Strengthening Subnational Debt Financing and Managing Risks
The Chinese budget law prevents subnational governments from borrowing. However, Subnational Governments (SNG) borrows indirectly off-budget, through Urban Development and Investment Corporations (UDIC). There are various estimates on the off-budge...
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| Format: | Policy Note |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2010/08/13159499/china-strengthening-subnational-debt-financing-managing-risks-policy-note http://hdl.handle.net/10986/19471 |
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okr-10986-19471 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTANT ACCOUNTING ACCOUNTING STANDARDS ACCRUAL ACCOUNTING AMORTIZATION AMOUNT OF DEBT ARREARS BAILOUT BAILOUTS BALANCE SHEET BANK LENDING BANK LOANS BANKRUPTCY BANKRUPTCY COURT BANKRUPTCY LAW BANKRUPTCY PROCEDURES BENEFICIARIES BOND BOND ISSUANCE BOND ISSUING BOND SALES BONDS BORROWER BORROWING COST BORROWING PLANS BUDGET CONSTRAINT BUDGET CONSTRAINTS BUDGET DEFICIT BUDGETARY FRAMEWORKS CAPITAL ACCOUNTS CAPITAL INVESTMENT CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CAPITAL MARKETS CASH FLOW CASH MANAGEMENT CASH RESERVE CATEGORY OF DEBT COLLATERAL COMPETITIVE AUCTIONS CONSUMPTION EXPENDITURE CONTINGENT LIABILITIES CONTRACT LAW CORPORATE GOVERNANCE CORPORATE INSOLVENCY CREDIT ASSESSMENT CREDIT MARKET CREDIT MARKETS CREDIT RATING CREDIT RATINGS CREDIT RISK CREDIT STANDING CREDITOR CREDITOR CLAIMS CREDITOR RIGHTS CREDITORS CREDITWORTHINESS CURRENCY CURRENCY CRISIS CURRENCY RISKS DEBT DEBT BURDEN DEBT CAPACITY DEBT COMPOSITION DEBT CRISES DEBT CRISIS DEBT DEFAULT DEBT FINANCING DEBT INSTRUMENTS DEBT ISSUANCE DEBT MANAGEMENT DEBT MARKET DEBT OBLIGATIONS DEBT OUTSTANDING DEBT PAYMENTS DEBT REPAYMENT DEBT RESTRUCTURING DEBT RESTRUCTURING AGREEMENTS DEBT SERVICE DEBT SERVICES DEBT SERVICING DEBT STOCK DEBT-SERVICE DEBTOR DEBTORS DEBTS DECENTRALIZATION DEFAULT RISKS DEFAULTS DEPOSIT DEVALUATION DEVELOPING COUNTRIES DOMESTIC BORROWING DOMESTIC CURRENCY DOMESTIC MARKETS EXPENDITURE EXPENDITURES FINANCES FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL RISKS FINANCIAL STATEMENT FINANCIAL STATEMENTS FINANCIAL SYSTEM FISCAL AUTONOMY FISCAL DECENTRALIZATION FISCAL DEFICIT FISCAL DEFICITS FISCAL DISCIPLINE FRAUD GENERAL OBLIGATION BOND GENERAL OBLIGATION BONDS GOVERNMENT CAPACITY GOVERNMENT DEBT GOVERNMENT GUARANTEES GOVERNMENT MONETARY POLICIES GOVERNMENT REGULATIONS INDEBTEDNESS INDIVIDUAL CREDITORS INDIVIDUAL INVESTORS INFLATION INFLATION RATE INFORMATION SYSTEMS INFRASTRUCTURE BONDS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE FINANCE INFRASTRUCTURE FINANCING INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INTEREST PAYMENTS INTEREST RATE INTEREST RATE SPREAD INTERNATIONAL BANK INTERNATIONAL RATING AGENCIES INVESTMENT CORPORATIONS INVESTMENT INSTRUMENTS INVESTMENT PROJECTS INVESTOR BASE ISSUANCE LEGAL