China’s Ministry of Finance will closely collaborate with local governments and other departments to create a synergistic approach to ensure the effective implementation of the hidden debt resolution policies, turning these initiatives into tangible benefits, said Minister of Finance Lan Fuo’an in an article on Thursday.
Lan stressed accelerating bond issuance and utilization to realize the policy and funding benefits promptly.
The ministry has allocated a new debt quota of 6 trillion yuan to local governments and it will guide them in allocating bond funds appropriately, promptly detailing the issuance and usage plans for bond swap, and setting clear “timelines” and “roadmaps,” he said.
Efforts will focus on accelerating the issuance and utilization process to ensure refinancing bonds are “issued and swapped in batches,” enabling the swift release of policy effects, and in addition, comprehensive oversight throughout the entire process will ensure every fund is used lawfully and in compliance, he said.
Lan also emphasized firmly curbing new hidden debts and improving local government debt management.
A robust information-sharing and regulatory coordination mechanism among departments will be established to monitor local government debt comprehensively and a strict “zero-tolerance” policy will be maintained toward new implicit debts, treating this as a “strict discipline.”
The ministry will continue to enhance budget management, urging local governments to develop public investment projects in accordance with laws and regulations. Moreover, local government debt management will be continuously refined, accelerating the establishment of a debt system with Chinese characteristics that aligns with high-quality development.
In addition, Lan stressed promoting the reform and transformation of financing vehicles to prevent unlawful provision of new financing services for local governments.
Building on the progress in swapping existing implicit debt and resolving local debt risks, the reform and transformation of financing vehicles will be accelerated, with a continued reduction in their numbers, and the ongoing efforts to mitigate financing vehicles’ debt risks have already achieved significant milestones, with a marked decline in risk levels.
Going forward, the ministry will strengthen cooperation with financial regulators to support local governments in further advancing the resolution of financing vehicles debt risks, he said.