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Explore debt repayment mechanisms to prevent debt risks

Special Office for Government Debt Research and Evaluation of the Ministry of Finance and China Finance and Economics Co-sponsored a Workshop on Local Government Debt Repayment Mechanism

Author: Liuguo Wang Source: China Financial and Economic News Network Date: 2019-11-21

China Finance News Network reporter Liu Guowang reported that on November 16, a seminar on the local government's special debt repayment mechanism co-organized by the Ministry of Finance's Government Debt Research and Evaluation Office and the China Finance News Agency was held in Beijing. From the Ministry of Finance, the National Development and Reform Commission, the Ministry of Agriculture and Rural Affairs, the Ministry of Water Resources, the Ministry of Natural Resources, the Banking Regulatory Commission and other central ministries and commissions, as well as the Central Government Bonds Registration and Clearing Co., Ltd., Shanghai Stock Exchange and local financial departments, financial institutions, intermediary agencies Relevant leaders, experts and scholars from scientific research institutes total more than 100 people, and conducted comprehensive and in-depth discussions on improving the local government's special bond repayment mechanism.

According to reports, since the implementation of the new budget law in 2015, the scale of local government special bond issuance has increased rapidly. This year, 2.15 trillion yuan has been arranged, which is 21 times more than 4 years ago. With the front door opening wider, how to improve the special bond repayment mechanism and effectively prevent risks has become a key and urgent practical issue in special bond management.

According to the current system, special bonds must be repaid through government fund income and special income corresponding to the project. In terms of total volume, the revenue of local government funds in 2018 was 7.1 trillion yuan, while the balance of special debt for the same period was 7.4 trillion yuan, exceeding the income scale; from the perspective of structure, the revenue of local government funds that can be used as a source of repayment of special bonds Among them, land transfer income accounts for about 91%. Under the current policy background of deleveraging and real estate regulation, the problems of single bond repayment sources and insufficient scale of special bonds have become prominent, and the pressure on debt repayment has gradually increased. Especially since this year, the central government has allowed special bonds to be used as eligible capital for major projects, and the scope has also been expanded from the initial 4 areas to 10. While these measures further enhance the positive role of special bonds, it also means that the pressure and risk of debt repayment are further increased.

The important indicator for preventing and controlling the risk of special bonds is the debt ratio, the numerator is the balance of the special bond debt, and the denominator is the budget of the local government fund. In the case of a large increase in the numerator, the risk level can remain relatively stable only if the denominator is expanded accordingly. ease. Therefore, how to expand the sources of debt repayment and improve the debt repayment mechanism of the special bonds has become the objective requirement for ensuring that the bottom line of local government debt risk prevention and control put forward by the central government is unshakable, which is also the theme of this seminar.

The meeting emphasized that matching borrowing and debt-paying capacity is a rule and rule that the market economy must follow. It is an important manifestation of the spirit of the contract. It is also clearly stipulated at the legal level. The budget law revised in 2014 clearly stipulates that "the government must have a repayment plan and a stable source of repayment funds." As the leader of social credit and the maintainer of economic order, the government must vigorously practice the spirit of contract and safeguard legal authority and government. Credit, we must never engage in tricks like "Ponzi scheme".

The Party Central Committee and the State Council attach great importance to the risk prevention and control of local government debts and put forward strict requirements. The Ministry of Finance also regards "two adherences" and "one awe" as principles of economic design, market laws, and the rule of law as the principles of system design. , Speed up the construction and continuous improvement of the local government's special bond management mechanism to ensure that the government debt within the statutory limit does not appear to have any risk. Among them, there are clear provisions on debt repayment obligations, sources of debt repayment funds, and repayment methods, and strive to achieve the system. Scientific design and sustainability of debt management.

During the seminar, the participants raised the current situation and problems of repayment of special bonds of local governments in China, and thought about improving the repayment mechanism of special bonds of local governments in China from different perspectives from macro to micro, policy to practice, theory to practice. And suggestions.

Participants believed that it is necessary to expand new space and fields for the sustainable development of special bonds at a macro level. Under the premise of matching the scale of borrowing and solvency, the issuance and use of special bonds are better combined with the country's regional balanced development and urbanization strategies with important characteristics of urban agglomerations and metropolitan areas; On the premise of meeting the conditions for special bond issuance and risk control, the use direction is more inclined to important areas and major projects involving national economy and people's livelihood, such as rural development, water conservancy and transportation. This will help optimize the regional structure of special bonds and lay a better foundation for expanding the sources of bond repayment funds.

To improve the special bond repayment mechanism, participants from the completion of the special bond project income mechanism, user payment mechanism, the establishment of debt service reserves, reasonable and effective collection of various types of special income, the use of government subsidy funds, special bond project income after the realization of Many valuable opinions and suggestions have been put forward in terms of redemption and reducing the cost of using special bonds.

In terms of special bond management, the participants put forward many specific suggestions, including improving the efficiency of resource allocation, compacting the debtor's responsibility, and enhancing the positive incentives of financial institutions and intermediaries.

It is understood that this seminar is the third phase of the ChinaBond Zhihui High-end Salon jointly created by the Government Debt Research and Evaluation Special Office of the Ministry of Finance and China Finance and Economics. In the future, we will continue to discuss the development of special bonds for local governments and put forward more and better policy recommendations.

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