Moderate Scale Estimates of Local Government Debt Case of Jilin Province

Abstract

In order to prevent local government debt crisis, we established a theoretical model to estimate appropriate scale of local government debt in this paper. Example of Jilin Province, we forecast a moderate scale of local government debt in Jilin Province in next few years. The results show that the local government debt in Jilin Province has been more than the appropriate scale calculated by us. Therefore, local government must take some measures to enhance the financial strength, reduce the unnecessary expenditure of financial, clean-up of the existing local government debt and establish a debt service reserve system. Keywords-local government debt; appropriate scale; forecast; measure I n recent years, the scale of local government debt increased dramatically. As the end of 2010, the local government debt balance 10.717491 trillion yuan in the country. According to the data from Chinese Academy of Social Sciences, to 2013 or 2014, the local government debt is expected to reach 20 trillion yuan. Such large-scale debt has caused great concern of the government. Whether the scale of debt is reasonable, there are a lot of controversies in academia. We believe that, there should be a number of boundaries to determine the scale of local government debt Reasonable or not. Otherwise, the general talk about local government debt too much or not is the lack of a scientific basis. Unfortunately, we have not found Empirical Study of appropriate scale for local government debt in the collected academic achievements. In this paper, we build a model to estimate the modest scales of local government debt, and calculate the appropriate scale of local government debt in Jilin Province in the next few years. We put forward the recommendations to control the reasonable scale of the local government debt also.