By Ni Hongri　

Date: 2002/08/02

Abstract:　

With the expansion of fiscal deficit and debt, the fiscal risk is on the increase though remaining low at present. It is worth noting that the fiscal deficit announced by China in its consolidated table of the central government fiscal situation and the situation of the local governments does not include the deficit of the local governments resulting from the local government debt issued by the central government on behalf of the local governments. As a result, the size of deficit and the deficit ratio as announced may be underestimated. On top of that, the local administrative system and organization of the local fiscal departments for managing local debts are not sound. Therefore, the risks resulting from those factors need to be heeded and the paper makes explicit proposals for enhancing management of local fiscal debt and its risks.