The Study Of Local Government Debt's Causes And Risk Management

Chinese local government debt issue has caused decision-marks highly valued in recent years.Domestic and foreign economists have also discussed the size,structure,risk,causes and countermeasures of local government debt and other issues in depth. Strengthening of local government debt management,preventing and eliminating debt risk are important things that ensure sustainable,healthy and stable development of national economy and society.Local government in China in the debt management system,no doubt drawing on international experience should serve as an important manner.We choose Japan's fine management mode of local government debt and Columbia's "traffic light" early warning mechanism. Learn form the experience of these countries,establish and improve the local debt management system.A District is one of the four main districts of Nanjing. Up to December 2013 the local government debt balance was 34.82 billion and the debt ratio was 89.9%. From the size and debt ratio, the government debt risk of A district was in the controlled area. However, the debt which the government bears grows excessively fast. Recently pressure of debt concentrates. Short-term liquidity risk is high.A district causes from the perspective of government debt, mainly due to:the financial system is not complete, financial and powers substantially mismatched; political reform is not in place, local governments bear the dual functions of public administration and economic construction; A area itself weak revenue growth, fiscal rigidity spending enormous pressure.The reality of Adistrict local government debt management at this stage is:From the borrowing rights management point of view,A district government has not been given the right to own bonds;From budget management point of view,there are still a lot of debt free outside of the budget system;From the size of the control point of view, A district government has not established control mechanisms;From a risk management point of view,there is no sound risk early warning mechanisms;From information disclosure point of view,there is no fully open the sub-national government borrowing situation.To prevent the debt risk of local government in A district, establishing a sound system of local government debt management has become a top priority. This paper presents a reasonable countermeasure for local financial governance and debt management in A district, which further clarify the relationship between government and the market, the importance of transformation of government functions,as well as to deepen financial reform continuesly and define property rights and government powers clearly from all levels, which make property rights and powers matched and improve the system of transfer payment; to establish a sound system of local government debt management which covers unified integrated management, strenghthen examination, approving of debt and budget management, supervision and announcement of information and establish a warning mechanism for repayment and problem solving.