The southern Chinese province of Guangdong, one of the country’s richest, has announced itself as the first to eradicate hidden local government debt. The announcement comes around the half-way point in a campaign to straighten out trillions of yuan of off the books liabilities, reports Caixin.
A pilot program announced in October to achieve “zero hidden (government) debt” has been realized, Wang Weizhong, Guangdong’s acting governor, announced on Thursday when he delivered an annual government work report to the province’s legislature. Wang did not specify the scale of the liabilities brought back onto the books.
Hidden debt, also known as implicit debt, refers to off-the-books borrowing by local governments, commonly through local government financing vehicles (LGFVs), companies set up to raise money for infrastructure and other public projects. Local authorities also hide their borrowings in public-private partnership projects and via shady loan contracts. The nationwide scale of the liabilities is unknown but some estimates put the number at around RMB 50 trillion ($7.7 trillion).