The overweight of the active fiscal policy is bound to affect the changes in fiscal revenue and expenditure, and this requires the legal process of budget adjustment.

Since the beginning of this year, under the impact of the epidemic, the downward pressure on the economy has increased, and the growth of local fiscal revenue has been sluggish. How will local fiscal policies be used to stabilize the economy in the next step? The market is closely watching the changes in figures in the adjustment of local budgets.

  The team of Zhao Wei, chief economist of Sinolink Securities, found that 31 provinces have completed their first budget adjustments this year. Most of the local budget adjustments are routine increases in borrowing quotas. However, under the pressure of fiscal revenue support, some areas have increased "Throttling" efforts, more investment in "three guarantees" and so on.

  Zhao Wei told Yicai that as the pressure on the balance of payments accelerates, follow-up similar adjustments to revenue and expenditure structures such as "opening up sources and reducing expenditure" and increasing "three guarantees" should increase, especially those with relatively large fiscal revenue and expenditure pressures and those seriously affected by the epidemic. area.

  "The subsequent adjustment of the total amount of revenue and expenditure is currently more likely to use the remaining debt limit in the past. It may be necessary to pay attention to the next meeting of the Standing Committee of the local people's congress to be held in late September." Zhao Wei said.

  Revenue slips but not much to adjust revenue expectations

  On the one hand, this year's proactive fiscal policy is reflected in the implementation of a large-scale tax rebate, tax reduction and fee reduction policy, which reduces the burden on enterprises and reduces fiscal revenue in the short term.

On the other hand, by increasing borrowing, etc., and increasing fiscal expenditure, in order to hedge the downward pressure on the economy and protect people's livelihood.

  Since local budgets for the current year are generally formulated at the beginning of the year, the specific policies for tax rebates, tax reductions and fee reductions and the scale of local borrowing can only be determined during the National Two Sessions in March.

According to the new budget law, if the local government increases the amount of borrowing, or needs to increase or decrease the total budgetary expenditure, or need to reduce the amount of key expenditures arranged in the budget, budget adjustments are required.

Therefore, after March, all localities will gradually adjust their budgets.

  Zhao Wei found that the first local budget adjustment this year was similar to the past, mostly the adjustment of the total revenue and expenditure after the issuance of the new debt limit.

  For example, Guangdong, the largest financial province, adjusted its budget in late April this year. The main reason is that after the Ministry of Finance issued a new debt limit of 241.7 billion yuan, the local debt limit increased, which increased the total budgetary expenditure and needed to adjust the budget.

  In order to stabilize the economy, local issuance of new bonds has been concentrated in the first half of this year (over 4 trillion yuan) at an unprecedented rate, which has given full play to the expansion of effective investment of bond funds and hedged against the downward pressure on the economy.

  Of course, there are also a few places that need to adjust their budget revenues and expenditures due to the impact of the epidemic.

  For example, Chongqing’s first budget adjustment plan for this year stated that there is a financial gap at the municipal level in Chongqing based on the forecast of revenue reduction and central subsidies.

In response to the reduction in revenue, Chongqing plans to take greater efforts to reduce non-urgent and non-rigid expenditures.

For the expenditure budget arranged by the financial resources of the city level, in addition to rigid expenditures such as ensuring wages, ensuring operation, and ensuring basic people's livelihood, a total of 5 billion yuan has been reduced.

The money is used to supplement the Budget Stabilization Adjustment Fund to balance the revenue reduction gap in the second half of the year.

  In addition, Suzhou City, Shenzhen Yantian District, Longgang District, etc. also adjusted their income and expenditure due to the impact of the epidemic, and increased expenditures such as anti-epidemic in the budget adjustment.

  Since the beginning of this year, due to the impact of the epidemic and the large-scale value-added tax refunds, local fiscal revenue has rarely declined, and the downturn in the property market has led to a sharp decline in local land sales revenue, and the contradiction between local fiscal revenue and expenditure has increased significantly.

