutions, governance quality, and political incentives.
▪ Why weak institutions and poor governance amplify debt distress
▪ How creditor coordination failures delay resolution
▪ The link between corruption, capital flight, and external debt accumulation
▪ Why debt relief without governance reform often recycles risk
▪ How IFIs, bilateral creditors, and markets try to balance relief and discipline
The objective is to move beyond a narrow financial reading of debt crises and understand how governance failures turn debt relief into a fragile and often temporary solution.
These slides were presented in Rome at the LUISS School of Government with the students of the Joint Master in Global Economic Governance and Public Affairs (GEGPA) offered in partnership by the Centre International de Formation Européenne (CIFE) and the LUISS Guido Carli School of Government.
