Research On The Legal System Of Public Debt

Many countries have fallen into the most serious debt crises in the history in recent years. The rapid increase of the local government debt has made the government debt problem a social focus in China. The public debt has become a global problem which has surpassed beyond the limits of economy, politics, culture and national boundary. The public debt is caused by the budget deficits, which has become an important part of one country’s financial revenue and expenditure. The rational use of public debt can remedy deficit, adjust macro-economy and promote economic increase. But the public debt is a two-edged sword, without legislative restrictions to the raising of the government public debt; the government will abuse the power of borrowing, which can aggravate the government’s repayment burden. The government has to refund the debt and becomes a "debt state" from a "tax state" finally. The serious debt crises make the people introspect into public debt legal system. The public debt law is an important law of market economical legal system, but the supply of public debt legal system is quite inadequate in China, a integral public debt is needed to regulate the borrowing of public debt. The public debt law is the base to regulate the public debt legal relationship, but only one law is not enough, we need a series of legal systems to regulate the raising, usage, repayment and supervision of public debt.The United States, Japan, Taiwan District and other countries and regions have enacted sophisticated public debt laws and regulations and have established perfect legal system of public debt, which offers references for the establishment and improvement of the public debt legal system in China. These references include that the public debt legal system is systematical, the public debt legal system follow the principle of public debt legitimacy, the local government has authority to issue bonds under appropriate autonomy, the public debt legislative model is influenced by the structural form of state and so on.The issuance of public debt bonds is the beginning and base of the public debt system operation, the legal system on issuance of public debt is an important part of the public debt legal system. The issuers of the public debt consist of the central government, the local government and public institutions. In China, the issuer of the treasury bond is explicit, the local government should have power to issue the local government bonds under appropriate autonomy, the power of issuing government bonds for local government should be limited at the same time. The legal regulations of public debt dimension consist of substantial law regulation and procedural law regulation. The substantial law regulations conclude the public debt limits and compilation of the public debt budget. Parliament can control the scale of public debt through the examination and approval of public debt borrowing and issuing. In order to control the scale of public debt, we should perfect the system of the public debt limits and set the standards of controlling the scale of treasury bond and local government borrowing through the legislation.The use and repayment are essential parts of the public debt system. The usable range of public debt should obey the principle of public debt legitimacy; the use of public debt should be transferred from the economic construction field to the public field. Moreover, the budget supervision should be strengthened to limit the use range of the public debt and to enhance the efficiency of the use of public debt. To safeguard creditors’rights and interests, the public debt law should provide the sinking fund system and the sources of fund.The supervision of public debt is the guarantee of the effective operation of public debt system. Influenced by economy development level, political system and legal system, there are three kinds of public debt supervision model:self regulation and administration supervision of government model, specialized agency model and executive supervision model. To strengthen the public debt supervision, China should choose specialized agency model, a specialized supervision agency--Public Debt Managing Committee should be instituted. The supervisions of public debt consist of the budget supervision, audit supervision and self-regulation. In China, the public debt supervision exists the following problems:the public debt budget supervision of the People’s Congress is short of independence, the range and depth of the supervision isn’t enough; the legal status of the audit institution is affiliated with the government, which result in the audit supervision is ineffective; the self discipline supervision of the public debt market isn’t working. To improve the public debt supervision in China, the public debt supervision system should be reconstructed:The budget planning supervision of the People’s Congress should be strengthened, the People’s Congress should have the power to amend the public debt budget; to enhance the legal status of the audit institution, the audit institution should be placed under the jurisdiction of the People’s Congress, its one of important tasks is to audit the public debt in annual work program; to improve the self-discipline supervision of the public debt market, the function and power of public association should be provided clearly.The perfection of the public debt legal system will depend crucially on the legislation. Though large number of laws and regulations on public debt were enacted, they must be improved. In China, we must combine international experience with our national conditions to enact specific public debt law. Massive issuance of public debt bonds by central government and local government provide practical basis for the enactment of "Public Debt Law". The present laws and regulations provide the legal foundation for the enactment of "Public Debt Law". Considering our national conditions, on legislative model, we should set down a uniform Public Debt Law concluding central government public debt and local government public debt. We should achieve harmonization in the public law and other laws and regulations such as Constitution, Budget Law, Securities Law and Mortgage Law during legislation.