Part of the anti-epidemic special treasury bond projects are difficult to make returns, can the grassroots finances really get the bottom line?

  The anti-epidemic special treasury bond projects actively pursued by the local government have been launched one after another, which will help ease the financial pressure on the grassroots level, promote local epidemic prevention and control and the healthy economic and social development.

However, there is a phenomenon worthy of vigilance. In some places, special treasury bond projects mainly focus on basic people's livelihood, with little or no return from the project, and the repayment of the principal has not yet been implemented. In the end, local finances still need to be funded.

  The slowdown in economic growth is superimposed on the complex external situation. In recent years, local fiscal revenues have grown weakly, and the pressure on rigid expenditures such as debt and people’s livelihood has increased. The contradiction between grassroots fiscal revenues and expenditures has continued to increase, and the space for maneuvering has become smaller and smaller. This has also made grassroots governments After 2025, there is a slight worry about repaying the principal of the special national debt totaling 700 billion yuan.

  A number of fiscal and taxation experts told China Business News that the city and county governments should consolidate their responsibilities for repaying the principal of special treasury bonds, and rationally arrange infrastructure construction projects in accordance with the repayment plan. Some projects that have no revenue should be adjusted as soon as possible to "stop loss" and coordinate Improve project investment deadlines and repayment plans, strengthen project performance management, and use special treasury bond funds "on the blade" to reduce future debt repayment risks.

Project financing and income are difficult to balance

  This year's 1 trillion yuan anti-epidemic special treasury bond funds are all transferred to local governments, of which 700 billion yuan needs to be repaid by local governments. At present, this fund is being allocated to infrastructure construction or specific anti-epidemic-related projects.

The 700 billion yuan anti-epidemic special national debt is all 10 years, and the interest of the debt repayment is borne by the central government, but the principal will be repaid by the local government within 5 years from 2025. This means that the city and county grassroots will be repaid from 2025 to 2029. The government needs to repay the principal of 140 billion yuan in special treasury bonds every year.

  700 billion yuan of special treasury bonds have been invested in two major types of projects. One is infrastructure construction projects, including 12 key areas such as the construction of a public health system, the construction of a major epidemic prevention and control system, and the transformation of old urban communities.

Infrastructure projects must have a certain amount of asset income protection, which also provides support for local repayment of principal in the future.

  The other category is related to anti-epidemic expenditures, including rent reduction and exemption subsidies, loan interest discounts for key enterprises, subsidies for assisting enterprises to stabilize jobs, and basic living allowances for people in need.

This category is a one-time expenditure to deal with the epidemic, and there is no benefit.

  A county-level finance bureau analysis report obtained by a reporter from China Business News stated that, according to regulations, the anti-epidemic special national debt emphasizes the balance between project financing and income, and the local government assumes certain responsibility for repaying the capital, but the local finance mainly uses the funds for basic people’s livelihood. (Including local public health system and other infrastructure construction and anti-epidemic related expenditure investment, high-standard farmland construction), subsequent project units may not be able to implement the capital repayment expenditure, and ultimately it will still be "local finances".

  For example, the county has 9 anti-epidemic special national debt projects, 5 of which are public health and major epidemic prevention and control system construction projects, mainly related hospital construction projects, whose income depends on the corresponding medical service income; 1 high-standard farmland construction project, The income comes from the completion of the auction of new cultivated land occupation and supplement balance indicators; the other is the expenditure related to the epidemic.

  A grass-roots financial official in the western region told China Business News that a local anti-epidemic special treasury bond project is a grain storage project, and it is estimated that it will be difficult to make a profit. Currently, this project has not yet repaid the plan, and it may eventually have to rely on land sales to repay the debt.

  Wang Zecai, a researcher at the Chinese Academy of Fiscal Sciences, analyzed to a reporter from China Business News that since the government emphasized that special treasury bonds are used for public health and other infrastructure construction and anti-epidemic projects with asset income protection, generally speaking, the interest and principal can be repaid. Certainly guaranteed.

However, in practice, due to inaccurate identification of the main projects using special treasury bonds, extensive preliminary feasibility studies, unquantified and refined performance targets, and lack of project supervision measures in some places, the output effects of project operations fell short of expectations. Or according to government accounting standards, the tangible assets that cannot be formed into debt reciprocity will inevitably face the pressure of "repayment of principal and interest". According to the unified principle of "borrowing, using, and repaying", the bill will eventually be paid for by the local finance.

