Study On Risk Management Of Local Government Bonds In Shandong Province

The tax-sharing reform in 1994 centralizes the fiscal power and decentralizes the rights of handling business,making local governments only raise funds to develop local economy through bank loans and LGFV.During the global financial crisisin 2008,the central government adopted a“4 trillion Yuan”stimulus policy,which aggravated the imbalance between local governments revenue and expenditure,causing local governments to raise funds through platform companies and rely on debt to ensure basic operations and project construction.In this case,local government debt gradually became implicit,which increased the debt risk.This paper focuses on government bonds,but the study is not limited to the risks of government bonds themselves.From the perspective of government governance,the paper emphasizes on analyzing the problems existing in the management measures adopted by local governments in bond risk management.Meanwhile,the paper points out a practical issue that it is very important to establish and improve Chinas bond risk management system,and give full play to the role of bond funds in promoting Chinas economic growth while controlling the bond risk of local governments with such a huge scale.Taking Shandong Province as the research object,the paper carries out an in-depth study with an aim to promote the management of local government bonds.To study the risk management profile of local government bonds in Shandong Province,the paper sorts out the economic and social development,bond scale and bond risk in Shandong Province,and analyzes the underlying problems and corres ponding causes in the risk management of local government bonds in Shandong.Generally speaking,the government debt risk of Shandong Province is within the red line,and overall,the risk is controllable.However,it is also found that there are some problems in bond issuance,bond repayment,bond supervision,special bonds and market constraints in Shandong Province,and the risk management policies need to be further improved.The main causes lie in the following aspects:unclear division of responsibilities,weak legal policy system,insufficient management system,and undemanding regulatory requirements.In order to solve these problems,the paper focuses on the advanced management experience at home and abroad,studies the current international management modes including administration of government bonds.Based on the advanced risk management practices of other provinces in China and abroad,and considering Chinas situation,the paper offers solutions and suggestions in aspects of the clear division of powers and responsibilities,making good use of special bonds,establishment of professional management teams,optimization of the risk prevention and control indicators of local government bonds and the strengthening of the awareness of performance management,in a hope that meaningful countermeasures can be used to strengthen the risk management of government bonds in Shandong Province.