Local Government Fiscal Risk And Market Transformation Of Local Government Investment And Financing Platform

In recent years, local government investment and financing platform raise funds for local economic and social development through debt financing which has played an active role in strengthening infrastructure construction and responding to the shock of the international financial crisis. Meanwhile, there have been some highly concerned issues, mainly about the scale of the rapid expansion of debt financing of local government investment and financing platform and nonstandard operation; the increasing debt risk resulting from illegal or disguised guarantee provided by local government; lack of business credit management about local government investment and financing platform, and weak risk awareness of some banks; etc.There are always some risks hiding behind the running course of the local government finance under the frame of national public finance which can not be ignored. The local government investment and financing platform has a strong government background, reflect the government will. Therefore, as the local government implicit contingent debt, its debt inevitably implies a certain degree of financial risk. On the basis of summarizing the operation pattern and development status of local government investment and financing platform, and affirming the rationality of its existence in a certain historical period, there is a need to explore and analyze the risk in its operation, investigate the risk shift mechanism from the enterprise into the local government, in order to achieve the objectives of preventing and resolving the local government risk caused by the local government investment and financing platform debt, and the healthy operation and sustainable development of the economy. Accelerating the restructuring of local government investment and financing platform, improving local government financial transparency, establishing early warning mechanism of local government financial risk and sinking fund, especially promoting the legalization of local government bonds, have become essential to the local government to resolve the financial risk.As a corporate enterprise, the operation pattern of local government investment and financing platform is government decision-making and enterprise financing, which leads to the loss of decision-making power of the project by the enterprise. This operation pattern severely restricts the efficiency of business and project operation. Therefore, the market transformation has become an inevitable trend for the development of local government investment and financing platform.