Types And Precautions Of Local Fiscal Risks

Local fiscal risk is a concentrated expression of the contradiction in the economic and social development process in the financial field. It refers to the possibility that the government can not provide the most basic public products and public services needed for social and economic development, as well as the large scale breach of the government's obligation to pay for the government's obligations, such as government debt default, arrears of wages and pensions for public servants, unemployment subsidies, etc., as a result of the financial operations facing the economic environment, social environment, institutional environment, and the financing environment.

To understand local financial risks correctly, we should first understand the types of risks and identify the hidden dangers of different types of financial risks to local society, so as to facilitate corresponding measures to prevent and resolve them.

Generally speaking, the local fiscal risk mainly includes the following kinds: the financial risk of the financial crisis, the important index of measuring the risk of fiscal revenue is the proportion of fiscal revenue to GDP.

First of all, in a considerable number of areas, the normal operation of the organs has been unable to maintain. In the long run, it is bound to bring hidden dangers to the long-term stability of the society.

Secondly, due to the limited financial resources of the state, it is not enough to fulfill the responsibility of public expenditure. Some even fail to guarantee the minimum capital requirements, which is extremely unfavorable to the long-term and sustainable development of China's social economy.

Thirdly, with the decline of financial concentration, financial investment is weakening.

Financial expenditure risk is very important. The proportion of fiscal expenditure in gross national product is an important index to measure the risk of fiscal expenditure.

The proportion of China's fiscal expenditure in gross national product has been decreasing, which was 27.19% in 1980, 16.63% in 1990 and 12.11% in 1998.

In addition to the proportion of fiscal expenditure in gross national product, fiscal expenditure risk is also reflected in the unreasonable fiscal expenditure structure.

On the one hand, there is "offside" phenomenon.

At present, in the pitional period of the economic system, the government finance still undertakes the expenses that should be borne by the market (such as deficit subsidies for state-owned enterprises, subsidies for residents' prices, and tap the potential for pformation of state-owned enterprises, etc.), resulting in the offside of fiscal expenditure. On the other hand, there is a phenomenon of "Absence" of expenditure.

Financial expenditure (such as basic education, basic science, environmental protection, public facilities, agriculture, social security, etc.) can not be guaranteed because of insufficient financial resources. The development of these areas has lagged behind, which has seriously affected the healthy and coordinated development of social economy and formed the "Absence" of fiscal expenditure.

There are two aspects of financial institutional risk. On the one hand, there are more and more non-standard charges, and the proportion of extra budgetary funds in fiscal revenue is higher and higher.

Government departments have formed more and more extra budgetary revenues through charges, thus solving the financial and financial difficulties, causing confusion in the distribution order, forming a certain risk of social stability, and on the other hand, the financial revenue is getting bigger and bigger.

In some areas, the development of the economy is slow, but the tax revenue is heavy. In order to ensure the completion of the task, some collection departments have adopted non-standard or even illegal methods, such as "idling", eating taxes and levying taxes.

The above two problems are caused by loopholes in the system. The risks they cause are not only the economic risks of the loss of financial revenue and the confusion of financial order, but more importantly, the dignity of the law and the burden of the people.

At present, debt risk has become the main cause of local fiscal risk.

There are many sources of local government debt risk, such as direct debt risk and type debt risk, both external debt risk and national debt risk. It has both operational risk of grain circulation fund and operational risk of social security funds.

The negative effect of local government borrowing is obvious. It is shown as follows: (1) the scale of borrowing is larger and the financial burden is increased.

At present, many local governments have already exceeded the financial capacity of the local governments. If they are not controlled, some debts will require the "final solvency agency" - the financial sector to bear it to a certain degree or a certain period. This will make the already difficult financial situation worse.

(2) the credit of local governments has been reduced and the cost of borrowing has been raised.

With the expansion of the debt scale of each sector, its asset liability ratio and debt service ratio have been raised, and the cost of borrowing has also increased correspondingly.

From the relevant statistics, the government debt is relatively single, mainly based on bank loans. Although the government's rights can be used to realize the borrowing plan, it will damage the government's credit because of a temporary default.

(3) the difficulty of provincial government regulation is increasing.

The scale of the debts of cities and counties is out of control. When the debt crisis happens, the finance of cities and counties can not be solved, so the higher level government needs to be coordinated, thus increasing the burden of the provincial governments.

On the other hand, city and county debt is an important part of provincial debt. If the scale is not controlled, the difficulty of provincial government regulation will be increased.

In the long run, the development of economy, the quality of economic growth, the adjustment of economic structure and the upgrading of industries, and the opening up of new economic growth points are the material basis and fundamental basis for preventing and resolving local government debts.

However, due to the constraints of capital, technology, market, talent, information and other factors, economic development is a long-term historical process. Therefore, in the short term, preventing and resolving the important part of local government debt can even be regarded as a key link, which is to improve the system guarantee.

The pformation of government functions.

The socialist market economy is a unified operation mode which combines market and government intervention effectively. The goal of reform is to let the market play a leading role in the process of resource allocation. The function of the government is to regulate, organize and improve the market, play a role in the field of market failure, and provide necessary public products and public services for social and economic development.

