Abstract: It has become a consensus of both the business world and academic circle that local government debt should be included into fiscal budget so as to be better managed and standardized through the legality and seriousness of budget management. The budget management of local government debt consists of three models, i.e., public budget, annexed budget and dual budget. The debt management of the dual budget model is the most ideal and ultimate model for the inclusion of debt into budget management. Local government debt should be gradually included into budget management, following a phase-in model of three modes and three steps, so as to ultimately establish a complete dual budget system covering public finance budget, governmental funds budget, state-owned capital operation budget, social insurance fund budget and government debt budget.

Key words: local government debt; budget management; dual budget system