China’s local authorities will be allowed to pump up sales of special-purpose bonds (SPBs) this year to bolster the government’s firepower in supporting the economy as it struggles to recover from the coronavirus outbreak. They are also being urged to speed up the issuance of the early quotas they have already been allocated, reported Caixin.
The announcement was made after a meeting of the State Council, the cabinet, on Tuesday to roll out more policies to support jobs and growth as the world’s second-largest economy heads for the first contraction in quarterly gross domestic product since 1992. It followed a meeting of the Politburo on Friday that approved an increase in the national quota of SPBs along with a bigger fiscal deficit and the issuance of special treasury bonds for the first time since 2007.
“To cope with the severe impact of the current domestic and foreign epidemics on our economy, we must further increase the adjustment of fiscal and monetary policies,” Premier Li Keqiang said in a statement on the government’s website after the meeting. “The series of policy adjustments we took after Spring Festival were mainly to ensure supply and help enterprises, while the aim of this round of policy adjustments is to focus more on expanding domestic demand, helping to resume production and ensuring employment.”
The State Council didn’t quantify the increase in the overall quota or specify how much more will be allocated early to provincial-level governments. The Ministry of Finance has already given the green light to the sale of RMB 1.29 trillion ($182 billion) of SPBs, the maximum allowed under the law until the National People’s Congress (NPC) approves the quota for the full year. The delay in holding the annual meeting of the legislature is complicating efforts to raise the funds, which analysts now expect could amount to as much as RMB 4 trillion for the whole year, almost double the RMB 2.15 trillion SPB quota in 2019.
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