The government's regulation of the economy, rather than direct participation, should redefine the role of the government in the process of social economic development and regulate the contents and ways of government intervention in the economy. This includes narrowing the scope of intervention, shifting from "no matter" to "limited areas", from "excessive intervention (offside)" to "moderate intervention (positioning)", from "lack of intervention" to "strengthening intervention" in the field of public service and public goods, and at the same time, realizing the intervention means mainly from direct intervention to indirect control, and from "rule by man" to "rule of law", to improve the pparency and effectiveness of intervention, to reduce the phenomenon of "rent seeking" in the process of intervention, and to eliminate or reduce the formation mechanism of local government debt. Therefore, in the historical period of pition from planned economy to market economy, we must strengthen.

Reform and reform of state-owned enterprises.

Some of the thorny problems in the reform of state-owned enterprises, such as debt problems in the process of pformation, large-scale unemployment and unemployment, need to be solved by the government and become an important source of local contingent liabilities.

Therefore, we should intensify the reform of state-owned enterprises, realize the diversification of the property rights of state-owned enterprises through effective property rights pactions, solve the problem of "virtual position" of the property owners of state-owned enterprises, form a new and efficient resource allocation pattern, and solve the problem of state-owned enterprises lacking effective incentive mechanisms and the high cost of principal-agent.

To regulate the act of government guarantee so as to minimize the guarantee contract.

We must strictly enforce the "guarantee law", standardize the acts of government guarantee, strictly control the scope of guarantee, control the decision-making power of guaranty matters, clarify the principles, conditions, scopes, responsibilities and effective enforcement mechanisms, control mechanisms and responsibility handling mechanisms of government guarantees.

For the current stage of local government guarantee, the local government should make a request for the proportion of its own funds, limit its financing quota, ask for the repayment reserve system, and establish the system of recourse to the government, so as to reduce the risks brought by the local government guarantee.

To improve the social security system.

According to the principle that the level of protection is compatible with the level of economic development, we should respect the principle of regional differences, take into account the principles of fairness and efficiency, the principles shared by the state, enterprises and individuals, the principle of universal coverage, the principle of combining social security with commercial insurance, and the principle of separating government operation from social security fund operation, and gradually establish a social security system that adapts to the socialist market economy, so as to realize the marketization of labor force and promote the reform and development of state-owned enterprises.

Reform of the financial management system.

Finance is the Department of government financial management, and the ultimate undertaker of financial risk, the level of financial management is directly related to the ability to prevent and dissolve fiscal risks. We must reform the current financial management system in accordance with the basic principles of public finance and strive to raise the proportion of fiscal revenue to GDP.

We should reform the existing fiscal revenue collection and management mechanism.

First of all, we should rationally arrange and improve the tax collection and management institutions according to the distribution of the economy and tax sources, and form a complete network of tax collection and management.

At the same time, the tax administration departments at all levels generally establish and improve the target management responsibility system. Secondly, we must establish tax control and information systems, accurately, comprehensively and timely grasp the distribution and increase or decrease of tax sources, strengthen the control and strict supervision of tax sources, make timely collection of taxable funds into warehouses, eliminate the phenomenon of "running, running, dropping, and leaking" in the process of taxation; thirdly, we should strengthen the supervision and inspection of Taxation, and intensify the investigation and handling of illegal activities in the process of tax collection and administration.

Reform budget management system.

The traditional budget management mode is a base plus growth mode. There are such problems as the waste of budgetary funds, the short budgeting time, the scattered distribution of funds, the two pieces of funds inside and outside the budget, and the decentralization of the budgetary internal budget.

To overcome these problems, we must establish and promote the reform of the budget management system, which is based on departmental budgets, early compilation, budget compilation, zero base budgeting and comprehensive budgeting, so as to improve the integrity, accuracy and scientificity of the budget, enhance the rigidity of the budget and the efficiency of the use of the budget funds, and enhance the seriousness of the government budget and the ability of macro regulation and control.

Reform the expenditure management system.

At present, the local finance is facing the pressure of rigid expenditure growth. The soft budget constraint is widespread. The financial foundation for preventing and resolving local fiscal risks is very fragile. Therefore, we must reform the expenditure management system, adjust the expenditure structure, and strictly manage the budget expenditure.

First, we must harden our budgetary constraints and enhance the seriousness of our budget.

According to the provisions of the budget law, once approved by the people's Congress, the budget can not be arbitrarily increased or adjusted without legal procedures. Expenditures must be strictly carried out according to the budget, so as to prevent arbitrary increase in the amount of expenditure and increase in expenditure. At the same time, the budgetary temporary payments should be vigorously reduced to enhance the stability of the budget implementation.

The two is to redefine and standardize the scope of fiscal expenditure.

We should optimize the expenditure structure, ensure the key needs, and reduce the general expenditure needs.

We should put an end to deficit budgets and adhere to the principle of "one must eat and two must build", leaving no gaps in individual parts for the sake of construction and not allowing projects to be scrambling.

The finance at all levels should give priority to overtaking financial resources to make up for the deficit, actively digest the stock and strictly control the increment.

Three, we should actively implement the treasury centralized payment system and the reform of the government procurement system.