Four Provinces And Municipalities Or Autonomous Issuing Bonds 25 Billion 100 Million &Nbsp; Waiting For Approval From The Ministry Of Finance.

Recently, foreign media reported that four places in Shanghai, Zhejiang, Guangdong and Shenzhen may issue their own local government within the year. Government debt 。

In response to the above report, yesterday (September 29th), a person from the Zhejiang Provincial Department of Finance said in an interview with the daily economic news that the province is indeed in the first batch of pilot projects issued by local governments, but it is still waiting for the approval of the Ministry of finance.

Four places are expected to issue 25 billion 100 million yuan.

According to an interview with reporters in Zhejiang finance department, Zhejiang province has allocated the size of the local government bonds in 2011 to the cities and counties according to the requirements of the Ministry of finance. The plan for the use of bond funds will be issued after the approval of the Ministry of Finance and the Standing Committee of the provincial people's Congress.

Earlier media reports said Shanghai and Guangdong had submitted their own debt issuance to the Ministry of finance. Apply It will become the first batch of pilot provinces to issue local bonds in the year. However, at the twenty-second session of the Standing Committee of the eleven National People's Congress held at the end of August, the chairman's recommendation did not include a revised draft of the budget law. According to the insiders, the shelving of the revised budget law may mean the delayed release of local independent bonds.

It is understood that since 2009, the Ministry of finance has begun to issue local government bonds, and the scale of issuance of local government bonds in 2009 and 2010 has been 200 billion yuan. At present, the Ministry of finance issues the issuance of local government bonds by means of merger, merger and trust.

Two years after the Ministry of Finance issued the local debt issue, the Ministry of finance began to consider the issue of "letting local governments issue bonds" at the beginning of this year. When Shanghai applied to the Ministry of Finance for issuing bonds, it also applied for pilot projects of issuing bonds in 2011.

According to the above foreign media, the Ministry of finance made a relevant statement at a recent meeting, and at the same time, the relevant departments of the Treasury's issuance and payment management office also said that the specific issuance scale has not yet been announced, but it should be approved at the beginning of the four year.

It is understood that the Ministry of Finance approved the scale of Shanghai local government bonds in 2011 to 7 billion 100 million yuan, the scale of Guangdong was 6 billion 900 million yuan (excluding Shenzhen), the scale of Shenzhen was 2 billion 200 million yuan, and Zhejiang province was 8 billion 900 million yuan. Since the four places have not yet issued local government debt this year, the total amount of local government debt issued during the year is 25 billion 100 million yuan.

This year, the Ministry of finance has issued six local debts, a total of 141 billion 600 million yuan, that is to say, it will issue 58 billion 400 million yuan local bonds in the year. In addition to Shanghai, Zhejiang, Guangdong and Shenzhen four places, this year has not yet debt issuance areas also include Beijing, Liaoning, Jilin, Inner Mongolia, Henan, Ningxia and other provinces and municipalities. According to convention, other unissued local government bonds will still be issued by the Ministry of finance.

It helps to promote the reform of public financial system.

Local government for the first time Autonomy Issuing bonds has become the preferred province with relatively strong financial strength.

According to the information provided by the Zhejiang Provincial Department of finance, the audit results of the National Audit Office show that by the end of 2010, the debt rate of the Zhejiang provincial government was 43.20%, and the debt rate of the government was 47.66%, lower than the 52.25% and 70.45% of the national level.

However, the issuance of independent bonds will face greater regulatory challenges. Zhejiang's finance department has said it will set up a risk warning mechanism to implement a risk warning for government debt. The specific design is to establish an early warning system, including debt rate, new debt rate, debt repayment rate and so on. At the same time, accurately grasp the stock debt situation, including scale, structure, risk, etc., correctly assess the real debt paying ability of local governments, control the scale and risk warning of issuing bonds.

In the interview with the daily economic news, Ni Hong day, a researcher at the State Council Development Research Center, said that if the local government issued its own bonds, the assets and financial status of the government should be open and spanparent, and the government's balance sheet should be established to regulate the issuance of local government bonds through the supervision of the market and the public.

The report released by standard & Poor's 28 called "improving the public financial system or helping local governments to increase their local government debts" indicates that China's plan to improve public financial system may play a vital role in controlling the accumulation momentum of domestic local government debt. The report attributed the surge in China's local debt to local governments' potential to make ends meet, opaque business arrangements outside the table and weak financial management.

Chen Jinrong, a credit analyst at standard & Poor's, said China's financial management system is not perfect and lacks spanparency and accountability. Under such circumstances, local governments' financial discipline tends to be relatively loose. This phenomenon is even more prominent when the central government energetically stimulates the economy and local governments take risks in participating in profitable business activities.

In fact, even if the local government is issuing bonds, it may well be a spanitional form between the central agency issue and the fully independent issue. The Ministry of finance should apply to the State Council for approval to apply for the pilot project of issuing bonds by local governments, as well as the agency's issuance. It should also be examined and approved by the Standing Committee of the local people's Congress. The scale of the issuance of bonds and even the range of interest rates are also stipulated by the central government.

The industry believes that through such an attempt, local governments can familiarise themselves with the issuing procedures, and when the future conditions are ripe, they will go to local governments to issue bonds independently.