Study On The Debt Repayment Ability And The Risk Management Of China’s Local Government

Our country has taken quite cautious attitude to the local government debts. "Budget Law"promulgated in March 1994 clearly banned of the issuance of local treasury bonds, local government has accumulated a lot of debt. The hidden nature and non standard of the local debt will increase the difficulty of local financial management, accumulating financial risks and preventing the healthy economic development..To avoid supervision and management of regulatory departments, local government debt has the characteristics of concealment and diversity, increased local fiscal management difficulty.regulating the government’s financing channel and strengthening government debt regulatory system become a pressing matter of the moment.This paper mainly studies the ability of local government to pay the debt and risk management mechanism.According to the local government debt audit results in 2014, the Audit Commission published, from economic strength, the scale of debt, debt structure, raise the efficiency in the use of funds, the actual repayment of debt and other aspects of selecting 12 indexes to measure the 2012 end of the year to 2013 June, 23 provinces and municipalities directly under the central government debt repayment ability. Using principal component analysis to extract the "debt growth and its supporting factor", "form of local government debt", "the actual situation of debt payment", "debt fund use efficiency" four principal components, and the principal component scores of function model, the provinces and cities of principal component factor research subject score and comprehensive payment ability. Research results show that, at present, our local government debt solvency risks in different degree, some local government’debt burden is heavy.