Following the six departments last month jointly issued a document to regulate the behavior of local government debt financing, the Ministry of Finance on the 2nd again issued a document, pointing directly to the problem of local disguised debt under the pretext of government purchase services.
Official data show that as of the end of 2016, China's central and local government debt balance of 27.33 trillion yuan, the debt ratio of 36.7%, the overall debt risk can be controlled. However, there are different degrees of illegal debt guarantee problems in some places, and the debt-servicing capacity of individual regions has weakened. The Ministry of Finance pointed directly at the fake government purchase services disguised as debt problems, what will be the impact on the local government, financial institutions, social capital?
Negative list of government purchased services
In the "Ministry of Finance on resolutely stopping the local government to buy services in the name of illegal financing notice", the Ministry of Finance clearly pointed out that the content of the government to buy services should focus on budgetary arrangements for the basic public **** service projects, and set out the negative list:
-Goods such as raw materials, fuels, equipment and products, as well as construction works such as new construction, alteration and expansion of buildings and structures and their related renovation, dismantling and repair shall not be used as government-purchased service projects.
--It is strictly prohibited to take the construction works of railroads, highways, airports, communications, water, electricity and gas, as well as the infrastructure construction in the fields of education, science and technology, medical care and health care, culture and sports, the pre-development of reserve land, and the construction works of farmland and water conservancy, etc., as the projects of the government purchasing services.
--It is strictly prohibited to package construction works and services as government-purchased service projects.
--It is strictly prohibited to include the financing provided by financial institutions, financial leasing companies and other non-financial institutions in the scope of government-purchased services.
Central University of Finance and Economics, China's public **** Institute of Finance and Policy, Qiao Baoyun told reporters that the notice in the title of the expression "resolutely stop". In fact, some local government financing tricks, can not be prevented, inhibit and prevent the use and abuse of government purchasing services has been very urgent. "A negative list of government-purchased services at this time is very timely and necessary."
The relevant person in charge of the Ministry of Finance also frankly said that some places in the name of government purchased services disguised as debt financing, there are illegal and unlawful expansion of the scope of government purchased services, beyond the management authority to extend the period of purchased services and other issues, "exacerbated the financial and fiscal risks."
Case
It is understood that in January this year, the Ministry of Finance to the Inner Mongolia Autonomous Region Government sent a letter, pointing out that the autonomous region of the Department of Transportation and the District High-level Highway Construction and Development Limited Liability Company signed the "entrusted to build the purchase of services agreement", agreed to the construction period and the construction of the first 17 years after the construction period. After the construction period of the first to 17 or 18 years, through the purchase of service funds to pay for the construction of the project funds to support the company as the main body of the loan to the Agricultural Development Bank loan 10.55 billion yuan, the use of funds and project implementation are the main body of the alliance cities and counties of the Bureau of Transportation.
In Jiangsu Province, it has been verified that the Changzhou Jintan District Government (Party A) signed a purchase of services "entrusted to build contract" with Jintan City City Urban Construction and Development Corporation (Party B) in 2015, the latter on behalf of the construction of the New City East Court construction project. Subsequently, these two parties and Jintan Construction Industry Group Company Limited (Party C) entered into a tripartite "Claims Confirmation Agreement", which made it clear that Party B had assigned all the underlying claims to Party C at no cost.In March 2016, Party C financed 500 million yuan from Founder East Asia Trust Company Limited with the accounts receivable of the New City East Court Construction Project as a source of repayment and requested for the issuance of a financial commitment letter. At the end of that month, Jintan District Finance Bureau issued a relevant commitment letter, which explicitly included the project financing amount in the scope of debt management of the whole district. This is a typical government purchase of services under the guise of debt behavior.
Open the front door to block the back door multi-pronged risk prevention
In fact, from the debt limit management, budget management, risk assessment and early warning, to the risk of emergency response to events, the debt default classification and disposal, and to improve the supervision system, etc., in recent years, the government has been committed to creating local debt risk management "The whole chain". "Block the back door" stripping the financing platform company government financing functions, resolutely stop the local government debt financing in disguise at the same time, our country is also in due course "open the front door", to build a standardized local government debt financing mechanism.
Just on June 1, the Ministry of Finance and the Ministry of Land and Resources jointly issued a "local government land reserve special bond management approach (for trial implementation)", clearly will allow provincial governments to issue land reserve special bonds to legal and standardized way to protect the land reserve project reasonable financing needs. This is the first time in China to local government fund revenue project classification issued special bonds, is regarded as China's version of the "municipal special bonds", marking an important step in the management of local government special bonds.
Analysts believe that the Ministry of Finance issued a sternly worded opinion on the government's purchase of services, which is a continuation of a series of blocking policies, highlighting the problem-oriented, showing the determination and tenacity to promote the implementation of established policies.
Zhao Quanhou, director of the Financial Research Center of the China Academy of Fiscal Sciences, said a major core content of the notice is reflected in the budget management, insisting on the budget first, after the purchase of services. "This means that the government's purchase of services is limited only to the financial expenditure side, and cannot break through the established scale of government budget revenue, and cannot seek to increase financing revenue as a result."
The opinion also strictly prohibits the use or fictitious government purchase of services contract illegal financing. Financial institutions involved in the review of financing of government-purchased services must comply with the relevant requirements of the government budget management system. Local governments and their departments may not use or fictional government purchase service contracts for construction projects disguised as debt, not through the government purchase service to financial institutions and other financing, not in any way fictional or beyond the authority to sign accounts payable (receivable) contracts to help financing platform companies and other enterprises financing.
Preliminary realization of illegal financing of local governments to prevent full coverage
Newly issued opinions also require that all localities effectively do a good job of publicizing information on government-purchased services, so that government-purchased service projects and their budgetary arrangements for the real compliance, open and transparent information to ensure that it can be queried and traced to ensure that the main body of the undertaking, financial institutions, the legitimate rights and interests. The legal rights and interests.
The relevant person in charge of the Ministry of Finance said that with the introduction of a series of documents, China has initially realized the current local government and its departments of the main illegal financing methods to prevent the full coverage of the policy.