The Ministry of Finance released multiple heavy signals related to local government debt risks: further breaking the government’s bottom-line expectations and adhering to the principle of no central government assistance

Recently, the Ministry of Finance released a number of signals related to the prevention of local government debt risks, which aroused great concern in the market. For example, the reporter of “Daily Economic News” noticed that when Liu Kun, the Minister of Finance, was interviewed by the media, he particularly emphasized the topic of regulating and managing local government financing platform companies, “We will further break the government’s bottom-line expectations.” At the same time, a recent reply to a proposal disclosed on the official website of the Ministry of Finance also clearly addresses the risks of local government debt, and must adhere to the principle of no assistance from the central government, so that “whoever owns the child will take care of it”. Establish a market-oriented and law-based debt default disposal mechanism, steadily resolve the stock of hidden debt, and realize the reasonable sharing of risks between debtors and creditors in accordance with the law. | Related reading (Daily Economic News)

Bao Buping

Over the past few years, local debt has become an important topic of discussion in the economic circles. In the past few years, the scale of local debt in various places has been reported by many media. In the past two years, the real estate market has declined, and the land finance of local governments has been difficult to support. Then, coupled with the consumption of finances by normalized nucleic acid testing, the debt problem of local governments has been exacerbated.

But at this time, the Ministry of Finance came to say “the central government will not provide assistance”, which probably made the local governments who hoped that the central government would take care of them feel a little bit cold. Firstly, if the central government has always had the bottom line, then the accumulation of local government debt may be unscrupulous in the future. Second, the landlords have no surplus food. Everyone knows the economic situation in the past few years, and the central government may not have spare money to help the local government. “Wipe ass”.

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