The Risk Study Of Local Government Debt

The large, long-term debt crisis which was caused by the financial crisis is themost special feature of this financial tsunami. Especially in June2011, following thethree countries’ sovereign debt crisis of Iceland, dubai, Greek in2009, the Italian debtcrisis was upgrade again. And for the debt problems occurred these social problems ofworkers’ strike, students parade in the European Union and the United States seemsendlessly. Today, the European debt crisis is evolving into the European systematiccrisis gradually, the largest economy in the world will still suffered bitterness from thedebt for a period of time in the feature.The local government debt is the outstanding performance of China’s debtproblems. As the legacy of the investment stimulus plan of4trillion yuan and thecredit plan of9.6trillion yuan, the China’s local government debt problems has itsparticularity, and has once been the wide attention of all social sectors. One purpose ofthis study is to have a systematic cognition to our country’s local government debtproblems, realizing its risk. The other is to find a new effective path to prevent andcontrol the local government debt risk, and I also hope to make a certain contributionto the local government’s financial management and float a loan scientifically.This paper introduced the characteristics of China’s local government debt andthe channel of borrow debt firstly, and then transposed from the subjective perspectiveof local governments to dissect the causes of borrow debt. Second, during the time ofpaying close attention to the development of our local government debt and analyzingit’s potential risks, using the analytic hierarchy process (AHP) method, making threekinds of index---finance, financial and social as evaluation criterion. And selectedspecific indexes which were corresponded as evaluation factors to construct indexsystem of risk evaluation. Through the expert scoring, calculated the weights of everyjudgment factor that relative to target layer, and quantitated its risk value through themodel of risk assessment to realize the combination of qualitative analysis andquantitative analysis. Besides, then timely discover and actively prevent the risk that possibillity caused by the local government debt.Then, on one hand, this paper analyzed the experience of debt management of themajor foreign nation in the world, and gave an overview summary in the end. One theother hand, this paper also gave a systematic introduction about a new practice oninvestment and financing budget of Jiaozuo bureau of finance, including budgetingscope, procedures, content and related management mechanism, etc. As the flaunt ofHenan province and even in China, Jiaozuo bureau of finance have gave me manyinspiration. Finally, the author gave the following suggestions about the debtmanagement on the basis of the real condition of China and the research result madeby many scholars both at home and abroad."Classify, clear debt scale is thefoundation of prevent and control debt risk. Establishing unified agency of debtmanagement, the rewards and punishments mechanism of debt risk management, theearly warning mechanism of debt risk are the keys to prevent and control debt risk.Making investment and financing budget is the new path to manage the localgovernment debt scientifically, to prevent and control the debt risk of localgovernment debt effectively； because it put investment, financing and debtmanagement up to the height of the law".