The Research On Supervision Of Local Government Debt Risk

In April2011,Yunnan Road Development and Investment Co., Ltd. sent a letterto its creditor banks, the letter said:”From this day, we are interest-only and not forprincipal”; In July2011,as the largest platform company in Yunnan, the news of theassets reorganization of the Yunnan Provincial Investment Holding Group Co., Ltd.spread in the bond market，it became the inflection point of collective selling the mustmunicipal bonds in the bond market. The two times debt problems of the urbanconstruction investment company, let people pay more and more attention to the localgovernment debt problems that behind the problems on the must municipal bonds.The local government debt is a deep-rooted problem. At present, China is in thespecial period of economic restructuring, the local government’s financial capital cannot meet the urgent needs of the local economic development, so the localgovernment had to rely on public financing ways to obtain development fund. But inChina, the legal system in the local government debt is not perfect, it leads to localgovernments behavior is not up to standard during the financing, and hidden dangersfor the local government debt risk. Once the local government debt crisis, it will be tobring adverse factors to our country’s economic construction and social stability. So,comprehensive understanding and specification of local government debt has becomea problem that urgent need to be solved.In this paper, The author used the method of comparative analysis, under the situation of clear understanding of the local governments debt, learning from foreignadvanced management experience on local government debt, and put in the applicableto solve the problem of local government debt concrete measures. The text is dividedinto five parts.The fist part is the introduction.The second part mainly describes the basic theory of local government debt andthe risk. This part discussed the concept and classification of local government debtfirstly; and then analyzed the local government debt risk from the riskcharacteristics,the formation reasons. This is the theoretical basis of the study.The third part mainly introduced the status of local government debt. This partintroduced the local government debt from its size, structure, etc, and then summed upthe risks problem of the local government debt.The fourth part analyzed the foreign management experience of localgovernment, and summed up the revelation to our country. This part mainlyintroduced local government debt of the United States, Japan and France, comparedthese countries’ debt management system, debt capital operation and debt riskaversion, and summed up the revelation on local government debt’s management.The fifth part took example by foreign experience, combined with the specificsituation of our country, put forward the policy suggestions on management and riskprevention of local government. These suggestions include to unify the debtmanagement agency, to perfect the financial system, to construction debt securitymechanism, to issue local government bonds, etc.