An Analysis On The Policies Of Local Government Bonds In China

In order to implement the positive fiscal policy, resolve the issues of lack of matching funds the central government invested in local projects, and to expand the investment capacity of local government and also to control and regulate the local government financing platform, the State Council agreed to the Ministry of Finance to issue 2000 billion Yuan of local government bonds in March 2009, and successively drawing up many related provisions such as The Notice of Good Control in the Local Government Bonds Work in 2009, and the Detailed Measures of Issuing Cash of Local Governments Bonds Substituted by the Ministry of Finance in 2009 and so on, which made specify regulations of issuing, using and monitoring the local government bonds, however, there were many deficiencies in the process of implementing and the performances of the policy-executing was flawed which need further refinement.This paper, based on of analyzes the general theory of local public debt policy and the interpretation of the existing local government debt policy, and with the combination of the actual situation of the local government bonds policy implementation, pointed out that due to the restriction caused by current Budget Law and tax division system, and also under the influence of the insufficient policy implementation and lack of monitoring besides the irrationality originally exited in the local government bonds, the current local bonds had many defects such as low yields, poor liquidity, and the matching funds may not be in place and so on. According to these problems, this paper combined theoretical and empirical research method, carried out a deep-going research on the local Government Bond Policy itself and the implementation of such intensive study, firstly assessed the achievements objectively, then investigated its problems and summed up the foreign mature experience of running local government bonds, combined with our practical situation, at last proposed the way of improving our local government public debt policies, which is not only to set a reasonable interest rates levels and distribution scale, but also to gradually grant the dominant position to the local government, to implementation the central approval system, to reform the Budget Law and the tax sharing degree, to improve the management measures of local government public debt and to enhance risk-prevention policy. Through all the series of reform and refinement, it was supposed to effectively solve the problems confronted in the local government bonds policy implementing, and to give a better guidance to the operation of local government bonds.