The race to spend funds

A recently published report has raised public concerns about possible high levels of local government expenditures at the end of the year.

As of late October, overall expenditures had reached 11.4 trillion yuan ($1.86 trillion), accounting for more than 74 percent of this year's budget, according to the report, released by the Ministry of Finance on Nov 14.

That means that about a quarter of the budget, almost 4 trillion yuan, could be spent in the last two months of the year.

A number of media outlets and several financial experts have also expressed concerns.

On Wednesday, an editorial in the Beijing News said local government departments could barely restrain their appetite for investment in the face of nearly 4 trillion yuan of unspent funds. That's because under the current rules, departments are highly unlikely to receive an increase in funding if they have money remaining at the end of the calendar year. Rules such as this encourage local authorities to spend all the funds at their disposal by the end of the year, the paper claimed.

Recently, an online post revealed that earlier this month, the Shenzhen Maritime Rescue Center spent more than 100,000 yuan on a three-day conference at a five-star hotel. Officials from the center spent an average of 931.50 yuan during each day of the conference, leading to allegations that the event had been arranged simply to ensure the center could use its entire annual budget and capture the same amount in funding next year, according to reports in the Southern Metropolis Daily.

In the past, government expenditures have always been high during the last few months of the year. For example, public expenditures in December were 2.5 trillion yuan, about double the average level of the preceding months.

Under the current rules, budgets must be reviewed by the National People's Congress, the country's top legislative body, during its annual session in March.

Deng Shulian, a professor of public administration at Shanghai University of Finance and Economics, said the lengthy approvals process often means many local governments don't receive their budgeted funds until the third quarter of the year, which results in higher expenditures in November and December than during the early months of the year.

Government departments should publish detailed information about expenditures so the public can supervise spending, in accordance with a requirement in the recently revised Budget Law, Deng said.

The amendment to the Budget Law, which was adopted by the NPC in August, requires all government departments to publish their budgets and final account reports within 20 days of them being adopted by the local legislature. The amended law also guarantees public access to information related to local government debts, purchases, budgets and audits.