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Local govt debt risk controllable, Minister of Finance says

By Liu Zhihua | | Updated: 2024-03-07 10:23
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A cashier counts RMB notes in a bank in Haian, Jiangsu province. [Photo/Sipa]

Local government debt risk in China is controllable, and the country will accelerate the construction of a government debt management mechanism in line with high-quality development so that the debt risk will be solved as the country marches toward high-quality development, a senior official said on Wednesday. 

Lan Fo'an, minister of finance, told a news conference on the sidelines of the ongoing two sessions that thanks to joint efforts from relevant parties and the implementation of a package of solutions for defusing local government debt risk, the payment of principal and interest on the local government statutory debt is well secured, and the scale of local government implicit debt has gradually decreased.

Two sessions are the annual meetings of the nation's top legislative and political advisory bodies.

Besides, positive progress has been made in clearing government arrears owned to enterprises, and the number of local government financing platforms has also dropped, he said.

In the next step, Lan said China will strengthen the management of local government statutory debt, optimize the debt structure of the central and local governments, and scientifically and rationally determine the scale of local government debt.

It will make overall arrangements for government bonds supporting public welfare projects, improve the full-life-cycle management mechanism for special-purpose government bonds, and increase the returns on fund use.

It will also further promote the implementation of a package of solutions defusing the debt risk, urge local governments to strictly shoulder primary responsibilities for solving the debt issue, and make good use of existing assets and resources, among other measures, to gradually defuse the debt risk and seek for new development paths while solving the debt issue.

Lan also said the country will strengthen supervision and hold accountable debt-borrowing in violation of laws and regulations, while establish a long-term mechanism for preventing and defusing hidden local government debt risk.

It will establish and then improve a full-caliber local government debt monitoring and supervision system, resolutely curb new hidden debt, address existing hidden debt in an orderly manner, and promote the reform and transformation of local government financing platforms by categories and continuously reduce their number, Lan added.

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