China SCIO | April 7, 2020
Economic Herald:
A State Council executive meeting recently decided to increase the issuance of local government special bonds ahead of schedule. Is this a measure adopted to tackle the impact of the COVID-19 outbreak? How will risks be prevented while promoting the issuance of special bonds?
Xu Hongcai:
Assigning some of the local government special bond quota ahead of schedule is a measure to cope with the economic downturn as well as the COVID-19 outbreak. While giving better play to the role of special bonds, we should also prevent risks, which is an important part of our work. To play our role and prevent risks, we mainly take four aspects into consideration:
First, quick results are expected. Local governments are required to issue special bonds according to the quota decided by the Central Government. Local authorities should strive to issue the bonds by the end of the second quarter and allocate them to projects for substantive use with quick results. This is the most urgent work to do in order to deal with the economic impact of the outbreak.
Second, good projects are required. We have made some adjustments and expanded some areas on the basis of the seven fields that I mentioned before. Local governments are required to select projects in accordance with the fields designated by the Central Government. Key projects, must-do projects and projects that can play a major role in stimulating economic growth should be chosen. In particular, local governments and relevant departments are required to work closely, and local authorities must undertake their responsibilities. Financial departments, development and reform departments and others should all play their roles and cooperate with each other. After the local governments select projects, they should report to the National Development and Reform Commission and the MOF for examination and verification.
Third, the projects should be qualified and in compliance with regulations and laws. After local governments choose projects and central authorities check and verify them, all projects are required to be qualified and in compliance with the requirements of special bond management. That is to say, they should be public welfare projects with certain benefits. And the projects should have a scheme for financing and income balance, so as to ensure that they are truly effective while preventing risks.
Fourth, supervision should be conducted throughout the whole process of special bond issuance. In accordance with the requirements of special bond penetration supervision, we will track and manage the whole process of special bond issuance. If there are any problems, we will urge timely rectification and implementation. Thank you.