Audit uncovers the issue of local government debt issuance: large amounts of funds are idle and spent in disorder

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 Audit uncovers the issue of local government debt issuance: large amounts of funds are idle and spent in disorder


Recently, provincial budget execution and other financial revenue and expenditure audit reports have been disclosed in various provinces. Firstly, financial reporters have found that there is a general problem in many provinces: the funds raised by issuing local government bonds are idle in the accounts, can not be spent, and the amount is not small.

For example, the Audit Office of Guangdong Province disclosed that as of March 2019, 13 municipalities and 55 counties in Guangdong Province and Guangzhou had 13.876 billion yuan of new government bond funds deposited in financial departments or budget (project) units, which accounted for 10.25% of the total amount of new government bonds of 135.43billion yuan in 2018.

If most of the funds are idle and can not be spent, it will increase the cost of government operation, aggravate the burden of local finance, and even lead to problems in debt management, which should arouse great concern. Wen Laisheng, Executive Director of China Finance - Pengyuan Institute of Local Finance Investment and Finance, told the First Financial Journalist.

At present, there is no unified national data. From the scattered data disclosed, this idle scale is not small. In 2018, the average interest rate of local government bonds issuance is 3.89%. If local government bonds raise 100 million yuan but remain idle for one year, it will pay 3.89 million yuan in white. If the 100 million yuan is included in the banks current interest income, the loss will exceed 3 million yuan.

Part of the debt-issuing funds are idle and wasted.

Local government bond funds have played an important role in stabilizing the economy, increasing steadily and making up for shortcomings. The audit department found that the idleness of local debt issuance funds is a common problem.

According to the audit reports of some provinces and municipalities, at least in Guangdong, Sichuan, Guangxi, Shandong, Ningxia, Beijing and other places, there has been idle debt issuance funds.

For example, the bond funds of 98 cities and counties in Sichuan Province are 5.401 billion yuan idle for more than a year. In Yunnan Province, 7 prefectures and municipalities and 34 counties, cities and districts, 7.451 billion yuan of special bond funds have been idle for more than half a year.

According to the State Councils audit report on the implementation of the central budget and other fiscal revenues and expenditures in 2018 released by the Audit Office in June, 52 regional government debts in 18 provinces, 17 municipalities and 17 counties were audited, and 29.04 billion yuan of debt funds were found to be idle in 35 regions due to reasons such as lack of links between fund-raising and project progress. Twenty-two regions have received $11.426 billion over a year.

Professor Zheng Chunrong of Shanghai University of Finance and Economics has long been concerned about the issue of local debts. His first financial analysis shows that the fund management of local debt issuance is very strict. On the one hand, the idleness may be due to inadequate project reserves, or the hasty reporting of projects, and the change of planning in project construction, which results in the slow progress and the inability to spend money. On the other hand, it may also be that the project construction objectively meets some problems and the money can not be spent.

For example, Shandong Province last year used general bond funds to arrange its own expenditure budget of 5.371 billion yuan. As a result of changes in project planning and other reasons, 509 million yuan had not been expended by the end of 2018, accounting for 9.48%.

Up to the audit date, 30 of the new bond funds in some districts of Beijing in 2017 had no related capital expenditure due to the slow progress of demolition, resulting in a fund balance of 3.624 billion yuan, accounting for 60.4% of the new bond funds in 2017. By the end of 2018, due to insufficient project reserve and slow progress of the project, the balance of Ningxia was 861 million yuan in municipal and county financial departments and project units at all levels, which did not form actual expenditure.

Some places borrow money blindly to get funds, but the local peoples livelihood development does not have an urgent need to start projects, which is also a major cause of idle debt financing. Temperature component analysis.

According to the Audit Office of Guangdong Province, some areas are not forward-looking and systematic enough to promote development, fail to make good project reserve in advance, lack of solid preparations for pre-project feasibility study and planning layout, resulting in idle fund balance, lagging project construction and difficult implementation of relevant policies and measures.

