China’s central government has asked local authorities to issue all special-purpose bonds in this year’s annual quota by the end of September and complete the use of the funding from the bond issuance by the end of October, reported the 21st Century Business Herald, citing people from local fiscal authority and local government bond underwriters.
That came after the Politburo, the top decision-making body of China’s Communist Party, in a key policy meeting last month urged local governments to accelerate issuance and use of local government special-purpose bonds as part of efforts to boost investment and bolster economic growth.
As of the end of July, issuance of special-purpose bonds this year had amounted to 2.36 trillion yuan, according to China’s official data, leaving 1.34 trillion yuan of the type of bonds to be issued in the rest of the year.
If the remaining quota is issued by the end of September, an average of about 670 billion yuan of the bonds will be issued in August and September, respectively.
Special-purpose bonds are designated for investment in infrastructure and public welfare projects which are commercially viable. They must be repaid with income generated from the projects, compared with general-purpose bonds, which are paid back with local governments’ fiscal revenue.