The Efficiency Study Of Local Government Financing Platform

The80’s of the last century, our country city modernization is just at the initial stage, our country city infrastructure construction is accelerated gradually, the scale of funds needed to expand increasingly, and the local government of urban construction funds is relatively short, to relieve the financial pressure of local government, local governments have set up some " Municipal Corporation "," the city investment company " or " traffic company " and other economic entities, professional investment companies, construction investment companies have been established, the prototype of our country local government financing platform began to form.The reform of tax distribution system in1994has greatly changed the t fiscal revenue ability contrast between the central government and the local government, and expenditure responsibility division did not make corresponding adjustment, this made property rights continue to shift and power drop ceaselessly, on one hand the tax reform made the local government tax revenue in the proportion of total income be cut, the right of relieving the local business tax is weakened; on the other hand the expenditure responsibilities division still showed the planned economy period features, and do not make corresponding changes with the tax division pattern changes, local government still needs to undertake the provision of basic public product responsibility. After reforming the tax distribution system in1994, the local finance income accounted by78%in1993dropped sharply to44.3%, while the local government finance expenditure proportion has decreased only2%, local government fiscal funds can not meet the need of city construction investment. This kind of Imbalance between property rights and the governance makes the local government produce huge financing gap in the city infrastructure construction, the public liability of expanding city infrastructure construction, accelerating regional economic structure adjustment and industrial upgrade, improving the social, educational, medical security system and promoting social and economic to develop, protecting people’s livelihood continues to increase, it has brought huge economic pressure and burden to the local finance, and made the gap of the local finance gradually increase day by day.At the same time, China promulgated" the Budget law of the people’s Republic of china", the twenty-eighth clearly defined " local budget must be in accordance with the principle of making both ends meet, balancing payments system, the deficit is not included. In addition to legal and otherwise provided by the State Council, the local government may not issue local government bonds." In1996the people’s Bank of China issued the " the general law of loan ", the seventeenth defined," the borrower should be enterprises industry corporate, other economic organizations, individual industrial and commercial household registered by the industrial and commercial administrative organs (or authority) or natural persons who have the completely civil capacity with the people’s Republic of China nationality."In the current legal system of our country, local government through the establishment of the investment and financing platform, bypassed all kinds of system obstacles of massive financing debt for city infrastructure construction, especially in2008the United States sub-loan crisis and the global economy battered, our country has adopted the moderately loose monetary policy and vigorous finance policy and launch four trillion economic stimulus plan of infrastructure investment being as the main contents to cope with the global economic crisis, to help boost the confidence, to help export oriented economy to overcome the huge impact that the weak external demand brings. In order to carry out large-scale infrastructure construction, local governments injected the financial capital, land, state-owned shares as capital investment and make local financing platform appear in the development of blowout, the number of platforms rapidly expanded from the first half year of2008about3000, loan amount about17000billion to the number of platforms in the end of2009about8221, the loan amount about73800billion. By the end of2010, the number of local government financing platform was about ten thousand, the number grew25%more than that in the end of2008.In recent years, local government financing platform credit scale is continually expanding, local government debt risk has increased, the main department of the State Council and the relevant regulation of the financial sector called for strengthening the management of local government financing platform, ask various local government and financial institutions as soon as possible clearing the debt of the local government financing platform and put forward clearly " the commonweal construction projects which rely on the fiscal capital as the main source of repayment, in addition to legal and otherwise provided by the State Council, should not continue financing through local government financing platform ". In the strict control environment, local government financing platform faced a severe credit policy environment. Since this year, economy downward pressure is big, the national credit investment slow down fast, the policy of estate adjusting and controlling has not changed, the prospects that local government financing platform financing through the capital market and land finance are not optimistic, local government financing platform faced with difficult financing environment, coupled with the type of financing being relatively single, local government financing platform mainly financed through commercial bank, so debt is concentrated in commercial banks. The main financing method of local government financing platform is bank credit, and commercial banks regard the government financing platform as the main lending customer, the great proportion of the credit funds mostly lend to local government financing platforms. In addition, the projects of local government financing platform are mostly commonweal and need large amount of capital investment, the projects yield very low or no return, it’s difficult to repay debt through its operating cash flow. Local government financing platform generally take on multiple projects in short-term and often need debt financing, it can not effectively control the scale of debt and make the ratio of liabilities to assets generally high, the asset quality of local government financing platform drops ceaselessly and it’s function of financing losses in the end, thus it’s widening the local government financing platform debt risk. By the end of2010, the debt of local government financing platform is4971billion which is46.38%of local government debt balance, wherein the debt of the government bearing the responsibility for repayment is3137billion, the debt of the government bearing the responsibility for security is8143billion, other related debt is1019billion.Although local government financing platform in our country has shortcomings with single financing channel, a fuzzy positioning of main responsibility, opaque information, lacking of external constraint, and debt risks, the produce and development of local government financing platform as a government financing way which as a result of the function of our country government and the specificity of government financing goal breakthrough the bondage of financial system and legal aspects in the financial system, it effectively meets the local government financing demand, promote economic growth and structural adjustment, realize capital integration, help to stimulate social investment, promote the market operation of local government public construction projects. This paper aims to establish the appropriate index system and make efficiency evaluation with scientific, system, reasonable approach, to establish a scientific and reasonable framework for the government financing platform efficiency evaluation, to provide a scientific standard and basis for its operation and development, to improve the efficiency of government financing platform. This article have made a theoretical discussion based on the general meaning of the economic efficiency and combined with the specificity of the local government financing platform, select representative index in the economic investment, economic output and social output in the general principles of availability, practicability and dynamic nature, establish a index system of the local government financing platform with a scientific method, provide a scientific, system and accurate basis for the efficiency evaluation of local government financing platform.