Positive progress has been made in clearing government arrears owned to enterprises, said finance minister Lan. — China Daily
BEIJING: Local government debt risk in China is controllable, and the country will accelerate the construction of a government debt-management mechanism so that the debt risk will be solved as the country marches toward high-quality development, a senior official says.
Finance Minister Lan Fo’an 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.
The 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, optimise 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-calibre 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.
Meanwhile, China’s policymakers will further reduce financing costs, ensure ample liquidity and enhance protection of capital market investors’ legitimate rights this year to create an accommodative financial environment for the country’s economic recovery, officials and experts said.
Pan Gongsheng, governor of the People’s Bank of China (PBoC), the country’s central bank, said that China still has the scope to further cut the reserve requirement ratio (RRR) – the proportion of money that lenders must hold as reserves – as intensified macroeconomic adjustments are needed to cope with complex and changing international and domestic situations.
Addressing a news conference of the ongoing second session of the 14th National People’s Congress, the nation’s top legislature, on Wednesday, Pan said the average RRR of China’s banking industry is currently 7% after a 50-basis-point cut in February, and has room for further slashing.
The overall financing costs will be further lowered, Pan said, as the PBoC will deem keeping prices stable and promoting a moderate recovery in prices as important considerations of monetary policy adjustments. — China Daily/ANN
