Legislator Admits Some Governments’ Unofficial Debt Exceeds Limit on Official Borrowing
Some local governments have borrowed more money off-the-books than the total legal amount the Ministry of Finance allows them to borrow through official channels, a senior lawmaker has said.
The Standing Committee of the National People’s Congress (NPC), China’s top legislature, surveyed of local governments’ “hidden debt” to confirm the exact extent of such borrowing, said Zhu Mingchun, a vice chairman of the committee’s Budgetary Affairs Commission.
Local governments’ off-the-books borrowing, or hidden debt, refers to liabilities they take via local government financing vehicles, public-private partnerships and government procurement contracts, and that they promise to pay back with fiscal revenues. Since the new budget law took effect in 2015, taking on such debt violates the rule that local governments can only raise money by issuing bonds.
Hidden debt is considered to be riskier than officially reported borrowing due to the lack of clarity.
“The size of some local governments’ hidden debt is rather big and the rate of increase is quite fast. The value of the hidden debt of some local governments has exceeded the legal quota of their official debt,” Zhu said at a press conference on Sunday. “The risks of some regions are quite outstanding.”
The results of the survey haven’t been finalized as some of the data still need to be verified, he said.
Curbing excessive borrowing by local governments, as well as by financial institutions, businesses and individuals, has been a key issue in China’s deleveraging campaign, which started in 2015.
To control hidden debt, the banking and insurance regulator has been working with the Ministry of Finance to establish a data system to monitor local government debt, including their off-the-book borrowing. Initial figures obtained by the authorities while preparing for the system showed the hidden debt of most provinces was 1.5 to 2 times larger than their reported budgets, people close to the regulators told Caixin previously.
As of December, outstanding official local government debt totaled 18.39 trillion yuan ($2.73 trillion), within a quota of 20.1 trillion yuan by the end of last year approved the NPC.
Last week, the Ministry of Finance proposed allowing local governments to issue 3.08 trillion yuan worth of bonds in 2019.
Contact reporter Liu Jiefei (email@example.com)
Mar 21 17:12
Mar 21 17:16
Mar 21 16:52
Mar 21 15:49
Mar 20 19:25
Mar 20 18:20
Mar 20 17:07
Mar 20 16:06
Mar 20 16:43
Mar 20 14:49
Mar 20 14:36
Mar 20 12:35
Mar 20 01:57
Mar 19 20:56
- 1China Passes Landmark Foreign Investment Law
- 2Update: Tax Cuts Mean Governments Need to Tighten Their Belts: Premier Li
- 3China Became Net Importer of Rare Earths in 2018
- 4Uxin Shares Plunge as Revenue Surge Fails to Yield Profit
- 5Popular WeChat Account Valued at 2 Billion Yuan Snapped Up By Education Firm
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas