Research On The Causes And Countermeasures For The Debt Crisis Of Villages And Towns

After China implemented the reform of tax sharing system, the central financial resources began to move up while the administrative power began to move down, which lead to the situation of villages and towns’debt increasing rapidly, and it has imposed negative impacts on the economic development of regions at grass-root level including villages and towns to hinder the economic development. The paper analyzes the current debt management situation of Town B in City A and the causes of debt management problems and the consequences of debt crisis, and puts forward a series countermeasures and suggestions to help the governments of villages and towns get rid of the debt crisis through learning from the advanced experience of some villages and towns’governments in debt management.The main research conclusions of this paper are shown as follows:The institutional reasons for the debt crisis in Town B are mainly rellected in three aspects:firstly, incomplete debt management system, including that the government’s management rules lor the budget of financial funds are not standard, the scope of Town B’s fiscal expenditure is becoming larger and larger, and the structure of Town B’s fiscal expenditure is incomplete; secondly, incomplete debt performance evaluation, including that the government of Town B has an inadequate control ability for the expansion of debts, lacking professional departments and standards for the performance evaluation of debts, and the performance evaluation does not play an effective role in promoting the efficiency of debt management; thirdly, unreasonable government performance examination, including the standards of government performance examination are unreasonable because they pay too much attention on GDP, and the evaluation system is also unreasonable because it ignores the non-economic performance examination. All of them have caused a serious of harms on the local economy, including restricting the economic development at grass-root level, weakening the authority of governments at grass-root level, affecting the stability of economy and society in rural areas, and affecting the relationship between the Party and governments and the masses, and so forth. Based on the experience of other local governments in solving debt crisis, the author summarizes some countermeasures to improve the current situation of the governments’debt crisis in villages and towns:firstly, improve and perfect the debt management system in villages and towns, including perfecting debt management principles, clearing and defining the administrative power and financial resources of governments, preparing, reviewing and implementing governmental debt plans, determining the usable range of debt funds, and establishing the warning and supervision system for governmental debts; secondly, set up a scientific performance evaluation system for debts in villages and towns; thirdly, build a scientific government performance examination system for leaders and a scientific government performance appraisal system for common staff in villages and towns.