Local implicit debt soon to be given unified definition
Any debt beyond the legal government debt limit which is illegal or disguised in any form will be counted as implicit debt, sources say
The Chinese government is expected to issue a uniform definition of implicit government debt, so as to make it easier for the calculation and cleanup of hidden debt risk of local governments, Yicai.com reported.
An informed source told Yicai.com that the scope of implicit debt will soon be clearly stated in a high-level document. Any debt beyond the legal government debt limit which is illegal or disguised in any form will be counted as implicit debt, the source added.
Last year, the central government explicitly proposed to curb implicit debt increases, including local government financing platform companies, Public-Private Partnership models, government funds and government services purchases.
All of those possible ways for local governments to raise debts illegally have been gradually rectified.
According to the Ministry of Finance, as of the end of 2017, China’s local government debt was 16.47 trillion yuan (US$2.59 trillion). And its debt ratio (debt balance/integrated financial resources) was 76.5%, which was lower than the internationally accepted alert standard of 100%.