Study On Management Mechanism Of The Risk Of Municipal Governments' Debt

In the recent years,local governments have collected money by borrowing debts,which has played an active role in tackling the international financial crisis,and promoting new urbanization,and promoting economic growth,and improving people's living standards and so on.However,due to the imperfectness of the related systems such as the diverse borrowing forms of debt,and the absence of the debt management in fund use,the scale of the debts grows very rapidly,and many places face heavy debt risk.Currently,the local governments have been in a peak period of debt repayment.Local governments should be confronted with the challenge to balance the relationship of reducing the risk of stock debt,controlling the new debt risk,and satisfying the reasonable funding demand of the local government.Especially the debt risk of the municipal-level government is more serious,while the governance ability and its improvement depend on the use of the advantages of debt and the control of the debt risk directly.Under the background of the "new normal" of the economy and the reform of the supply side,the municipal-level governments are not only faced with opportunities and challenges in the construction of the Belt and Road and the new urbanization,but also trapped in the mismatch of supply and demand and the contradiction of the slow increase of the revenue and the rigid growth of the expenditure.How to solve the problem of the fund gap? How to prevent and control the local government debt risk? How to perfect the relevant system of local government debt risk control? We should study these issues in depth.According to the audit report,the municipal government is the main subject of debt in most provinces.By the end of 2012,there are 99 municipal governments,whose ratio of the debt burden is higher than 100%.The municipal government is facing a great debt risk,which caused widespread concern at home and abroad.If municipal governments have problems in the use and management of debt,it will easily prone to debt risk and has a domino effect,thus inducing financial risks.It will have a domino effect,and will be transmitted and induce financial risks and financial risks.In the new economic normality,how to timely resolve the municipal government debt risk? How to meet the infrastructure funding needs? These are the key issues that local governments are facing.It has directly affected the sustainable economic and social development and the construction of new urbanization.More and more developing countries focus on local government debt management.In the case of macro-economic downturn,if local governments borrowed a lot of debt recklessly,it will expand the size of the debt,and lead to a big potential risks.Therefore,under the current circumstances,it is necessary to establish a scientific and rational institutional framework of local government debt risk control,and it will be helpful to prevent and control the debt risk,lower the financing costs and promote the sustainability of the infrastructure construction funding.The New-amended Budget Act authorizes the provincial government can enjoy the debt-borrowing right,while the municipal and county governments cannot.Files from the State Council explicitly require that the provincial government can borrow debt instead of municipal governments and county governments.Local governments have been prohibited borrowing debt by enterprises and units.In this case,how to control debt risk from municipal governments? This problem is worth thinking about and solving.The paper focuses on the risk management of the municipal government debt.This is the main contents of the paper which include the stock of debt and incremental debt.The paper uses a variety of analytical methods,including the empirical analysis,normative analysis,qualitative analysis,quantitative analysis,comprehensive analysis and case studies etc.The paper is conducted from various angles,including finance,economics,management,statistics,etc.Through research,we find that there are the following features about the municipal government debt risk: firstly,local governments bear much debt,and debt is growing rapidly;local governments bear debt pressure and potential debt risk;secondly,it is not critical in terms of debt management,and related system is not perfect.In this paper,we take the N Municipal Government debt risk as an example.On the surface,debt risks are from local government debt impulses and performance driven.But the underlying reason lies in the current financial system,investment and financing system,and the official assessing mechanisms.To learn from the experience of other countries,the paper selects the local government debt management systems and practices from New York City,Orange County,Detroit City,Yubari and Cairns so as to understand the information of overcoming the debt crisis and strengthening of debt management.With the methods of comprehensive induction and comparative analysis,the paper summarizes the experience of foreign local government debt management,and obtains important inspiration of local government debt management.Based on the analysis and research above,this paper focuses on ground-level city government debt stock of debt and incremental control mechanisms.Scale of the debt is an important factor to measure debt risk.It is very important to the local government's ability of local governments to repay,including financial debt and asset situation.The larger scale of the debt does not mean that the debt risk is also large.A small amount of local government debt does not mean that there is no risk of debt.We should rationally determine the scale of the debt,and fully play an active role in debt,and reduce the negative effects of debt.It will be helpful to control debt risk.This paper argues that local government should improve the debt risk management system,and combine short-term response with long-term institutional system.The Government should pay attention to debt risk.Excessive debt affects economic growth.The larger scale of the debt,the more obvious the drag effect.Incremental debt control helps prevent the expansion of the debt risk.This paper constructs a dynamic debt mechanism which is used for risk screening and early warning.This mechanism will contribute to real-time monitoring of debt.According to the results of early warning,local governments timely adopted different tactics.For example,in the red warning state,local government will launch the emergency mechanism.In red or yellow or orange alert status,local government will simultaneously adopt short-term and long-term countermeasures.Local government should focus on strengthening the system construction,and strengthen supervision and management.On the incremental debt risk management,local government scientifically should determine debt qualifications and determine the size of the debt according to supply and demand sides of the new debt.Meanwhile,the government should screen debt risk again through risk screening and early warning systems,when the government is at the maximum debt limit state.Government should establish real-time debt risk monitoring mechanism,and always monitor the debt risk,while the stock of debt and incremental debt is changing.In addition,the paper proposes to build a full range of regulatory mechanisms,including multiple dimensions of governance,market discipline,legislative norms and pluralistic supervision.