CONSTRAINTS LEGAL FRAMEWORK LENDER LENDERS LEVEL PLAYING FIELD LIABILITY LIQUIDATION LIQUIDITY LIQUIDITY POSITION LOCAL GOVERNMENT LOCAL GOVERNMENTS MACROECONOMIC CRISIS MACROECONOMIC MANAGEMENT MACROECONOMIC VARIABLES MARKET ACCESS MARKET DEVELOPMENT MARKET DISCIPLINES MARKET PARTICIPANTS MARKET RISKS MATURITIES MATURITY MORAL HAZARD MUNICIPAL BOND MUNICIPAL BONDS MUNICIPAL FINANCE NATIONAL DEBT NATIONAL TREASURY NON-PERFORMING LOANS OUTSTANDING DEBT PENSIONS PORTFOLIO PRINCIPAL REPAYMENT PRIVATE CREDITORS PRIVATE DEBT PRIVATE DEBTORS PRIVATE FINANCING PROVINCIAL DEBT PUBLIC ASSETS PUBLIC BANKS PUBLIC DEBT PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SECTOR BANKS REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REGULATORY FRAMEWORK REGULATORY FRAMEWORKS REPAYMENT REPAYMENT OF PRINCIPAL RESERVES REVENUE BONDS RIGHTS OF CREDITORS RISK MANAGEMENT RISKY BORROWERS SALE OF PROPERTY SHORT MATURITIES SHORT MATURITY SHORT-TERM BORROWING SHORT-TERM DEBT SOLVENCY SOVEREIGN BOND SOVEREIGN DEBT SOVEREIGN GUARANTEES STATUTORY REQUIREMENT STATUTORY REQUIREMENTS SUBNATIONAL BOND MARKETS TAX TOTAL DEBT TRANSFER INTERCEPTS TRANSPARENCY TREASURY BONDS TRUSTEE VALUATION VARIABLE INTEREST RATES WORKING CAPITAL |
| spellingShingle |
ACCOUNTANT ACCOUNTING ACCOUNTING STANDARDS ACCRUAL ACCOUNTING AMORTIZATION AMOUNT OF DEBT ARREARS BAILOUT BAILOUTS BALANCE SHEET BANK LENDING BANK LOANS BANKRUPTCY BANKRUPTCY COURT BANKRUPTCY LAW BANKRUPTCY PROCEDURES BENEFICIARIES BOND BOND ISSUANCE BOND ISSUING BOND SALES BONDS BORROWER BORROWING COST BORROWING PLANS BUDGET CONSTRAINT BUDGET CONSTRAINTS BUDGET DEFICIT BUDGETARY FRAMEWORKS CAPITAL ACCOUNTS CAPITAL INVESTMENT CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CAPITAL MARKETS CASH FLOW CASH MANAGEMENT CASH RESERVE CATEGORY OF DEBT COLLATERAL COMPETITIVE AUCTIONS CONSUMPTION EXPENDITURE CONTINGENT LIABILITIES CONTRACT LAW CORPORATE GOVERNANCE CORPORATE INSOLVENCY CREDIT ASSESSMENT CREDIT MARKET CREDIT MARKETS CREDIT RATING CREDIT RATINGS CREDIT RISK CREDIT STANDING CREDITOR CREDITOR CLAIMS CREDITOR RIGHTS CREDITORS CREDITWORTHINESS CURRENCY CURRENCY CRISIS CURRENCY RISKS DEBT DEBT BURDEN DEBT CAPACITY DEBT COMPOSITION DEBT CRISES DEBT CRISIS DEBT DEFAULT DEBT FINANCING DEBT INSTRUMENTS DEBT ISSUANCE DEBT MANAGEMENT DEBT MARKET DEBT OBLIGATIONS DEBT OUTSTANDING DEBT PAYMENTS DEBT REPAYMENT DEBT RESTRUCTURING DEBT RESTRUCTURING AGREEMENTS DEBT SERVICE DEBT SERVICES DEBT SERVICING DEBT STOCK DEBT-SERVICE DEBTOR DEBTORS DEBTS DECENTRALIZATION DEFAULT RISKS DEFAULTS DEPOSIT DEVALUATION DEVELOPING COUNTRIES DOMESTIC BORROWING DOMESTIC CURRENCY DOMESTIC MARKETS EXPENDITURE EXPENDITURES FINANCES FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL RISKS FINANCIAL STATEMENT FINANCIAL STATEMENTS FINANCIAL SYSTEM FISCAL AUTONOMY FISCAL DECENTRALIZATION FISCAL DEFICIT FISCAL DEFICITS FISCAL DISCIPLINE FRAUD GENERAL OBLIGATION BOND GENERAL OBLIGATION BONDS