MNI BRIEF: China Unveils CNY6 Trl Limit For Hidden Debt
MNI (BEIJING ) - China will increase the local government debt limit by a total CNY6 trillion to replace existing hidden debt over three years in a bid to relax debt burdens and expand room to boost consumption and investment, Minister of Finance Lan Fuan told reporters on Friday.
The CNY6 trillion debt limit will be allocated over three years, with CNY2 trillion yuan per year from 2024 to 2026. An additional CNY800 billion from new local government special bonds will be allocated each year for five years since 2024 to supplement government funds for debt restructuring, resulting in a total of CNY10 trillion in debt resolution resources, Lan noted, stressing the total amount of hidden debt that local governments need to address by 2028 will significantly decrease from CNY14.3 trillion to CNY2.3 trillion.(see:MNI: China Domestic Stimulus Needed To Counter Trump-Advisors)
The nationwide balance of hidden debt was CNY14.3 trillion as of the end of 2023, Lan said, noting the move of additional debt limit was considering new challenges had emerged in the economy due to external environment changes and insufficient domestic demand.