Management And Local Government Debt Risk To Resolve The Countermeasures

Due to the constraints of the budget law in China, local government faced with limited financial resources when developing social economy so they have to issue bonds. In order to change this situation, the local governments adopted other measures to raise loan for promoting the economy development and filling the financial demand. However, rising loans also bring heavy debt burden, as a matter of fact, all levels of government in China more or less have debt issues. Based on lots of theories about government debt, combined with the real cases encountered during the authors’ working experience as an audit in the government of X city, the paper analyzes the debt and risk status of the government in X city, based on the historical data, a debt warning indicator system was built. A debt warning model was constructed using fisher method. And the discriminant function was also given. Specific measures were proposed to solve the debt and risk problems. These measures mainly focused on economics supplemented by administrative means, which was trying to increase its feasibility. At last, the conclusions were given, which shows the innovation of this paper and gives directions for future research. Conclusions:(1) The debt problem in X city a serious problems, for following reasons: Governmental debt management system wasn’t built; a lot of money leave unused; some apartment have the illegal assurance issue; the financing platform lack of the ability to develop sustainably.(2) Local government has an serious debt issue. Take X city for example:the debts that X government is responsible to pay for are small, however, lots of the money that X government use to pay the debt was from land transferring revenue, which is highly affected by the real estate industry, thus the potential risk is high. The possibility that the debt X government assures transferred into the debt that X government is responsible to pay for is large. The financing platform companies have a heavy debt burden, the profits are low, some of their debts may transfer into the government. (3) Improvement program for debt management:establish a debt service reserve fund system, standardize the behavior of government borrowing and debt, establish a capital budget of government investment projects, construct a risk assessment monitoring system, strengthen liabilities subject supervision and strengthen the management of. debt repayment plan(4) The measures to lower the debt risk:predicting measures, monitoring measures, temporary measures, reviewing measures, which is mainly about develop different measures for different debts.