Government Financing Platform Loans To Project Risk Management

The function of government has radically altered along with the deepen revolution of the investment financial system. Moreover, the system of dividing taxes has been widely promoted, as a result of that it has lead the state revenue to highly concentrate to central government and has provoked the contradiction of the active investment demands from local government at several levels and the limit collective financial resources. In order to getting around the law, a new mode which is to build a financing platform for local government to float loans has emerged. The local government utilizes the future fiscal revenue to repay the interests and principle and accept loans for those Non-operational projects as well as pre-operational projects. However, in recent years, the government financing platform has grown too fast as to accumulate huge risks. These risks have now become a new challenge for the security and stable of the Chinese fiscal system and the financial system.This paper demonstrates the procedure of the revolution of the investment financial system; it analyzes the influence of the dividing taxes system, and defines the projects for the government financing platform. A detailed project case has been raised as the example. This paper utilize the project risk management methodology and proceed both qualitative and quantitative analysis on different aspects including law risk,risk of government admission,market risk,construction risk and credit risk, etc. It also analyzes the various types of risks and points out how they influence the implementation of the projects. The deterred final loan terms might be given through expert appraisal and vague model analysis. In the end, it has figured out the proposal for releasing the particular types of risks, by using "BT" operation mode, setting effectual mortgage and impawn, setting the government approval and the capital as the initial condition for signing the contract and other methods. This paper has set a considerable model for the government financing system to manage the risk exposed from projects.