MNI BRIEF: China To Tackle Local Gov Debt - MOF
MNI (SYDNEY) - China’s debt resolution plan aimed at reducing the burden on local governments will be the largest in recent history, increasing the debt ceiling for a one-time replacement of existing hidden liabilities, Finance Minister Lan Foan told reporters Saturday.
Greater detail will be revealed after “necessary legal procedures,” Lan noted. Authorities did not reveal the plan’s timeline, or size. (See MNI INTERVIEW: Yuan Rally To Depend On Stimulus, Fed- Guan Tao)
The Ministry allocated over CNY2.2 trillion in 2023 and CNY1.2 trillion in 2024 in local-government bond quotas to help municipalities, especially those in high-risk areas, resolve outstanding debt risks and clear overdue payments to businesses, Lan said. Chinese local governments have issued about CNY12.2 trillion of bonds to replace their off-balance sheet debt from 2015-2018, according to data from the Ministry.
The Ministry will also move to replenish the capital of the six largest state-owned banks via special treasury issuance, said Liao Min, vice finance minister.