BEIJING, Jan 26 (Reuters) - China will allow local
government financing vehicles (LGFVs) in the southwestern
province of Guizhou to delay debt payments and undergo debt
restructuring, the cabinet said on Wednesday, part of a broader
plan to spur growth in one of China's poorest regions.
China's local governments are struggling financially as tax
and fee cuts by the central government and a downturn in the
property market weigh on fiscal revenues. Governments in
less-developed regions like Guizhou have been particularly
Analysts at S&P said in November that they expect fiscal
balances for China's local and regional governments to widen
this year, owing to increasing economic headwinds and more
countercyclical fiscal support.
"For qualified outstanding hidden debt oligations, China
will allow local financing platforms to negotiate with financial
institutions to appropriately extend repayment and undergo debt
restructuring to maintain cashflow," the State Council said in a
document on its website.
In addition, the central government will increase the quota
for local government debt issuance allocated to Guizhou.
Local government hidden debts, mainly LGFV debts including
loans and bonds, reached 45.0 trillion yuan ($7.12 trillion) at
the end of 2020 - equivalent to 44% of GDP and more than four
times its end-2010 level, Nomura estimated last year.
China will also support state-owned companies in Guizhou to
conduct strategic restructuring, as well as pushing for reforms
in local energy and mining sectors, the State Council said.
The new document on Wednesday also outlined favorable
policies to help Guizhou transition into a digital economy and
develop its tourism industry.
($1 = 6.3182 Chinese yuan)
(Reporting by Stella Qiu, Samuel Shen and Andrew Galbraith;
editing by Jason Neely and Louise Heavens)