An Research Of The Local Government Debt Moderate Scale In Our Country

With the acceleration of urbanization process, to maintain the sustainable development of local economy and to meet people’s increasing public service requirements,Local government funding needs had been increasing, but our country has carried on the reform of tax allocation in1994.It improved the central government revenue and the ability of macroeconomic regulation and control,but local government pay most of the tax revenue and take responsibility for most of the spending,so most local governments are in the financial trouble. In order to circumvent the law, local governments had set up local financing platform company to issue municipal bonds.Since the subprime mortgage crisis,In2009the ministry of finance agency issue local government bonds and is responsible for repay principal and interest.It means the legal status of local government bonds had been recognised by the central government,at the same time, Municipal bonds had grown quickly. Local governments in China began to pilot to issue bonds and are responsible for repay principal and interest in201l.In2012,2013,2014, the policy continues to promote and perfect.However, China’s local government debt risk problem are increasingly prominent since2011.Municipal bond defaults emerged frequently and to control the local debt scale became a pressing problem.At the same time,Local debt provides funding for local economic development and the construction of public service facilities.Appropriate debt for local economic and social development is also indispensable,so the local government should keep the moderate scale of the local debt in the case of guaranteeing debt risk overall control.This article obtains from the local debt development course in China and analyzes the present situation of local government debt and existing problems,then uses the feasible quantity and the necessary quantity to determine the moderate scale.we use the KMV model to analyse the feasible quantity of local government debts in Anhui province as an example,and then use the qualitative analysis method to reckon the necessary quantity,at last determine the provincial government debt scale moderately during the period of the future.we want to provide a train of thought for the local government debt moderate scale measurement in other cities and provinces.At last considering actual situation in our country,the article put forward policy suggestions to control the scale of debt and reduce the debt risk.