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The Present Situation, Problems and Countermeasures of the Chinese government external debt management system

Author: ZhangChi From: www.yourpaper.net Posted: 2009-04-02 10:16:12 Read:
Abstract: China's foreign debt management system since the reform and opening up has been in development, and has made certain achievements, but still not perfect. With the constant expansion of the foreign debt in China, the Chinese government must continue to improve the external debt management system, strengthen the management of foreign debt, improve the efficiency in the use of foreign debt and foreign debt in the nation-building to maximize value.
Keywords: external debt; system; status quo; countermeasures

The foreign debt is the domestic institutional commitment to non-residents denominated in foreign currency debt. Debt repayment obligations, foreign debt can be divided into sovereign external debt and non-sovereign external debt; divided according to the type of debt, foreign debt into foreign government loans and loans from international financial organizations and international commercial loans. Which sovereign debt is the borrowing countries, foreign national credit guarantee repayment of the foreign debt, also known by the authority of the State Council, on behalf of the government foreign debt, further divided by debt service obligations, the government foreign debt can be divided into the Government system borrowed from also external debt and the government system by the system but also the external debt.
Developing countries in the initial stage for economic and financial factors is the primary constraint on economic development, foreign loans is an important way to solve the shortage of funds. But improper use of government foreign debt, will increase the financial burden to produce financial risk affecting the financial functions of play, and even lead to social reproduction can not operate normally, endangering social stability. Since 1992, China has for five consecutive years, the World Bank's largest borrower, in 1994 became the first major borrowing countries of the Asian Development Bank, the third largest debtor developing countries after Mexico and Brazil in 1995. With the continuous expansion of the scale of foreign debt, our government must improve its external debt management system, strengthen the management of foreign debt, improve the efficiency in the use of foreign debt and foreign debt in the nation-building to maximize value.

First, the development and status quo of our government external debt management system

After the reform and opening up, with the gradual development of our indirect introduction of foreign work, to further standardize the management, in August 1986, the State Council issued "the State Council approved the notice of the State Planning Commission on the use of foreign loans in the division of work between the views of the external debts of The division of responsibility for the centralized management system. In September 1988, the Ministry of Finance issued a "do work for bank loans a few comments about the local financial sector, the Ministry of Finance letter, clearly the local financial sector in the management of World Bank loans should have a unified power.
Unified government external debt management agency in 1998, the government foreign debt to implement the sub-population management, and thus on the project, do guarantee, is not enough information to communicate, the lack of a better grasp of the total external debt total and annual repayment burden department, the structure of external debt sources, currency structure, the term structure, the lack of overall planning, scientific proof and unified management. After 1998, with the gradual unification of the central government external debt management agency, the government foreign debt management gradually achieve unified management, structural reform relatively short time, the external debt management has not yet really establish a management system of a unified set of regulatory and government external debt with non-governmental external debt is still no unified management.

Second, the problem of external debt management system of our government

(A) the current government external debt investment and financing system defects
The first is the lack of a scientific and democratic project project decision-making mechanism: mainly ideological mistakes in the project, is not rational to consider macro needs and solvency, but to the preferences of local or department heads, the needs of departmental interests and performance evaluation. RMB savings deposits of urban and rural residents in China balance in the end of September 2003, according to statistics released in October 2003, the People's Bank of China has exceeded 10 trillion yuan to 10.1 trillion yuan. In fact, China's financial system to produce a pattern of relative surplus funds and investment opportunities relative shortage of coexistence. China's surplus of funds, lack of funds should not be the reason for the introduction of foreign investment in China. Project in project design and feasibility study for the power sector to provide rent-seeking opportunities, led to many investment projects on a project, the idea of ??an enterprise "," The completion of the day, is bankrupt when. Investment decision-making responsibility for this lack of constraint is a threat to the financial and social capital use efficiency and safety of funds, in fact, the risk is concentrated in the national finances, and eventually be passed on to every citizen and future generations.
The second is the problem of matching funds for financing. Government external debt projects require local matching funds accounted for 50% of the total financing, almost all public service project matching funds is always difficult to place in full and in a timely manner. The reasons are as follows: the external debt are many projects focused on poverty-stricken areas, but the lack of impoverished areas finances, the Government eager to introduce debt funds and often blindly commitment of matching funds: feasibility study to analyze the factors predicted time of unfavorable factors and may There is a risk, change analysis through implemented sources of funds can not be put in place because of all the changes of the late; enough for projects owe IOUs to farmers, a commercial loan or way to make up with the farmers and labor in folding owned . In addition, the field of infrastructure and public welfare financing is still the financial funds and government borrowing mainly for not trying to market investment and financing, investment subject and financing methods single idle in the bank, on the one hand, a large number of private capital investment is restricted, and the other On the one hand, most of the projects lack sufficient matching funds to make the project run blocked.
(B) The Government external debt continued to increase the cost of project management
Government by the people authorized to exercise management functions of the society, so government agencies and a business to investment management fees, while the output of the government is the government functioning reach the performance, including government costs in general accounting costs and opportunity costs risk costs, hidden costs, regulatory costs, and so on. More than the cost of two types of rational and irrational, unreasonable cost points quantitative and difficult to quantify. Audit department in the actual process is difficult to assess the use of cost efficiency and correctness, which gives some people an opportunity to exploit.
Item substantial assets through further analysis will find 7 hidden costs associated loss of funds: project management units exist serious overstaffing; project management fees tend to cost overruns; the Financial sector stranded heavily; lend the project management unit, misappropriated and diverted funds; idle; many areas, the lack of effective institutional arrangements, thus breeding many irregularities and corruption, resulting in a large number of items of capital loss (such as the audit of the funds of the medium-term adjustment after the end of the project, the balance of funds and assets); does not regulate the bidding so a lot of money to be "gray evaporation.
(C) the current debt statistical indicators can not truly reflect
Debt statistical indicators can not truly reflect the increased risk of financial debt of the size of the debt and its risk and debt management, and budgeting system defects. Such as internal and external debt is not uniform; local government arrears for civil servants, teachers' salaries and pensions, not completely, including arrears for the works hidden financial liabilities; hidden debt of the local government to circumvent the Budget Law; massive government external debt to invest in a profitable industrial projects, the failure of the project need fiscal transparency, corporate "system borrowed from also, since also the external debt and local guarantees may be required fiscal transparency, government foreign debt by financial lending or guarantees project units bankruptcy or reorganization of assets borrowed from pass on the defaulted debt finance, have further increased the levels of financial liabilities.
(D) The regulatory regime system is not perfect
Structure and system defects and their deep-rooted cause problems because: government foreign debt and ultimately by the contemporary citizens and future generations that all citizens bear all citizens did not have a sense unsupervised supervision mechanism, making the owner of the funds management and users of responsibilities and rights unknown, causing the owner of the funds on foreign debt use of project funds can not be the whole process of all-round supervision. Therefore, users and managers of the funds in this lack of effective supervision conditions inevitably will cause problems. Government audit only from within the government of self-monitoring is not truly representative of the interests of the taxpayers and the citizens oversight tool.
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