2023 is the fifth year of resolving local implicit debts, and the deadline for the resolution of implicit debts is more than half. At the same time, it also pushed the special refinancing bond to the forefront.
According to the data, as of mid-November, 28 provinces and cities have disclosed special refinancing bonds125 trillion, including issued and planned issuance. Special refinancing bonds are not new financing, but borrowing new to repay old ones, and will not expand the scale of local financing;That is to say, the biggest role of this kind of bond is to alleviate the maturity of the local debt, but it cannot provide capital increment for the local government, and this part of the money cannot be put into the market, but can only be used to repay the due debt.
On July 24, 2023, the Politburo meeting proposed to "formulate and implement a package of debt swaps", planning to start the fourth round of debt swaps from the second half of the year. Now, 2023 is coming to an end, and according to the information disclosure of special refinancing bonds announced in many places, the effect of special refinancing bonds has appeared, at least promoting stability.
According to the statistics of Nafu Finance, in October this year, the scale of special refinancing bonds issued and to be issued in 25 places has reached 10,430900 million. Among them, the top three in terms of total issuance are Guizhou Province, which issued 882 on October 13380.4 billion yuan, Tianjin issued 7380.4 billion yuan, Hunan Province issued 643255.4 billion yuan;And the Department of Finance of the Inner Mongolia Autonomous Region issued 663200 million yuan, all the funds are used to repay the arrears of enterprises (no longer through high-cost urban investment bond projects to raise funds), becoming the first province in the country to successfully issue special bonds this year.
In fact, in recent years, the idea of "opening the front door and blocking the back door" has been adopted to manage local debts, and the "front door" has been opened, but the "back door" has not been completely blocked. Some localities have excessively borrowed money to seek "political achievements", exceeded the upper limit of financial resources, and continued to borrow in disguised form or even in violation of laws and regulations through financing platforms, PPPs, establishment of investment, and purchase of services, forming local hidden debts.
At the end of 2018, the regulator completed the statistics of hidden debts. In 2019, the State Council Letter No. 40 stated that "the goal is to resolve implicit debts to zero within 10 years". However, it has been 5 years since 2018, and it has taken 1 2 time to resolve the hidden debt with less than 1 3, and the pressure of the remaining 5 years is really not small.
According to the data, in the first half of 2023, the local ** income will be -17% year-on-year, while the interest payment amount of special bonds will be +27% year-on-year, both of which will decrease and increase, making the proportion of interest payment in the ** income of the local government increase to 16%, and the interest payment pressure will rise.
*According to the data of the financial audit report, there were 47 regions that illegally misappropriated local special bond funds in 2022, compared with 10 in 2021. There was an increase in the misrepresentation of projects and the progress of the use of false funds. It can be seen from this that although it has been repeatedly reaffirmed, the luck psychology of "going to the bottom" still exists, and the selective turning a blind eye to "substantive violations" further expands debt risks and financial risks.
In this context, since the beginning of this year, local governments have put forward "new demands" for chemical debts. Nafu Finance and Economics found that in the work reports and budget implementation reports of various provinces, many places have a more prominent problem of frank debt. For example, Henan proposed that "some places have greater debt pressure and prominent contradictions between revenue and expenditure". On October 24, the size of special refinancing bonds in Henan Province was 255988.1 billion yuan, lower than Hebei, Sichuan and other provinces and cities. Obviously, this amount is a drop in the bucket for Henan's huge hidden debt.
However, it is foreseeable that the scale of Henan's special refinancing bonds will be greatly increased in 2024, but under the requirement of "the province is responsible for the overall responsibility, and the local party committees at all levels and ** are responsible for their own responsibilities", Henan provincial level should supervise, evaluate and assess the counties and districts before carrying out debt swaps and debt restructuring, and then re-promote another round of localities** The purpose of debt audit is to re-identify and classify local debts: one is for the provision of pure public goods, and the other is for other reasons. In order to prevent being "transferred flowers and trees" and "stolen beams and columns" again.
A survey by Nafu Finance found that in a county in southern Henan, in the five years from 2017 to 2021, a considerable part of the funds for public welfare and quasi-public welfare infrastructure investment relied on local debt from the market. During the introduction and implementation of Document No. 23, it also failed to block the back door of local ** illegal borrowing, and now the huge infrastructure investment funding gap has already surfaced. In addition, the non-marketable projects are invested according to the budgeted infrastructure funds at the historical level, and the funding gap is even larger.
Although since 2017, the Ministry of Finance and the provinces have been held accountable for many times on issues such as illegal debt guarantees and disguised debt borrowing, the accountability has not involved the county until the problems are cumulatively superimposed, so further measures need to be taken at the provincial level to classify and dispose of rectification.