Author(s)

Wei Yuan, Hudong Yang

Corresponding Author

Wei Yuan

Abstract

Municipal government investment and financing companies are new driving forces in local economic construction. They serve as investment and financing platforms for local governments and play key roles for local economic and social development. Due to their establishment, these companies have made positive contributions to promoting local economic and social development, industrial progress and infrastructure construction. In general, these investments and financing companies operate smoothly and their debt risks are manageable. However, these companies also have the following problems. First, the capital injection is insufficient and the debt ratio is on the high side. Second, the financing structure is not reasonable enough and indirect financing accounts for a large proportion. Third, financing guarantee resources are insufficient and refinancing is awfully difficult. Fourth, borrowing, using, returning and managing are not smooth, and there is no overall arrangement for funds. Fifth, the legal person governance mechanism is incomplete, and operational efficiency needs to be improved. Sixth, the pressure on fiscal debt repayment is greater, and the financial burden tends to increase. Accordingly, it is recommended to take the following measures to promote the standardization and healthy development of local government investment and financing companies and prevent the local government debt crisis. First, it is necessary to further strengthen the organization and leadership of investment and financing work, and increase the guidance for financing work. Second, the support of banking financial institutions should be further sought, and the scale of indirect financing should be expanded in every possible way. Third, it should further broaden financing channels and promote greater breakthroughs in direct financing. Fourth, in accordance with the positioning of investment and financing companies based on capital operations, their reorganization and standardization, strength and expansion should be promoted. Fifth, it should further improve the governance mechanism of investment and financing companies, and promote the establishment of a real modern enterprise system. Sixth, a virtuous cycle mechanism of borrowing, using, returning and managing should be formed.

Keywords

Current situation; Existing problems; Possible solutions; Municipal government investment and financing companies