The rhythm of local bond issuance will accelerate the use of capital efficiency is expected to improve

2022-06-02 0 By

In the first quarter, nearly 90% of the new special bonds issued through “advance approval” were issued, reflecting the proactive fiscal policy’s vigorous efforts to ensure steady growth.Looking ahead to the second quarter, experts believe that the pace of local bond issuance will continue to accelerate, and more infrastructure projects will start construction in time with the support of special bond funds, which is expected to play a key role in economic stabilization and recovery in the second quarter.On the last day of March, local bond issuance was not idle.According to statistics, a total of 54.6 billion yuan of local government bonds were issued on that day, including 51.6 billion yuan of new special bonds, accounting for about 12% of the total issuance in March, capping a “busy” first quarter of local government bond issuance with high single-day issuance.Compared with the same period last year, local bond issuance in the first quarter of this year significantly increased.A total of 1,824.6 billion yuan of local government bonds were issued in the first quarter of this year, more than double the amount issued in the same period last year, according to Wind.Of this amount, 1.298.1 trillion yuan of new special bonds were issued, accounting for 89% of this year’s pre-approved quota and 36% of the annual quota.Among them, Guangdong, Shandong and Zhejiang have the highest circulation.Guangdong announced on March 30 that it has fully issued 175.9 billion yuan of special bonds for 2022, and the funds raised have been allocated to cities and counties as soon as possible.From the perspective of investment, according to the statistics of Xia Lei, co-director of Sealand Securities Research Institute, nearly 70% of the new special bonds issued this year are invested in infrastructure, and the park infrastructure and transportation infrastructure are the main direction of development.According to guangdong, 38.6% of the special bonds issued in the first quarter were invested in municipal and industrial park infrastructure, 28.2% in transportation infrastructure and 15.4% in social undertakings such as science, education, culture and health.Looking ahead to the second quarter, experts believe that local bonds will still be issued on a large scale and the pace of issuance may be further accelerated.A large number of special bonds will play an important role in stabilizing and recovering the economy.The executive meeting of The State Council held a few days ago stressed that the government should pay close attention to issuing the surplus special debt quota.The quota issued in advance last year will be issued by the end of May, and this year’s quota will be issued by the end of September.A number of local governments recently announced plans to issue local bonds in the second quarter, including 228 billion yuan in new special bonds.With only 161.9 billion yuan remaining, Wen Laicheng, executive director of the Institute of Local Finance investment and Financing under the Central University of Finance and Economics, said this may mean that some local governments have already received new special debt quotas after the two sessions.”According to the requirements of the executive meeting of The State Council, local bond issuance will also accelerate in the second quarter.”Zhang Jun, chief economist of Morgan Stanley Securities, said that the recent external geopolitical risks and the domestic epidemic have had a negative impact on economic growth, requiring stronger macro policy measures.Against the backdrop of the current task of stabilizing growth, it is expected that the new issuance of special bonds in the second quarter will be at least the same as the first quarter, bringing the issuance volume in the first half of the year to about 2.5 trillion yuan.Yuan Haixia, vice president of Zhongxin International Research Institute, believes that the subsequent issuance of special bonds may be further accelerated to promote the formation of effective physical investment.It is expected that the quota will be issued in advance or completed in April, and the new quota will be issued in the third quarter of the year, which will promote stable growth as soon as possible.In the view of experts, the construction of relevant projects under the promotion of special debt will play a key role in stabilizing the economic recovery and stabilizing employment in the second quarter.In addition to accelerating the pace of issuance, the investment of special bonds may also be expanded.According to an executive meeting of The State Council held recently, the scope of special bonds will be expanded to support public services with certain benefits, while focusing on transportation, energy, environmental protection and government-subsidized housing projects.”The water conservancy sector, as one of the major weaknesses of people’s livelihood, will be supported by special bonds.At the same time, under the guidance of policies related to the 14th Five-Year Plan, such as old-age services and agricultural and rural modernization, the special debt will continue to steadily support areas that benefit a wide range of people’s livelihood, be more invested in rural development under the rural revitalization strategy, and accelerate new urbanization such as urban renewal.”Yuan haixia said that the proportion of special debt in the new infrastructure category may also be significantly increased.It is expected that new key infrastructure projects based on information digitization will be accelerated in the following regions, especially in the central and western regions.Zhang predicted that more new special bonds will be invested in new infrastructure-related projects such as new energy, 5G and big data, as well as low-income housing projects.It is worth mentioning that in improving the efficiency of the use of special debt, various localities have also begun to introduce measures.For example, Shanxi has recently established an early warning mechanism for the progress of special debt expenditure and an adjustment mechanism for overdue recovery of idle funds to speed up the progress of special debt expenditure and reduce idle funds.Yuan Haixia believes that in the follow-up, more local governments may issue similar supporting policies and establish a normal management mechanism, and the problems of special debt funds not being used according to the purpose, unused or misappropriated, and the construction schedule falling behind may be gradually improved, and the use efficiency of government funds is expected to be further improved.