The Legal Control About The Risk Of Local Government Debt

The budget law said that local financial budgets must keep balance, and can’t have deficits. Except of providing by other rules, the local Government shall not issue local government bonds. But the reality is that the debts of local governments in China are not only very large, but also still growing, has aroused the concern of the society. Implemented tax system made it difficult for limited revenue to pay for the massive fiscal spending, coupled with canceling agricultural tax, so that the local finances are stagnant. The local governments are avoid legal and borrow massive debts in order to develop the local economy, at the same time the risk of the local government debts also gradually expanding with the balances accumulate. In addition, the regulation of the local government debt itself exist lots of flaws, and many hidden debts outside of the supervision, which bring much more risks for the local governments. In China, the researching of controlling of local government debt is mainly from the fields of politics, finance, management, law controlling is very little. Though we have enacted many laws and regulations which related to financial, as a whole, these laws and regulations aren’t seem sound and perfect. Controlling the risks of local government debt through legal channels, not only bases on a sound legal system, but also very good implementation of it. Seeing from the system chain of borrowing, using and returning, the local government debt in China has a lot of flaws and loopholes. Controlling the risk of local government debts, we must through legal channels perform this process. The supervision is especially most important, whether the financing, using or repaying of debts, it must throughout the entire process. This paper based on respecting and referencing the research results which from other area scholars, of angle and analysis the defects from law to control the risk of local government debt. Then connecting the necessity of the legal control and referring the foreign mature experience, according to the condition of local government debt, focus on perfecting legal controlling, so I try to making several advises through borrowing behavior and supervision.