People familiar with the matter revealed that China will allow the provincial government to raise 1 trillion yuan (RMB, the same below, about 187.6 billion yuan) funds through sales of bonds to repay the local government financing platform (LGFV) and other assetsDebt of the issuer outside the liabilities.
According to Bloomberg News Agency on Friday (August 11), people familiar with the matter are quoted that except Beijing, Shanghai, Guangdong, and Tibet, all provincial governments will be able to use bonds to re -financing to repay foreign debt, so -called so -called so -called so -called so -called so -called so -called so -called so -called so -called so -called so -called so -called so -called so -called so -called so -called so -calledHidden debt.
People familiar with the matter revealed that the Ministry of Finance of the Chinese Ministry of Finance has notified the "re -financing bond" plan to the relevant departments.Each province and cities will set a financing quota, but people familiar with the matter will not provide further details.
People familiar with the matter said that the relevant departments also planned 12 provinces and municipalities as "high -risk" areas, including Guizhou, Hunan, Jilin, Anhui, and Tianjin.Essence
It is reported that this plan is actually transferring debt burden from LGFV to provincial governments, which will help resolve the risk of debt breach facing various local governments, and reduce the financing cost of hidden debt.Give local governments more debt repayment time and improve financing conditions.
People familiar with the matter said that the plan will be carried out in batches.It is unclear how the provinces and cities will allocate quotas among the financing platforms of different local governments within its jurisdiction.Some local governments' financing platforms are under the jurisdiction of provincial government, while others are managed by municipal or county governments.
People familiar with the matter did not explain the reasons for Beijing, Shanghai, Guangdong, and Tibet.
Many administrative units in China use the "local government financing platform" company to borrow money, and pay the infrastructure and other service costs that cannot be paid from the official budget.Most of the LGFV exist in the form of urban investment companies, controlled by local governments, but does not belong to government departments. The debt will not appear in the official financial statements. Therefore, such debts are considered "hidden debt".
The International Monetary Fund (IMF) estimates that as of the end of 2022, the total hidden debt of the Chinese local government financing platform was 6.6 trillion yuan, an increase of 40 trillion yuan in 2019.In order to support the local economy, the local government has increased non -public borrowing and expenditure during the crown disease.
It is reported that the target amount set by this plan is only nine cattle and one hairy compared with the IMF estimated 6.6 trillion yuan.Its scale is far less than the scale arranged by the Chinese government in 2015.
The Chinese government launched an initiative in 2015 to arrange an additional 12.2 trillion yuan of large -scale bond swap quotas in 2015 to reduce the hidden debt of the local government.
But unlike 2015, this plan will be used to use the bond conversion quota that has not been used in the previous few years.Based on the calculations of the Ministry of Finance's data, as of the end of 2022, the total amount of bond quotas unused in local governments across the country was 2.59 trillion yuan.
