"Fend off and defuse major risks" is one of the the three critical battles against potential risk proposed by the 19 th National Congress of the Communist Party of China.The continuous accumulation of local government debt,especially the implicit debt of local government,will lead to fiscal risks,and financial risks will inevitably follow.The Fifth Session of the Thirteenth National People’s Congress "Report on the Implementation of the Central and Local Budgets in2021 and the Draft Central and Local Budgets in 2022" further clarified the importance of fending off and defusing risks.The amount of local government debt was reduced again.Supervision continues to be improved to stimulate the efficiency of capital using,while the "red line" for containing hidden-debt growth remains unchanged,increasing the emphasis on orderly resolution of existing hidden debt,and avoiding the occurrence of "risks of disposal risks".Hidden debt accounts for a large proportion of local government debt in our country,and local hidden debt has the characteristics of various types,opaque scale,difficulty for the central government to handle the specific borrowing situation,and liquidity risks are prone to trigger financial risks.Therefore,resolving the hidden debt of local governments and effectively controlling and managing existing debt risks are the top priorities for pur country to deal with of the government debt problem.First of all,on the basis of the research results of experts and scholars in the field of local government debt and hidden debt,this paper expounds the concepts and related theories of local government debt,hidden debt,and hidden-debt risk.This paper analyzes the root causes of the local government’s hidden debt from three aspects: the fiscal decentralization theory,the incentive theory and the soft budget constraints,which provides a certain theoretical basis for the subsequent research on the measurement of the scale of local hidden debt and the analysis of risk warning.Secondly,based on the status quo of the hidden debts of the governments of31 provinces,municipalities and autonomous regions,and according to the principle of maintaining a basic balance between revenue and expenditures,the hidden debt scale of 2010-2020 is estimated from the investment side of the governments of 31 provinces,municipalities and autonomous regions.And then,a comprehensive evaluation system of local debt risk early warning with principal component analysis-entropy TOPSIS(Technique for Order Preference by Similarity to an Ideal Solution)method is established as the main method,and conduct comprehensive ranking and evaluation of local government debt risk.According to the evaluation results of local government hidden debt risk,relevant suggestions and solutions for local government hidden debt risk early warning and governance are proposed. |