In addition, given that local government debt comprises 27 of China s 2010 GDP, while central government debt and policy loans stand at 20 and 6 of GDP, respectively, the total public debt to GDP ratio is approximately 53 lower than Germany s. So, while China should not be complacent about local government debt, panic is unwarranted.

Governments may be able to mobilize funding through debt swaps, where donors exchange debt for local currency investment in environmental protection, such as waste water treatment.

Local currency government debt markets have performed fairly well during the crisis, while local currency corporate debt markets have played a more modest role as a vehicle for longer term finance. This suggests that domestic reforms aimed at reducing issuance costs, improving disclosure requirements, enhancing creditors rights frameworks, and tackling other inhibiting factors could bring high returns.

Bankruptcy should allow local governments to renegotiate their bond debt and, perhaps, their retired employees pension and health care costs (that s up to a bankruptcy judge). The state would be expected to take over essential public services from bankrupt local governments.

The problem lies in a mismatch between their respective shares of tax revenues and mandatory expenditures. With local governments forced to cover a large proportion of public spending with a disproportionately low share of revenues, local government debt has swelled.

Another major risk of interest rate liberalization in China stems from rising public debt, particularly local government debt, which has grown significantly in the wake of the global financial crisis. A key parameter for determining the long run sustainability of public debt is the gap between interest rates and the nominal GDP growth rate.

As for Chinese banks, the main problem appears to be exposure to ballooning local government debt, which, according to the government, totaled 1.7 trillion (roughly 30 of GDP) at the end of 2010. Approximately half of this debt was on their books prior to the crisis.

But the economic and social costs are very high. Local governments are saddled with a mountain of debt and wasted investments, banks accumulate risky loans, and farmers lose their land.

Debt sustainability and debt relief

Most economists failed to foresee the economic dynamics that actually led to the crisis, because they failed to pay enough attention to the rapid increase in US total debt. Instead, they focused exclusively on US foreign debt, ignoring household debt (mortgage and consumer debt), public debt, business debt, and financial debt.

European banks have been operating on a great deal of debt and very little shareholder capital the essential buffer against potential losses. Any shock to sovereign debt or further downturn in local economies will be transmitted through an overleveraged and undercapitalized banking system to other European countries and quite possibly elsewhere, including the United States.

Debt

Debt

Local LWV organizations monitor their local government meetings and address local issues.

Obama s long run budget calls for much higher spending, higher taxes, and an explosion of debt that will crowd out borrowing in capital markets by private companies, state and local governments, and developing countries. Obama would add 6.5 trillion to the United States national debt, more than all previous presidents, from George Washington to George W. Bush, combined.

Of course, curbing future debt accumulation is also vital to China s long term prosperity. That is why China must reduce local governments dependence on banks to meet their financing needs, by nurturing bond and equity markets.

Options for lower debt burdens on Governments of heavily indebted developing countries include debt cancellation and debt swaps for sustainable development.

To address the debt burden problem, many African countries at first resorted to repeated debt rescheduling which focused on debt service flows, resulting in steadily increasing debt stocks and related service payments.

Second, China s fiscal position will worsen rapidly because of massive local government debt. And, third, the collapse of underground credit networks in bustling cities such as Wenzhou will lead to a broad financial crisis across the country.

External debt

Debt relief

External debt

Debt relief, debt swaps or debt cancellation could offer important means for mobilizing resources for accelerating progress towards the water and sanitation goals.

If the central bank is serious about floating, it will hike local interest rates to limit price increases, causing a painful recession. Alternatively, it may intervene and sell international reserves, reducing the stock available to repay dollar debt.

You know, it's local cooks teaching local people.

(d) Debt burden

Restructuring Debt Restructuring

Europe s Debt Wish

China s Green Debt

Debt and Democracy

Does Debt Matter?

The Debt Delusion

Debt Without Drowning

Other debt renegotiations

Haiti External debt

External public debt

Noting with concern the continuing debt and debt servicing problems of heavily indebted developing countries as constituting an element that adversely affects their development efforts and economic growth, and stressing the importance of alleviating once and for all, where applicable, their onerous debt and debt service burden with the aim of attaining a sustainable level of debt and debt service,

Debt reduction, either through stock of debt reduction or debt service reduction based on a concessional rescheduling, will continue to be considered only in exceptional cases.

Emphasizing the important role that private sector creditors play in debt relief and debt sustainability,

Africa needs debt cancellation, as no growth can take place with a heavy debt burden.

Agreement by the G 8 to debt relief is a major event, but we should not be fooled by the seeming magnanimity of the gesture much of the debt would not have been repaid in any case. More debt relief encompassing more countries and more debt (including bilateral debt) is needed.

In addition to estimating financing gaps and identifying the sources of financing (including different scenarios of debt rescheduling), DSA includes an analysis of debt dynamics to determine the stability of debt to GDP or debt to government revenue ratios.

It assigns responsibility for local matters to a local government.

Many local LWV's include these articles in their local newsletters.

The objective is to tailor debt restructuring to the financial needs of the country concerned and to ensure debt sustainability and an exit from Paris Club debt reschedulings.