The Debt Monitoring Platform Introduces New Module to Prevent and Resolve Local Debt
The Debt Monitoring Platform has recently added a new module called “Prevention and Resolution Plan for Local Debt,” according to local finance personnel. This module aims to assist local governments in organizing and filling in relevant data related to local finance and economy, including basic data, assets, land reserves, and budget expenditure pressure. It also encompasses plans for debt reduction, arrears settlement, and local debt settlement.
The introduction of this module comes after the issuance of a notice in April 2017 by the Ministry of Finance, the National Development and Reform Commission, the Ministry of Justice, the People’s Bank of China, the former China Banking Regulatory Commission, and the China Securities Regulatory Commission. The notice proposed to improve the statistical monitoring mechanism and establish a big data monitoring platform to monitor government expenditures, bank loans, asset management products, and corporate debt financing instruments. The aim is to strengthen information sharing, data verification, and regular reporting of monitoring results.
The recent resolution of local government debt has drawn attention, leading to the proposal of a debt reduction plan at a meeting of the Political Bureau of the Central Committee on July 24. As a result, relevant departments have expressed their support and introduced substantial measures.
On August 18, the central bank, the State Administration of Financial Supervision, and the China Securities Regulatory Commission held a video conference to address financial support for the real economy and the prevention and resolution of financial risks. They announced plans to coordinate financial support for the resolution of local debt risks, which is expected to include rollover interest rate cuts, emergency liquidity support, and other measures.
Finance Minister Liu Kun also emphasized the need to strictly implement the requirement of “provinces bear overall responsibility and local party committees and governments at all levels bear their own responsibilities.” The central finance will actively support local governments in resolving hidden debt risks and urge the coordination and use of various funds, assets, resources, and policies.
According to reports, local governments have submitted pilot plans for resolving hidden debt risks, which have received preliminary approval from regulatory authorities. Special refinancing bonds may be restarted in the second half of the year to replace hidden debts and mitigate debt risks. The special refinancing bond quota is expected to exceed one trillion and will be allocated to high-risk provinces.
At the local level, Hunan Province was the first to introduce a debt reduction plan after the proposal by the Political Bureau of the Central Committee. Other provinces, including a western province, are also formulating and improving resolution plans.
The Debt Monitoring Platform’s new “Prevention and Resolution Plan for Local Debt” module is a significant step towards addressing local debt risks and ensuring financial stability. With the support from regulatory authorities and the implementation of various measures, it is hoped that local governments will effectively resolve their hidden debt risks and contribute to the overall economic stability and growth of China.
Source: 21 Finance
Author: Yang Zhijin