Yunnan Province will be issuing 100 billion yuan in special bonds in order to alleviate local debt risks. The province has a relatively heavy debt burden and weak financial resources at the grassroots level. The issuance of these special refinancing bond funds will help mitigate the debt risks.
On October 16, the Yunnan Provincial Government will issue 53.3 billion yuan of special refinancing bonds, followed by another issuance of 54.3 billion yuan on the 19th. The total amount of 107.6 billion yuan will be used to repay existing government debt and ease local debt risks. Yunnan is the province with the largest bond issuance among the 16 provinces that have publicly disclosed the issuance of special bonds. These bonds are considered important in resolving local government debt risks by replacing hidden debts and reducing interest rates.
Yunnan has received strong support from this round of centralized debt plan due to its high debt risks and weak fiscal strength. The province’s fiscal revenue has been significantly impacted in recent years, with the debt burden becoming relatively heavy. However, despite these challenges, Yunnan’s economy has grown steadily, reaching a total economic volume of 3 trillion yuan. The impact of the COVID-19 pandemic, tax cuts, fee reductions, and a sluggish property market have slowed down local economic growth and affected fiscal revenue.
Yunnan’s fiscal revenue has experienced slow growth in recent years, with the growth rate falling to single digits. In 2022, fiscal revenue dropped by 14.4% year-on-year to approximately 194.9 billion yuan. However, with the support of the central government, Yunnan will receive around 444.9 billion yuan in superior subsidy revenue in 2022, enhancing its financial security capabilities.
Yunnan’s debt balance has been increasing in recent years, reaching approximately 1.21 trillion yuan at the end of 2022. While debt risks are generally controllable, the debt burden is relatively heavy. The provincial government’s adjusted government debt ratio is 257.63%, and the adjusted liability ratio is 62.46%, both at relatively high levels.
The issuance of these special bonds will help alleviate local debt risks and provide financial relief for Yunnan Province. The funds will be used to repay existing government debt, extend maturity, and reduce interest rates. This will ultimately mitigate debt risks and contribute to the sustainable economic and social development of the province.