Proactive fiscal policy forces local governments to obtain "transfusion" of more than 2.7 trillion yuan in financial funds

Bao Xingan

The State Council executive meeting held on March 3 decided to increase support for local finance. The meeting determined that the proportion of local fiscal retention should be increased in stages. From March 1 to the end of June, based on the approved retention rates of the provinces that were approved for the year, they were unifiedly increased by 5 percentage points, and about 110 billion yuan of new retention funds were all reserved for county-level use. According to incomplete statistics from the Securities Daily reporter, as of March 4, the Ministry of Finance has issued various transfer payment budgets for 2020 in advance, involving a total financial fund of more than 2.7 trillion yuan.

"The local fiscal retention ratio refers to the revenue shared by the central and local governments. The central finance transfers its revenue to the local finance in a certain proportion to increase local fiscal revenue and the ability to dispatch funds." Deputy Director of the China Budget Performance Committee Zhang Yiqun told a reporter of the Securities Daily that the current shutdown and production of some enterprises has led to a substantial reduction in fiscal revenue, while fiscal expenditure has shown a rigid increase, leading to tight fiscal revenues and expenditures in some counties. And increasing the local fiscal retention ratio this time is equivalent to adding 110 billion yuan to the county-level finances, which will ease the pressure on county-level fiscal expenditures.

The executive meeting of the State Council also decided to accelerate the transfer of funds for transfer payments, and guide local governments to give priority to epidemic prevention and control and “three guarantees” payments in full and on time. Areas with gaps shall all reduce other project expenditures. Further reduce general expenditures and, in addition to the need for epidemic prevention and control, strictly control the new policy of increasing expenditures.

"The purpose and effect of accelerating the transfer of transfer funds and the periodic increase of the local fiscal retention ratio are basically the same. They have the same purpose and are intended to supplement the local fiscal funding gap." Zhang Yiqun said.

Recently, the Ministry of Finance has allocated 70 billion yuan in balanced transfer payment budget funds. So far, a total of 163.2 billion yuan of balanced transfer payment funds have been allocated to 26 provinces (municipalities, autonomous regions), of which Henan and Sichuan have received more than 100 billion yuan, and Hubei Province has received 79.545 billion yuan.

The Ministry of Finance requires that the provincial financial departments should promptly decompose and issue transfer payment budgets to ensure that funds are timely and fully available; grass-roots financial departments should reasonably arrange the use of transfer payment funds issued by superiors, and ensure the "three guarantees" and expenditure guarantee in key areas. At the same time, it is important to ensure the expenditure for the prevention and control of the new crown pneumonia epidemic, manage and make good use of funds, and improve the efficiency of fund use.

In addition, the Ministry of Finance recently issued other transfer payment funds in advance. Among them, the county-level basic financial guarantee mechanism awards 284.8 billion yuan, the resource-exhausted city transfers 14.9 billion yuan, and the refined oil tax reform transfers 69.3 billion yuan. Yuan, urban and rural compulsory education subsidy budget is 148.7 billion yuan, basic pension transfer payment is 135.4 billion yuan, urban and rural residents' medical insurance transfer payment is 332.7 billion yuan, key ecological function area transfer payment is 66.2 billion yuan, and old and young, poor and poor areas transfer payment is 114 billion yuan. The budget of the food-producing counties is 30.2 billion yuan.

Zhang Yiqun said that the difference between the above two policies is that the core of increasing the local fiscal retention ratio is at the county level, and the transfer payment is targeted at the entire local administrative area. The central government's early release of transfer payment funds indicates that fiscal policy is more active.

On March 3, Fu Jinling, director of the Department of Social Security of the Ministry of Finance, said that in the next step, the Ministry of Finance will coordinate the work of epidemic prevention and control and economic and social development, and make the proactive fiscal policy more active in accordance with the requirements of the central government. Adjust the structure of fiscal expenditures and increase the intensity of local transfer payments. In particular, we must increase support for places with severe epidemics like Hubei Province to ensure that epidemic prevention and control and people's livelihood expenditures in these places are guaranteed.