Research On The Legal Mechanism Of Local Government Debt Repayment Risk Managemen

One of the biggest highlights of the 2014 budget law revision is that it gives provincial governments limited claims,"opening the front door" for local governments to borrow debt,and allowing local governments to borrow debt in the form of bonds.In the past two years,with the new crown epidemic,the economy is in a downward stage,China’s active fiscal policy is also stepping up efficiency,and the issuance of local government bonds has increased sharply,which means that the scale of local government debt is still expanding.The ensuing debt repayment deadline and the accumulated huge debt how to repay,improper handling may face debt repayment risks at any time,has become an urgent problem to be solved.From the current point of view,in the post-land fiscal era,the space for local governments with accumulated debts to repay their debts is getting narrower and narrower,whether it is debt replacement or relying on land transfer income.At the same time,the use of central administrative power to dominate the local government debt repayment model will only exacerbate the moral hazard of local governments and create a credit crisis.At this stage,the constraints on local governments’ claims have not yet been institutionalized,and the legal mechanism for repayment and accountability of provincial-level local governments’ claims has not yet been formed.At this stage,debt limit management and power-based accountability are essentially local government debt management models dominated by administrative control,and deviating from the framework of the rule of law government system will inevitably face constraint failure and vague definition of responsibility.How to prevent the moral hazard of local government debt while taking a sustainable borrowing path to ensure debt repayment is not only related to whether the economic burden of local governments can be alleviated,but also affects the entire economic and social development.Therefore,this paper takes the debt repayment risk as the starting point,and the direct purpose is to break the expectations of local governments for central rescue and the soft constraint of the budget through the design of the legal mechanism of debt repayment risk,thereby strengthening the government’s credit.The body of this article consists of five parts:The first part reveals the current real situation of local government debt repaymentrisk by debt index,debt structure and debt maturity.Collect the debt balance,comprehensive financial resources,repayment period and amount of debt repayment of each province and municipality directly under the Central Government as the fulcrum of risk analysis,and make qualitative judgments on local government debt repayment risk through realistic data.The second part explains the necessity and importance of constructing and improving the legal mechanism of local government debt repayment risk management by revealing the relationship between local government debt and government credit.my country’s current decentralization of central and local fiscal powers means that local governments lacking financial resources need to rely on transfer payments from the central government to a large extent.Clarifying the responsibilities of local governments is an important part of local government debt repayment risk management.Only in this way can the central government’s bailout expectations be effectively cracked.The improvement of the legal mechanism of local government debt repayment risk management is an effective measure to reduce the local government’s moral hazard and soft budget constraints.The third part of the pre-supervision of local government debt is to impose legal constraints on the debt demand side.Demand control is implemented for local government debt to prevent local government debt repayment risks from the source,and to control the government’s inflated borrowing needs through debt limit management.The main function and purpose of demand control is to limit the expansion of the local government’s desire for borrowing,which is reflected in the restriction of the local government’s power.The measures to restrict local governments’ borrowing rights can be summarized into two categories: one is the mutual checks and balances between administrative powers,which is manifested by the central government.Local government debt limit management is also a common practice internationally as a means of managing debt scale.The appropriate scale of local government debt should be determined flexibly according to the local economic development level and actual needs and under certain reasonable and scientific standards,rather than a rigid one-size-fits-all approach.Each province must reach the corresponding debt-raising target.Only in this way will it be more conducive to play the macro-control function of local government debt and promote stable economic development.The second is the restriction on local borrowing rights through the exercise of the power of approval and supervision by the people’s congress.The specific manifestation is that the limit of local government debt is reviewed by the National People’s Congress,and the local government’s debt is included in the draft government budget for review by the local people’s congress,so as to ensure that local government borrowing is in line with the public Interests.In addition,the incorporation of local government debt into budget management first requires the preparation of a special local debt budget,and it is necessary to clarify how the classification of local government debt revenue and expenditure corresponds to the existing budget revenue and budget expenditure.Due to the long cycle of projects generally invested in local government special bonds,it means that the repayment is made through government expenditures across the years.Once the project is operated through debt financing,it will have a significant impact on the government’s future fiscal revenue and expenditure.The mid-to long-term budget framework can focus on the expenditures of local governments across the years to achieve a rolling balance of debt.Strengthen the dominant position of the budgetary authority of local people’s congresses and standing committees in local debt budget management.Includes the right to approve draft budgets and budget adjustments.Strictly follow the debt limit review procedures,ensure the approval of the local people’s congress through legal procedures,and further realize the legal constraints on the debt scale.Optimize the structure of special bonds and implement dynamic supervision of special bonds to ensure consistency with the project cycle.At the same time,it is necessary to increase the disclosure of information on special bonds during the issuance of special bonds to better promote the balance between project income and debt repayment.The fourth part establishes and improves the risk assessment and early warning mechanism.Risk management can be divided into two parts: prevention and control before the event and accountability after the event.Risk management is the cornerstone of the standardized development of local government debt.Setting scientific and reasonable risk assessment indicators and implementing dynamic monitoring of local government risks can effectively identify the risk status of local government debt,and make early warnings for different levels of risks.The fifth part analyzes the local government’s debt repayment risk and even crisis response mechanism from the perspective of local government debt ex post supervision,and local government debt repayment risk and crisis resolution are the most acute problems that local governments need to face after borrowing debt Therefore,the design of the legal mechanism for local government debt repayment risk management must take into account the fiscal emergency response mechanism caused by the debt repayment crisis.Fiscal reorganization,an emergency measure mainly aimed at the debt risks of provincial governments,is the starting point for the implementation of the government debt management system at the local level and the process of establishing fiscal rules at the local level.By improving and strengthening the accountability mechanism that matches the local government’s debt repayment responsibilities,the local government’s debt repayment responsibilities should be used to consolidate the self-discipline and the local government’s external constraints.