However, in the first half of the year, relatively few places such as Chongqing made local budget adjustments due to declining income.

  Zhao Wei said that because the current balance of local fiscal revenue and expenditure can still be supplemented by transfer payments and special debt funds, the extraordinary adjustment of total revenue and expenditure has not yet been seen.

  This year, in order to support local governments in implementing the policies of tax rebates, tax reductions and fee reductions and to protect people's livelihood, the scale of transfer payments from the central government to local governments has increased to nearly 10 trillion yuan, a growth rate that has hit a new high in recent years, which has also eased the pressure on local fiscal revenues and expenditures.

  Wang Zhenyu, dean of the Institute of Local Finance of Liaoning University, once told China Business News that it is not common to reduce expenditure budgets at present. This is because local budgets at the beginning of the year are very cautious, and many expenditures are mandatory livelihood expenditures.

With the easing of the epidemic and more precise anti-epidemic policies, the economic recovery in June and throughout the year has created conditions for local governments to complete their annual revenue budgets.

  A number of local financial sources told Yicai that it is expected that the budget will be adjusted according to the local fiscal revenue and expenditure situation in the second half of the year, so as to achieve a balance of budget revenue and expenditure.

  September budget adjustment attracts attention

  Generally speaking, local governments will adjust their budgets 2 to 4 times a year. Among them, the meeting of the Standing Committee of the local people's congress around September may be an important time window for budget adjustments.

  On July 28, the Political Bureau of the CPC Central Committee held a meeting to deploy the economic work for the second half of the year.

Among them, the statement "supporting local governments to fully utilize the special debt limit" has attracted market attention.

A number of experts interviewed by CBN believe that there are still about 1.5 trillion yuan of existing special bonds. In order to alleviate the shortage of financial funds and stabilize the economy, it is expected that some places will use part of the quota to issue special bonds in the second half of the year. It needs to be reported to the local people's congress for approval by adjusting the budget and approved by the Ministry of Finance.

  Zhao Wei believes that with the accelerated pressure on fiscal revenue and expenditure, the use of the remaining limit in the past or the potential way to "increase the amount" of special bonds, the end of August to September is an important observation window period.

  Recently, many places have been applying for the third batch of special debt projects and special debt projects in 2023. In addition to the nine major fields such as transportation and municipal administration, new infrastructure and new energy projects are also included in the scope of application.

This is to pave the way for the next special bond issuance.

  Previously, the market's expectations for fiscal incremental policies also included increasing the fiscal deficit and issuing special anti-epidemic treasury bonds.

This requires adjustments to the central budget.

  Zhao Wei said that, unlike the local annual budget adjustment, the central budget adjustment is less frequent, only 5 times in history, and the 3 times involving deficit adjustment occurred in late August, which was the issuance of additional national debt.

  Influenced by the impact of the Asian financial crisis, fiscal expenditure has been increased. In 1998, 1999 and 2000, the central government expanded its fiscal deficit by 50 billion yuan, 30 billion yuan and 50 billion yuan respectively.

  However, with the steady recovery of the economy in the second half of the year, the factors of tax rebates and income reduction gradually subsided, and the decline in local fiscal revenue gradually narrowed.

  However, the recent increase in the intensity of extra-budgetary funds has reduced the probability of issuing government bonds or special government bonds.

  In order to stabilize growth and bail out enterprises, the State Council has made it clear that it will increase the credit line of policy banks by 800 billion yuan and set up 300 billion yuan of policy development financial instruments to support the expansion of infrastructure investment.

Support China State Railway Group Co., Ltd. to issue 300 billion yuan of railway construction bonds.

Increase the civil aviation emergency loan amount by 150 billion yuan to support the aviation industry to issue 200 billion yuan of bonds.

In addition, this year, the new national financing guarantee fund re-guarantee cooperation business scale exceeds 1 trillion yuan.

  Author: Chen Yikan