The local government debt balance has exceeded 41 trillion yuan, with nearly one
In the first two months of this year, the pace of new local government bond issuance by local governments was slower than that of the same period last year.
The Ministry of Finance recently announced the issuance and debt balance of local government bonds in February 2024. In the first two months of this year, a total of 944.4 billion yuan of local government bonds were issued nationwide, a year-on-year decrease of about 23%.
Local government bonds are divided into new bonds and refinancing bonds according to their use. New bonds are newly issued bonds, and the funds are mainly used for the construction of major projects such as infrastructure and livelihood projects. Refinancing bonds, on the other hand, are mainly used to repay the principal of maturing debts and belong to the "borrowing new to repay old" category.
Data from the Ministry of Finance shows that in the first two months of this year, 575.9 billion yuan of new local government bonds were issued nationwide, a year-on-year decrease of about 46% (among which, the issuance of new special bonds decreased by about 51%). In the first two months, 368.5 billion yuan of refinancing bonds were issued nationwide, a year-on-year increase of about 143%.
It is not difficult to find that the progress of local debt issuance in the first two months was lower than that of the same period last year, mainly because the issuance of new bonds, especially new special bonds, was significantly slower than that of the same period last year. According to this year's budget report, the limit for new local government bonds this year has reached 4.62 trillion yuan, slightly higher than last year.
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Several local debt experts analyzed for the First Financial that the slow pace of bond issuance at the beginning of this year compared to the same period last year is mainly due to the additional issuance of 1 trillion yuan of national debt funds at the end of last year. The main focus of the relevant departments was on the review of these projects, and the review of the corresponding advance batch of new bond projects was slower than the same period last year. In addition, the 1 trillion yuan of national debt funds will be mainly used by localities this year, which can stimulate infrastructure investment in the first quarter, and the urgency of bond issuance in the first two months of this year is not as strong. It is expected that the pace of subsequent bond issuance will gradually accelerate to play the role of bond funds in stabilizing investment, promoting consumption, and stabilizing the economy as soon as possible.
According to the data from the Ministry of Finance, in the first two months of this year, investment related to infrastructure in the national general public budget maintained rapid growth. For example, urban and rural community expenditures increased by 19.6% year-on-year, and agricultural, forestry, and water expenditures increased by 24.9% year-on-year. Data from the National Bureau of Statistics show that in the first two months of this year, infrastructure investment (excluding the electricity, heat, gas, and water production and supply industry) increased by 6.3%, with a growth rate 0.4 percentage points higher than the full year of 2023.
It is worth noting that the rapid growth in the issuance of refinancing bonds in the first two months of this year is related to the high maturity scale of local debt in 2024 (about 3 trillion yuan), as refinancing bonds are mainly used to borrow new to repay old. Data from the Ministry of Finance shows that in the first two months of this year, the principal repayment of local government bonds upon maturity was 272.5 billion yuan, of which 208.1 billion yuan was repaid through the issuance of refinancing bonds.
On the other hand, the special refinancing bonds for resolving existing hidden debts and repaying overdue corporate accounts were restarted. In February, Guizhou issued 32.4 billion yuan of special bonds for the first time, and Tianjin issued about 20.2 billion yuan of special refinancing bonds in March.
With the large-scale issuance of local government bonds in recent years, the interest on bonds has exceeded 1 trillion yuan in the past two years, and the pressure to pay interest has increased compared to before.According to data from the Ministry of Finance, from January to February of this year, local governments paid 178.2 billion yuan in interest on bonds, a year-on-year increase of about 24%. Currently, the overall risk of local government debt is safe and controllable.
The Ministry of Finance's data shows that, as of the end of February 2024, the national local government debt balance was 14.4092 trillion yuan. This is within the limit of this year's local debt quota (approximately 46.7874 trillion yuan).
Looking at the bond issuance situation of various provinces, the data from the Ministry of Finance indicates that in the first two months of this year, Shandong and Guangdong had the largest bond issuance scales, both exceeding 100 billion yuan, while Henan, Zhejiang, Sichuan, Hebei, Fujian, and Jiangsu had bond issuance scales exceeding 50 billion yuan. Jilin, Heilongjiang, Tibet, Gansu, Qinghai, Xinjiang, and Shanghai had not issued bonds in the first two months.