GOVERNMENT CAPACITY GOVERNMENT DEBT GOVERNMENT GUARANTEES GOVERNMENT MONETARY POLICIES GOVERNMENT REGULATIONS INDEBTEDNESS INDIVIDUAL CREDITORS INDIVIDUAL INVESTORS INFLATION INFLATION RATE INFORMATION SYSTEMS INFRASTRUCTURE BONDS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE FINANCE INFRASTRUCTURE FINANCING INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INTEREST PAYMENTS INTEREST RATE INTEREST RATE SPREAD INTERNATIONAL BANK INTERNATIONAL RATING AGENCIES INVESTMENT CORPORATIONS INVESTMENT INSTRUMENTS INVESTMENT PROJECTS INVESTOR BASE ISSUANCE LEGAL CONSTRAINTS LEGAL FRAMEWORK LENDER LENDERS LEVEL PLAYING FIELD LIABILITY LIQUIDATION LIQUIDITY LIQUIDITY POSITION LOCAL GOVERNMENT LOCAL GOVERNMENTS MACROECONOMIC CRISIS MACROECONOMIC MANAGEMENT MACROECONOMIC VARIABLES MARKET ACCESS MARKET DEVELOPMENT MARKET DISCIPLINES MARKET PARTICIPANTS MARKET RISKS MATURITIES MATURITY MORAL HAZARD MUNICIPAL BOND MUNICIPAL BONDS MUNICIPAL FINANCE NATIONAL DEBT NATIONAL TREASURY NON-PERFORMING LOANS OUTSTANDING DEBT PENSIONS PORTFOLIO PRINCIPAL REPAYMENT PRIVATE CREDITORS PRIVATE DEBT PRIVATE DEBTORS PRIVATE FINANCING PROVINCIAL DEBT PUBLIC ASSETS PUBLIC BANKS PUBLIC DEBT PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SECTOR BANKS REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REGULATORY FRAMEWORK REGULATORY FRAMEWORKS REPAYMENT REPAYMENT OF PRINCIPAL RESERVES REVENUE BONDS RIGHTS OF CREDITORS RISK MANAGEMENT RISKY BORROWERS SALE OF PROPERTY SHORT MATURITIES SHORT MATURITY SHORT-TERM BORROWING SHORT-TERM DEBT SOLVENCY SOVEREIGN BOND SOVEREIGN DEBT SOVEREIGN GUARANTEES STATUTORY REQUIREMENT STATUTORY REQUIREMENTS SUBNATIONAL BOND MARKETS TAX TOTAL DEBT TRANSFER INTERCEPTS TRANSPARENCY TREASURY BONDS TRUSTEE VALUATION VARIABLE INTEREST RATES WORKING CAPITAL Liu, Lili Strengthening Subnational Debt Financing and Managing Risks |
| geographic_facet |
East Asia and Pacific |
| description |
The Chinese budget law prevents
subnational governments from borrowing. However, Subnational
Governments (SNG) borrows indirectly off-budget, through
Urban Development and Investment Corporations (UDIC). There
are various estimates on the off-budget liabilities, with
one estimate having the liabilities at more than 30 percent
of Gross Domestic Product (GDP). This paper provides a
discussion of more reform options for China, anchored with
cross-country experiences and lessons. The way forward is to
develop regulatory frameworks that can expand SNG and UDIC
market access and debt financing, while strengthening
subnational fiscal discipline, managing default risks,
promoting capital market development, and supporting
macroeconomic management and a stable financial system. The
paper is organized as: section two presents fiscal rules and
framework - ex ante regulations for subnational debt issuing
and procedures. Section three discusses what to do when a
subnational government becomes insolvent - ex post system.