Local debt issuance quota is determined by the higher government. In order to prevent and control debt risk, local government currently adopts quota management to issue debt. Specific debt issuance quota is determined by the central government and distributed to provinces, cities and counties layer by layer, and then issued to cities and counties layer by layer. Since debt issuance has become the only legal channel for local financing, every year the local government strives for more debt issuance quotas.

In addition to the idle funds for issuing debts, irregular wasteful phenomena also occur from time to time.

For example, the audit department found that 52.056 million yuan of government bond funds were diverted to non-public capital expenditure such as daily work funds in two cities and seven counties of Huizhou, Zhanjiang, Guangdong Province. In Hainan Province, 89.57 million yuan of bond funds were used for recurrent expenditure in three cities and counties, and 442.7 million yuan of bond funds in one county was used without approval. Ninety-eight million yuan of special bond funds in five prefectures, municipalities and 12 counties, cities and districts of Yunnan Province have not been used according to the items and regulations.

The Ministry of Finance has repeatedly stressed that local government debt funds can only be used for public welfare capital expenditure, not for recurrent expenditure. Local government debt revenue, arranged expenditure, repayment of principal and interest, and issuance expenses shall be included in budget management. If it is really necessary to adjust the purpose of expenditure, it shall be handled in accordance with the prescribed procedures.

Bond funds correspond strictly to project schedule

Mao Jie, a professor at the University of Foreign Economic and Trade, told First Financial Journalist that the mismatch between the actual process of the project and the financing of debt issuance is the key reason for the idleness of funds. This is mainly a technical problem. At present, some places, such as Shenzhen, are exploring the issue of debt issuance according to the actual progress of the project, so as to solve the problem of idleness of funds.

The Audit Office of Guangdong Province suggests deepening the reform of bond fund allocation, exploring the transformation of new bond allocation mode from factor method to project system, implementing the strict corresponding execution mechanism between bond fund and project, and improving the performance of bond fund utilization.

Zheng Chunrong believes that the current local debt-issuing mechanism actually forces local governments to reform. First, the project of debt-issuing financing must be fully demonstrated and conformed to the relevant provisions, and the performance evaluation should be carried out. It should be held accountable to ask for bond funds blindly but not to use them.

Last year, the State Council of the Central Committee of the Communist Party of China issued the Opinions on the Comprehensive Implementation of Budget Performance Management, requiring governments at all levels and departments and units to double monitor the achievement of performance objectives and the progress of budget implementation, and to correct problems in time. And the project responsible person is responsible for the budget performance of the project, and the person responsible for the major project is accountable for the performance of life-long accountability system, so as to make sure that the cost must be accountable for effectiveness and inefficiency must be accountable.

Through the implementation ofdouble monitoring, it is not only conducive to timely adjusting the deviation in the budget implementation process, avoiding the occurrence of idle deposits and loss waste of funds, but also conducive to timely correcting the problems existing in the implementation of policies and projects, plugging management loopholes, and ensuring the safe and efficient use of financial funds. The responsible person of the Ministry of Finance explained.

In order to improve the efficiency of local government bond funds, the National Peoples Congress issued 1.39 trillion yuan of new local government bonds in advance this year, and the progress of issuing bonds was greatly advanced. In the first seven months of this year, local governments issued about 2553 billion yuan of new bonds. The issuance progress (the proportion of new bonds in total) was 83.59%, compared with 36% in the same period last year.

In the opinion issued by the Ministry of Finance this year on the issue of local government bonds, local financial departments are required to speed up the allocation of local bond funds, prevent the long-term detention of funds in the treasury, and give full play to the efficiency of bond funds as soon as possible. Where conditions permit, prior to the issuance of local bonds, the government may pay the budgeted bond funds through the transfer of treasury funds to speed up the construction progress of the project, and make up the treasury funds in time after the issuance of bonds.

Source: First Financial Responsibility Editor: Zhang Xianchao_NN9310