Financial Analysis Of The Debt Quantity Of Local Government

Local government debt i s the main component o f the government public debt under the state grated tax for different levels financial system. At present, we have set up a financial administration by different level system; in which affair rights property rights and tax collection rights belong to corresponding levels. Borrowing power ought to be the right of different levels of government under the system. Recently, economic and social projects have developed very quickly in Qingdao. Furthermore Qingdao is the only companionate city of the 2008 Olympic games and is responsible for the construction of the gymnastic establishment. Thus Qingdao is in need of a great deal of capital input. So it is the main financial work for the Qingdao local government to study how to use the local debt system to meet the capital need of construction of the Olympic Games projects. Against the background of the fact that a great deal of money is needed for the 2008 Olympic sail boat games, this paper tries to study the debt scale 1 imitation and the capital raising ways, in order t o offer theory gist and data, and at the same time enrich the financial theory about momentous projects.This article is composed of 6 chapters. The main idea of every chapter is as follows:The first chapter introduces the study background, literature review, study method and main idea.The second chapter analyzes the financial revenue and expenditure condition and debt actuality in Qingdao in recent years, forecasts the economic development and financial revenue and expenditure in 2004-2010, at last, points out the primary difficulties and problems in the financial development in Qingdao.The third chapter analyzes the debt burden ratio and debt repayment ratio of the local government. According to debt risk appraisement index in EN and America, it calculates the debt capacity of the local levelgovernment and puts forward the optimum debt scale of Qingdao local level government in the future years after necessary financial analysis. The chapter is the corn of the paper. Considering the rapid development of Qingdao's economy and the ratio between the financial revenue and the GDP, we make the conclusion by analysis and forecast that if the assets liability ratio is 50% the debt capacity of the city in the future years is as follows:1 In the years 2004-2008, the up limitation of the borrowing is (1) 0.82-1.54 billion according to debt repayment ratio; (2) 0.7-0.8 billion according to construction capital scale. The 80% of the up limitation of the annual debt according to both debt repayment ratio and construction capital scale multiplies insurance coefficient. We conclude that the optimum debt scale of Qingdao local level government in the years 2004-2008 is 0.6-1.2 billion. If we adopt the scale, we can control the local level governmental risk, making the risk within the least limited scope and at the same time we can ensure the capital for the Olympic construction.2 In the same way, during the years 2009-2013, the up limitation of the annual borrowing is: (1) 1.86-3.41 billion according to debt repayment ratio; (2) 1-1.6 billion according to construction capital scale. We can deal with the data in the same way to previous process. We then can come to a conclusion that the optimum debt scale of Qingdao local level government in the years 2009-2013 is 0.8-2.7 billion.3 In the years 2014-2018, the up limitation of the annual borrowing is: (1)3.85-6.15 billion according to debt repayment ratio; (2) 1.75-2.8 billion according to construction capital scale. We can deal with the data in the same way to previous process. We then can come to a conclusion that the optimum debt scale of Qingdao local level government in the years 2014-2018 is 1.4-4.9 billion.The fourth chapter reviews the liability conditions in American and Japan and the international safe-line confirmed in the "Treaty on the European Union". It also analyzes the emission actuality of state bond and the local government debt actuality in the 15 vice provincial city.The fifth...