(ATF) China’s Ministry of Finance has called for efforts to expedite the issuance of local government bonds and accelerate use of the funds raised from those bonds.
The proceeds of special local government bond sales – debt linked to specific projects that have already been given officials clearance to begin – should primarily targeted at major sectors and large-scale projects, according to a statement issued by the ministry after a national meeting of financial officials.
The funds should also be used to catalyse investment from the private sector, to improve people's well-being and to boost consumption and domestic demand, it said.
Great importance should be attached to preventing debt risks, Finance Minister Liu Kun said at the meeting, urging efforts to enhance regulation in order to hold accountable those responsible for illegal and irregular practices in bond issuance. He also ordered risk control to forestall systemic risks.
China plans to issue 3.75 trillion yuan ($529 billion) of special local government bonds this year, 1.6tn yuan more than last year.
Officials at the meeting agreed to increase government investment to counter the downward pressure on economic growth, expand tax- and fee-reduction policies to help enterprises tide over hard times and balance budgets to mitigate against the adverse impact of the epidemic on fiscal revenue growth, the statement said.
China has vowed to pursue a more proactive and impactful fiscal policy, setting its fiscal deficit above 3.6% of GDP, 0.8 percentage points higher than in 2019.