On October 2, the State Council issued the "Opinions on Strengthening the Management of Local Government Debt" (hereinafter referred to as the "Opinions"), namely Guofa No. 43.

This "Opinion" has attracted widespread attention from all walks of life. It is not only related to the issue of local government debt repayment, but will also affect the development and fate of tens of thousands of local government financing platforms.

1. Contents of the document The "Opinions" *** have seven parts, which can be divided into three important aspects: overall requirements, local government debt management mechanism and existing debt treatment.

First of all, the guiding ideology of this "Opinion" is to establish a local government debt management mechanism that integrates "borrowing, using, and repaying" to effectively play the positive role of local governments in regulating debt, effectively prevent and resolve fiscal and financial risks, and promote the sustained health of the national economy.

develop.

The core content is to establish a standardized debt management mechanism, and its purpose is to play a positive role, prevent and resolve risks, and promote healthy development.

To achieve the above goals, the basic principles that need to be adhered to are the two-fold policy of "combine alleviating blockages, clarifying responsibilities, standardizing management, preventing risks, and advancing steadily".

Secondly, the "Opinions" also provide a set of solutions on how to strengthen the management of local government debt, including accelerating the establishment of a standardized local government debt financing mechanism, implementing scale control and budget management, control and

Four aspects including resolving local government debt risks and improving supporting systems.

Solve the problem of "how to borrow" through measures such as clarifying the subject of debt, standardizing debt methods, and strict procedures for borrowing; solve the problem of "how to use" through measures such as controlling the scale of debt, limiting the use of debt, and incorporating it into budget management;

Measures such as paying off debt responsibilities, establishing risk warnings, and improving emergency response measures will solve the problem of "how to repay".

In addition, improving supporting systems will provide safeguards for the establishment of a standardized local government debt mechanism from three aspects: improving debt reporting and disclosure systems, establishing assessment and accountability mechanisms, and strengthening creditor constraints.

Finally, in order to ensure a smooth transition of the reform, the "Opinions" clearly stated that the proper handling of existing debts should not only ensure follow-up financing for projects under construction, but also effectively prevent risks, and made necessary additions to relevant organizational leadership work.

If establishing a standardized local government debt mechanism is a long-term system, then digesting existing debt is a solution to the current thorny problem.

The "Opinions" also put forward clear measures to properly deal with existing debts: on the basis of cleaning up and screening local government debts, firstly, debts borrowed by local governments and their departments, as well as debts borrowed by enterprises and institutions that belong to the government should be

The repayment portion will be included in budget management.

Second, the part of the debt of enterprises and institutions that is not repayable by the government must be handled in accordance with market rules and reduce administrative intervention.

2. Analysis of key points (1) A mechanism to constrain government debt. The "Opinions" propose to establish a standardized local government debt financing mechanism and establish a local government debt management mechanism that integrates "borrowing, using and repaying". The previous extensive government debt

Expansion is constrained.

"Borrowing" clarifies the lending entity and form of local government debt.

Only with the approval of the State Council, governments at the provincial (autonomous regions, municipalities directly under the Central Government) level can borrow debts appropriately. Governments at the city and county level need to borrow debts through provincial governments. Government debts cannot be borrowed through enterprises and institutions.

Secondly, local government borrowing adopts the form of government bonds, and solves the funding problem for the development of public welfare undertakings by issuing general bonds and special bonds. This form is very close to U.S. municipal bonds.

"Use" strictly limits the purpose of funds, and classifies debts into full-scale budget management.

Debt borrowed by local governments can only be used for public welfare capital expenditures and appropriate repayment of existing debts, and cannot be used for current expenditures.

Government debt should be included in full-scale budget management, budget constraints should be hardened, and a punishment mechanism for illegal use of government debt funds should be established.

"Repay" mainly clarifies the debt repayment entities and emergency mechanisms for local government debts.

It is clear that local governments are responsible for repaying the debts they borrow, and the central government implements the principle of no bailout.

In terms of emergency mechanisms, when it is still difficult for local governments to raise funds through various channels such as liquidating resources and reducing expenditures to repay debts on their own, it is clearly stated that local governments must report in a timely manner, and governments at the same level and higher levels must initiate debt risk emergency response plans and

Accountability mechanism to effectively resolve debt risks and hold relevant personnel accountable.

This arrangement can prevent the blind expansion of local government debt to a certain extent.

(2) Two ideas to solve the debt problem. According to the government debt audit results as of the end of June 2013, my country’s central government debt accounts for about 20% of GDP, while local government debt accounts for about 32%. The total government debt The debt ratio is about 52%. Taking into account the incremental debt after June 2013, my country's government debt ratio is currently approaching the international security warning line of 60%.

The peak of local government debt repayment was precisely from 2013 to 2015.

On the other hand, in the current context of new urbanization, it is expected that the funding gap for urbanization construction will reach 42 trillion by 2020, and a large amount of government debt will still be required.