The Estimation And Resolution Of Fiscal Risk In Hunan Province

We have got a magnitude achievement in our economic development since the reform and opening to the outside world, with the boosting up of overall national strength and the enhancing of international standing. In this process, our finance has made an great contribution to resource allocation and economic adjustment and got some cost as well, such as the increasing of financial embarrassment, financial deficit and the scale of national debt. Especially under the system of tax division between central and local governments, some local governments have got a great deal of debt and the financial state is so disamenity. Compared with the practice, our government has put forward to that we should keep our eye on the fiscal risk, but the construction of the mechanic framework to forecast and prevent the local government's fiscal risk is still not in clarity. We haven't set up the evaluation and avoiding system completely suited for local development, especially in Hunan province which is stated in midland with prominent financial embarrassment and fall behind other regions in economy. So there is a very spacious foreground in the research of calculating and avoiding Hunan's fiscal risk.At first, based on the analysis of the characteristics and the hazards of local fiscal risks, we repair the evaluation of the fiscal risk indicators characteristically, and calculate the fiscal risk value for Hunan Province, and then we learn that the current overall fiscal risks in Hunan Province is in general risk region which is nearly close to the high-risk region, and we consider that the elementary of fiscal risks in Hunan exists in the process of obtaining tax revenue, fiscal expenditure supervision and the mechanism of government financing. Secondly, we analyze the cause of formation for the fiscal risk through two facts—the local fiscal factors and debt factors. We think that the reasons of expansion of the local financial risk include disunity between financial power and responsibility, system of tax division between central and local governments with excessive emphasis on centralization, the weakening budget management and the randomness of government financing. Finally, we propose that government should reasonably define the responsibility between all levels of governments, strengthen the supervision for budget and fiscal expenditure, and establish and standardize local government borrowing system and establish emergency response mechanism in order to prevent and resolve the local fiscal risk.