Abstract: It is stated by the Third Plenary Session of the 18th Congress of CPC that finance is the foundation and important pillar of national governance. The risks of local finance mainly come from the implicit debt of local governments, whose governance is related to the improvement of national governance capacity and the success or failure of the fight against the major risks. By clarifying the boundary, types and specific forms of the implicit debt of local governments, and setting the debt risk coefficients, contingent debt conversion rates, and indicators of government burden ratio, this paper makes a classified estimation of the scale of the implicit debt of local governments, which is between 9-15 trillion yuan in 2017; the risk of local government debt including implicit debt is generally within the security boundary, but the regional distribution of debt risks is significantly different, and in some provinces the warning line has been broken through. In the recent three years, the implicit debt of local governments is showing a tendency of expansion, which is mainly centered around the debts of rescue responsibilities. Therefore, the governance of implicit debt of local governments should follow the classified governance path, including the following specific measures, such as insisting on the idea of“integrality, coordination and systematicness,”adhering to the basic principle of giving priority to stability, classified implementation of policies, and combination of both incentives and accountability, pushing forward the national pension scheme, formulating rational risk-sharing mechanisms, optimizing the governance structure of debt entities, improving the overall planning ability of financial funds, implementing the administrative accountability and so on.

Key words: implicit debt of local governments; debt boundary; debt risks; debt governance