Dec 29, 2018 (China Knowledge) - China will be increasing local governments’ quota for special purpose bonds significantly next year to guarantee sufficient funding for key infrastructure projects and prevent debt risk, according to Finance Minister Liu Kun.
The Minister also reiterated that mitigating fiscal and financial risks based on tightening regulations on illegal debt financing activities in the country remain as a priority task for the government next year.
Special purpose bonds help governments raise capital to fund their infrastructure projects and are the legal financing channel for local governments. The fiscal capital raised from these bonds will be channeled towards areas such as transportation, water conservation, energy, environmental protection and agricultural development.
At the same time, governments will also continue to promote the public-private partnership model and encourage greater participation and private capital in projects.
Quota for these bonds may be released as early as January next year, the first-time government bond quota will be announced before the annual budget announcement in March.
Local governments will be mainly obtaining capital from the issuance of special purpose bonds next year to ensure major infrastructure construction investments. A large number of these bonds are expected to be issued in the first quarter next year to strengthen economic growth and stabilize market sentiment.
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