Research On Risk Management Of Hunan Municipal Government Debt

Debt of local government is a kind of liability to creditors under the arrangementof law, treaties or contracts. It is the aggregation of various debts which are borrowed,guaranteed or owed by the government or its functional department. Although financialdeficit is prohibited in some current laws, for instance,《Budget Act》, the localgovernment of all levels are to some extent bearing liabilities in the real economy andthe risk of debt financing is increasingly prominent. If the risk of debt of localgovernment persists to expand, there would be a tremendous threaten toward the localeconomy and even the state economy. Therefore, we should effectively manage the riskand keep it manageable. So it is very important both theoretically and practically tostudy the management of the risk of government debt financing.In this paper, Hunan Province, local government debt as the research sample,detailed study of the various prefectures in Hunan government debt financing situationand financing risks, combing through government financing platform from the upgradeto the county government established financing platform that Hunan local governmentdebt financing following risks exist: First, local government finance expansion bringshort-term solvency risk; Second, financing body fragmented, lack of unifiedmanagement; Third, financing structural imbalances, focusing on direct bank loans,financing terms project investment period imbalances; Fourth, local government creditconstruction is weak, debt mechanism is not smooth, heavy financing, light repayment.Fifth, the lack of regulatory mechanisms, the government oversight agency debtfinancing subject blur, it is difficult for local government financing behavior, the useof funds and repayment mechanisms during the formation of a strong constraint.Then, this paper’s Hunan Province, local government financing related data for itssolvency measure, mainly through debt ratio and debt ratio analysis to analyzeobservations Hunan local government solvency and debt pressures and deadlinesthrough debt funding structure Hunan Province, local government structures to observethe settled pressure carcinogen.Finally, at the policy level, Hunan local government debt financing proposedmanagement measures: First, to build modest and reasonable financing platform;Second, the establishment of local government financing debt risk preventionmechanisms, in particular government financing debt information systems and transparent system of government financing debt information; Third, strengthening oflocal government financing debt management, through economic development in orderto improve the local government’s financial strength, and strengthen local people’scongresses, and to supervise the review to ensure debt repayment mechanism smoothly;Fourth, the financing capacity of local government to achieve moderate growth,especially in creating good local financial ecology and local governments to improveoverall strength.