  "In the end, it is normal that some special treasury bond projects cannot find their own balance, because some of the funds invested in the projects have public service attributes, and there is a reasonable need for local finances to pay the bills." Hu Hengsong, assistant general manager of Caida Securities, told China Business News reporter .

  In recent years, the growth rate of local fiscal revenue has been declining, and the pressure on expenditure has not decreased. Some market participants are worried about the future solvency of the underdeveloped central and western grassroots governments.

  According to data from the Ministry of Finance, the growth rate of general public budget revenue of local governments across the country has dropped from 12.9% in 2013 to 3.2% in 2019. Due to the impact of this year’s epidemic, large-scale tax cuts and fee reductions have been added to local governments in the first eight months of 2020. Revenue fell 5.1% year-on-year, which is relatively rare.

  Wang Zecai believes that the sudden outbreak of the epidemic and the lack of a unified overall plan for the construction of infrastructure projects such as public health in the local area has led to the lack of scientific demonstration of whether some projects can be done, when, and how large they will be done. The hasty launch of some local projects is related to the public. The output benefit of the allocation of health resources (funds).

Because some places have not paid much attention to the performance management of related projects and lacked the awareness of using performance management to hedge public risks, it cannot be ruled out that some public health infrastructure and anti-epidemic project expenditures have rigid needs ahead or behind, which will produce negative effects.

Some basic-level counties (cities) still have the traditional debt repayment consciousness of over-reliance on "superior government assistance."

Consolidate responsibilities and formulate debt repayment plans

  The funds used for the anti-epidemic special treasury bonds are used by the municipal and county governments, and most localities have relatively weak financial resources. Some localities have the illusion that the central government will pay for this debt.

In this regard, some fiscal and taxation experts believe that in order to prevent and control debt risks, it is first necessary to consolidate the debt repayment responsibilities of the grassroots government, achieve "lifetime accountability and reverse inspection responsibility" for debt, and strictly perform the main responsibility of local government debt repayment.

Some provinces have issued documents expressly requiring that the capital of the anti-epidemic special treasury bonds allocated to cities and counties shall be repaid by the city and county finance.

The anti-epidemic special treasury debt repayment funds are transferred to the provincial finance through the government fund budget, and the central government is transferred from the provincial finance.

For areas that cannot repay the principal on time, the provincial finance department will withhold the corresponding funds when handling the province, city and county year-end accounting.

  In terms of the source of debt repayment funds, in addition to project investment income, local government funds (mainly land sales revenue), state-owned capital operating budgets, etc., are allowed to be used for repayment of capital, and can even be transferred from the general public budget when necessary. .

  Wang Zecai believes that it is necessary to strengthen the performance supervision of special treasury bond projects, actively prevent the increase of explicit debt, readjust the planned use of funds when necessary, and take timely "stop loss" measures for original projects to reduce the pressure on local finances to repay in the future.

  He suggested setting up a special treasury bond project library, strengthening the early stage identification and feasibility study of the project; compiling project performance targets, quantifying the economic benefits, social benefits, environmental benefits, sustainable development capabilities and satisfaction indicators of the project; implementing performance targets Dynamic monitoring to ensure that funds are used exclusively for the purpose of correcting policy objectives in a timely manner to truly achieve the market-oriented optimal allocation of labor, land, capital, technology, and digital factors.

  In addition, Wang Zecai suggested that the performance evaluation of special treasury bonds should be carried out in an all-round way, and the evaluation results should be disclosed in accordance with the law. At the same time, the evaluation results should be linked to the performance evaluation and unit evaluation. In addition, the implementation of a life-long responsibility accountability mechanism for the performance of major projects should be carried out without compromise. Lifelong accountability mechanism and accountability reverse inspection system", and constantly improve the incentive compatibility mechanism, so that the local government can make the "iron abacus" right, calculate the "conscience account", and do not spend "ambiguity money."

  Some experts believe that the investment of special treasury bonds into infrastructure projects in the livelihood of the people with lower returns should be accounted for, that is, investment in public health and other weak areas can drive other investment and consumption, promote local economic growth, and increase fiscal revenue.

Author: Chen Yi-Journal