A Research Of Fiscal Constraints In The Usage Of Public-Private Partnerships By Local Government

Due to the complexity and the local governments' limited understanding of PPP mode,PPP model is more likely to be regarded as a financing tool.In just about two years,many PPP projects has been launched without feasibility demonstration,resulting to the rapid expansion of the scale of PPP.Through the comparison and analysis of the total amount and the growth rate of the PPP projects,the PPP projects' share in the gross public investment,and the balance of the PPP industry,we can draw a conclusion that there are significant signs of excessive use of PPP model by local governments in China.The use of PPP model is constrained by fiscal constraints,and in the current situation of China,the most important fiscal constraints are local fiscal expenditure capacity,local governments' PPP risk management ability,local governments' fiscal system adaptability to PPP model.This paper thoroughly studied the above three kinds of fiscal constraints.Firstly,study the local fiscal expenditure capacity by analyzing the steps and the key points of the fiscal expenditure argumentation,combining the expenditure caused by PPP projects with macroeconomic factors and the contractual capital of PPP projects and analyzing the relationship between PPP scale and fiscal expenditure capacity through empirical model.Secondly,point out the importance of the local governments' PPP risk management ability by establishing a risk assessment model based on vague value after identifying and evaluating the risks of PPP model.The last but not least,research the the adaptability of the fiscal system by list three essential components,that's to say,efficient PPP management and coordination agency,medium and long term budget system and the “value for money” evaluation ability.At the end of the paper,the author comes to a conclusion as follows: PPP model is a kind of financing mode.What's more,it is a kind of management mode.To make rational use of PPP mode,the local government must control PPP scale according to local fiscal expenditure capacity,establish a reasonable risk sharing mechanism,and reform the fiscal system to better promote the healthy development of the PPP model.