Two special debts were raised in three days, and the prime minister asked the local authorities to seize the opportunity to make up for their shortcomings.
Within three days, Premier Li Keqiang of the State Council twice mentioned the issue of local special debts at the meeting.
On November 14, Li Keqiang, member of the standing Committee of the political Bureau of the CPC Central Committee and premier of the State Council, presided over a forum on the economic situation and ensuring the basic livelihood of some provinces in Nanchang, Jiangxi Province.
At the meeting, Li Keqiang said: all localities should make good use of state policies and actively solve development problems. Seizing the opportunity of issuing the special debt line of local governments in advance and reducing the minimum capital ratio of some infrastructure projects, speeding up the construction of short board projects, forming more physical workload, and promoting effective investment and industrial upgrading, We will strengthen the planning and preparation of major projects and promote the commencement of construction as soon as possible.
Prior to this, on November 12, Li Keqiang also talked about the issue of local special debts when presiding over a discussion between experts and entrepreneurs on the economic situation. Li Keqiang pointed out: it is necessary to optimize the use of special debts by local governments, encourage social funds to invest more in areas such as making up for shortcomings and benefiting the people's livelihood, expand effective investment, and enhance the endogenous driving force for development.
Local governments play a key role in responding to the current downward pressure on the economy and promoting the expansion of effective investment. As an important source of funds, the importance of local special debt is self-evident. According to the relevant requirements of the Budget Law, local governments can only issue local government bonds to borrow debt in accordance with the law, while local government general bonds can be used for the construction of public welfare projects with no income. Local government special bonds are used in the construction of public welfare projects with certain income.
In December 2018, the standing Committee of the National people's Congress authorized the State Council for the first time to issue a new debt limit for local governments in advance next year. In previous years, the issuance of local special debts had to wait until after the "two sessions" of the whole country in March of that year, and their use was often concentrated in the second half of the year. To this end, the standing Committee of the National people's Congress authorizes the State Council to issue the new limit for the next year in advance in the year after 2019, within 60% of the new local government debt limit in that year, with an authorization period from January 1, 2019 to December 31, 2022.
According to the requirements of the Ministry of Finance, special local government bonds within the limit this year should be issued by the end of September and allocated to the projects by the end of October. From January to September, 4.1822 trillion yuan of local government bonds were issued nationwide. Of this total, 1.6676 trillion yuan was issued in general bonds and 2.5146 trillion yuan in special bonds.
In June this year, the General Office of the CPC Central Committee and the General Office of the State Council issued the Circular on doing a good job in the issuance of Local Government Special Bonds and supporting Project financing, allowing special bonds to be used as capital for major projects that meet the requirements.
Subsequently, on September 4, in order to speed up the issuance and use of local government special bonds, the executive meeting of the State Council decided to issue ahead of schedule the new quota for special bonds for next year, so as to ensure that it can be used early next year, and expand the scope of use. It is mainly used in railway, rail transit, urban parking lot and other transportation infrastructure, urban and rural power grid, natural gas pipeline network, gas storage facilities and other energy projects, agriculture, forestry and water conservancy, urban sewage waste treatment and other ecological and environmental protection projects. Vocational education and child care, medical, pension and other livelihood services, cold chain logistics facilities, water, electricity, heating and other municipal and industrial park infrastructure.
At the executive meeting of the State Council on the same day, it was also stressed that it is necessary to strengthen project management and prevent the emergence of "half-pull" projects. In accordance with the requirements of "funds follow the project", the amount of special debt is tilted to projects with complete formalities and adequate preparation for preliminary work, giving priority to areas that are well issued and used and areas that have construction conditions this winter and next spring. All localities and relevant departments should strengthen project reserves, projects must have benefits, and projects that are relatively obvious in economic and social benefits, expected by the masses, and will be done sooner or later should be selected, and at the same time, a rush should be prevented to ensure the effectiveness of project construction.
Xu Hongcai, vice minister of finance, said in September that the current external environment is becoming more complex and grim, and the downward pressure on the domestic economy has increased. To this end, the State Council requires all localities and departments to, in accordance with the arrangements of the CPC Central Committee and the State Council, enhance their sense of urgency, take the initiative, focus on making up for weaknesses, benefit people's livelihood, and increase their stamina, and further expand effective investment.
Xu Hongcai also stressed that the special bond quota issued in advance this year should not be used in land reserves and real estate-related areas, nor in the replacement of debt and industrial projects that can be fully commercialized. The scope of use of this special bond has been expanded, mainly because the Ministry of Finance has expanded its investment in the field of people's livelihood in the light of local projects and the actual situation.
The executive meeting of the State Council held on November 13 decided that it was necessary to improve the capital system for investment projects in fixed assets and reduce the minimum capital ratio for some infrastructure projects. Reduce the minimum share of capital for port, coastal and inland shipping projects from 25 per cent to 20 per cent. For infrastructure projects in the areas of highway, railway, urban construction, logistics, ecological and environmental protection, social and people's livelihood, on the premise of a clear mechanism of return on investment, reliable returns and controllable risks, the minimum proportion of capital can be appropriately reduced. The rate of reduction shall not exceed 5 percentage points. (reporter Han Shengjiang)