Section four is devoted to developing regulatory frameworks
for UDIC, which may require a debt restructuring system
different from a system for direct debt of SNG. Ex post debt
restructuring for UDIC may also differ from the existing
bankruptcy code in China for corporations due to the
fundamental difference between a public entity and a private
corporation. Section five focuses on strengthening debt
management capacity of SNG particularly with respect to
liquidity and refinancing risks. Section six focuses on
managing fiscal risks of land financing, given its prevalent
use in China. Section seven discusses the development of a
competitive and diversified subnational debt market. Section
eight concludes with suggested reform options. |
| format |
Economic & Sector Work :: Policy Note |
| author |
Liu, Lili |
| author_facet |
Liu, Lili |
| author_sort |
Liu, Lili |
| title |
Strengthening Subnational Debt Financing and Managing Risks |
| title_short |
Strengthening Subnational Debt Financing and Managing Risks |
| title_full |
Strengthening Subnational Debt Financing and Managing Risks |
| title_fullStr |
Strengthening Subnational Debt Financing and Managing Risks |
| title_full_unstemmed |
Strengthening Subnational Debt Financing and Managing Risks |
| title_sort |
strengthening subnational debt financing and managing risks |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2010/08/13159499/china-strengthening-subnational-debt-financing-managing-risks-policy-note http://hdl.handle.net/10986/19471 |
| _version_ |
1764440933656428544 |
| spelling |
okr-10986-194712021-04-23T14:03:45Z Strengthening Subnational Debt Financing and Managing Risks Liu, Lili ACCOUNTANT ACCOUNTING ACCOUNTING STANDARDS ACCRUAL ACCOUNTING AMORTIZATION AMOUNT OF DEBT ARREARS BAILOUT BAILOUTS BALANCE SHEET BANK LENDING BANK LOANS BANKRUPTCY BANKRUPTCY COURT BANKRUPTCY LAW BANKRUPTCY PROCEDURES BENEFICIARIES BOND BOND ISSUANCE BOND ISSUING BOND SALES BONDS BORROWER BORROWING COST BORROWING PLANS BUDGET CONSTRAINT BUDGET CONSTRAINTS BUDGET DEFICIT BUDGETARY FRAMEWORKS CAPITAL ACCOUNTS CAPITAL INVESTMENT CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CAPITAL MARKETS CASH FLOW CASH MANAGEMENT CASH RESERVE CATEGORY OF DEBT COLLATERAL COMPETITIVE AUCTIONS CONSUMPTION EXPENDITURE CONTINGENT LIABILITIES CONTRACT LAW CORPORATE GOVERNANCE CORPORATE INSOLVENCY CREDIT ASSESSMENT CREDIT MARKET CREDIT MARKETS CREDIT RATING CREDIT RATINGS CREDIT RISK CREDIT STANDING CREDITOR CREDITOR CLAIMS CREDITOR RIGHTS CREDITORS CREDITWORTHINESS CURRENCY CURRENCY CRISIS CURRENCY RISKS DEBT DEBT BURDEN DEBT CAPACITY DEBT COMPOSITION DEBT CRISES DEBT CRISIS DEBT DEFAULT DEBT FINANCING DEBT INSTRUMENTS DEBT ISSUANCE DEBT MANAGEMENT DEBT MARKET DEBT OBLIGATIONS DEBT OUTSTANDING DEBT PAYMENTS DEBT REPAYMENT DEBT RESTRUCTURING DEBT RESTRUCTURING AGREEMENTS DEBT SERVICE DEBT SERVICES DEBT SERVICING DEBT STOCK DEBT-SERVICE DEBTOR DEBTORS DEBTS DECENTRALIZATION DEFAULT RISKS DEFAULTS DEPOSIT DEVALUATION DEVELOPING COUNTRIES DOMESTIC BORROWING DOMESTIC CURRENCY DOMESTIC MARKETS EXPENDITURE EXPENDITURES FINANCES FINANCIAL CRISIS FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL RISKS FINANCIAL STATEMENT FINANCIAL STATEMENTS FINANCIAL SYSTEM FISCAL AUTONOMY FISCAL DECENTRALIZATION FISCAL DEFICIT FISCAL DEFICITS FISCAL DISCIPLINE FRAUD GENERAL OBLIGATION BOND GENERAL OBLIGATION BONDS GOVERNMENT CAPACITY GOVERNMENT DEBT GOVERNMENT GUARANTEES GOVERNMENT MONETARY POLICIES GOVERNMENT REGULATIONS INDEBTEDNESS INDIVIDUAL CREDITORS INDIVIDUAL INVESTORS INFLATION INFLATION RATE INFORMATION SYSTEMS INFRASTRUCTURE BONDS INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE FINANCE INFRASTRUCTURE FINANCING INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INTEREST PAYMENTS INTEREST RATE INTEREST RATE SPREAD INTERNATIONAL BANK INTERNATIONAL RATING AGENCIES INVESTMENT CORPORATIONS INVESTMENT INSTRUMENTS INVESTMENT PROJECTS INVESTOR BASE ISSUANCE LEGAL CONSTRAINTS LEGAL FRAMEWORK LENDER LENDERS LEVEL PLAYING FIELD LIABILITY LIQUIDATION LIQUIDITY LIQUIDITY POSITION LOCAL GOVERNMENT LOCAL GOVERNMENTS MACROECONOMIC CRISIS MACROECONOMIC MANAGEMENT MACROECONOMIC VARIABLES MARKET ACCESS MARKET DEVELOPMENT MARKET DISCIPLINES MARKET PARTICIPANTS MARKET RISKS MATURITIES MATURITY MORAL HAZARD MUNICIPAL BOND MUNICIPAL BONDS MUNICIPAL FINANCE NATIONAL DEBT NATIONAL TREASURY NON-PERFORMING LOANS OUTSTANDING DEBT PENSIONS PORTFOLIO PRINCIPAL REPAYMENT PRIVATE CREDITORS PRIVATE DEBT PRIVATE DEBTORS PRIVATE FINANCING PROVINCIAL DEBT PUBLIC ASSETS PUBLIC BANKS PUBLIC DEBT PUBLIC FINANCE PUBLIC FINANCES PUBLIC INVESTMENT PUBLIC SECTOR BANKS REAL INTEREST REAL INTEREST RATE REAL INTEREST RATES REGULATORY FRAMEWORK REGULATORY FRAMEWORKS REPAYMENT REPAYMENT OF PRINCIPAL RESERVES REVENUE BONDS RIGHTS OF CREDITORS RISK MANAGEMENT RISKY BORROWERS SALE OF PROPERTY SHORT MATURITIES SHORT MATURITY SHORT-TERM BORROWING SHORT-TERM DEBT SOLVENCY SOVEREIGN BOND SOVEREIGN DEBT SOVEREIGN GUARANTEES STATUTORY REQUIREMENT STATUTORY REQUIREMENTS SUBNATIONAL BOND MARKETS TAX TOTAL DEBT TRANSFER INTERCEPTS TRANSPARENCY TREASURY BONDS TRUSTEE VALUATION VARIABLE INTEREST RATES WORKING CAPITAL The Chinese budget law prevents subnational governments from borrowing. However, Subnational Governments (SNG) borrows indirectly off-budget, through Urban Development and Investment Corporations (UDIC). There are various estimates on the off-budget liabilities, with one estimate having the liabilities at more than 30 percent of Gross Domestic Product (GDP). This paper provides a discussion of more reform options for China, anchored with cross-country experiences and lessons. The way forward is to develop regulatory frameworks that can expand SNG and UDIC market access and debt financing, while strengthening subnational fiscal discipline, managing default risks, promoting capital market development, and supporting macroeconomic management and a stable financial system. The paper is organized as: section two presents fiscal rules and framework - ex ante regulations for subnational debt issuing and procedures. Section three discusses what to do when a subnational government becomes insolvent - ex post system. Section four is devoted to developing regulatory frameworks for UDIC, which may require a debt restructuring system different from a system for direct debt of SNG. Ex post debt restructuring for UDIC may also differ from the existing bankruptcy code in China for corporations due to the fundamental difference between a public entity and a private corporation. Section five focuses on strengthening debt management capacity of SNG particularly with respect to liquidity and refinancing risks. Section six focuses on managing fiscal risks of land financing, given its prevalent use in China. Section seven discusses the development of a competitive and diversified subnational debt market. Section eight concludes with suggested reform options. 2014-08-19T21:06:07Z 2014-08-19T21:06:07Z 2010-08-16 http://documents.worldbank.org/curated/en/2010/08/13159499/china-strengthening-subnational-debt-financing-managing-risks-policy-note http://hdl.handle.net/10986/19471 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Economic & Sector Work :: Policy Note Economic & Sector Work East Asia and Pacific |