In order to improve the efficiency of the use of special bond funds for local governments, the State Council has delegated the review authority for special bond projects in 10 provinces and Xiongan New Area, allowing provincial governments in these regions to screen and review and approve special bond projects, that is, "self-authorization and spontaneous". In order to implement this new policy, various places have given corresponding operating rules.
On March 28, the General Office of the Hunan Provincial People's Government issued the "Implementation Plan for Promoting the "Self-Audit and Spontaneous" Pilot of Local Government Special Bond Projects" (hereinafter referred to as the "Plan") was published. The "Plan" clarified the "Self-Audit and Spontaneous" review mechanism for local special bonds, strengthened the post-investment management of projects, and strengthened the main responsibilities of municipal and county governments and other bond issuances to prevent government debt risks and improve the efficiency of bond funds use.
Wen Laicheng, a professor at the Central University of Finance and Economics, told the First Financial Daily that some pilot provinces for special bonds are currently formulating specific local implementation plans, and Hunan is currently the first province to disclose the plan to the outside world. The "Plan" not only implements the relevant provisions of the State Council on the management of special bonds, but also can establish a "self-examination and spontaneous" mechanism suitable for the local government in combination with the local actual situation in Hunan.
The special bond projects reported by local governments need to be jointly reviewed and approved by the Ministry of Finance and the National Development and Reform Commission before the corresponding bonds can be issued. At the end of last year, the General Office of the State Council issued a document allowing provinces such as Hunan, Guangdong, Sichuan, and Zhejiang to carry out a pilot program of "self-auditation and spontaneous" for special bonds, that is, the power to review special bond projects is delegated to provincial governments.
The Plan stated that Hunan will promote the pilot program of "self-audit and spontaneous" for special bond projects, establish a working mechanism of "development and reform leading management projects, finance leading management of funds, department leading management of industries, bond quota set upper limit, and project demand fixed issuance", implement "two up and two down processes, three-party joint review, and four-store rolling management", and build a full life cycle management mechanism covering "borrowing management and repayment".
For example, this time, Hunan divided the special bond project database into four sub-stores: reserve database, approval database, issuance database, and expiration database. Local special bond application projects enter the reserve database (i.e. "One-up"), and after being jointly reviewed and approved by the provincial development and reform, provincial finance, and project management departments and reviewed and approved by the provincial government, they enter the approval database. After the Provincial Department of Finance allocates the special bond limits to each city and county (i.e. "Second") according to the state, local governments will determine in the approval database that the relevant special bond projects shall be declared and entered into the issuance database (i.e. "Second"). It must be determined by the joint final review of the provincial development and reform and finance. The special bond projects issued will be included in the management of the existing warehouse. The provincial finance will transfer the bond issuance funds to the municipal and county (i.e. "Second") for use.
Wen Laicheng said that the above-mentioned Hunan special bond application and review process is clear, which is conducive to improving the application efficiency. The preliminary preparations for special bond projects are very important. The quality of the project is related to the control of future project construction and operation risks. Hunan’s relevant regulations are meticulous and highly operable.
For example, the "Plan" clearly defines the focus of the "three-party joint review" of special projects by Development and Reform, Finance, and competent departments, and strictly controls the quality of the project. For example, the financial department focuses on reviewing whether the project is preparing a project financing balance plan as required, among which projects that need to be balanced by arranging financial subsidies and other means, whether local governments' ability to balance regional balance is demonstrated.
In this "Plan", Hunan also strengthens the post-investment management of special bond projects. For example, if the special bond funds are issued and there are still no actual expenditures in 6 months, in principle, it will be adjusted to other projects in the region that meet the conditions according to procedures; if there are still no actual expenditures in 12 months, in principle, it will be recovered by the Provincial Department of Finance and allocated to other regions.
In order to prevent government debt risks and ensure the repayment of principal and interest on time and in full, Hunan has made it clear that if the project income does not meet expectations and is difficult to repay, all localities should supplement the project's assets and legally and compliantly allocate other budget funds in the region. If the project authorities and units fail to implement the responsibility for repaying principal and interest of special bonds in a timely and full manner, the financial department may take measures such as deducting relevant budget funds and repaying debts. If the city and county fail to pay the principal and interest repayment funds on time and in full, the Provincial Department of Finance will deduct the funds through fund dispatch in a timely manner.
Hunan provincial level has established a special bond repayment reserve system for special bond repayment in subsequent years. Cities and counties with conditions are also encouraged to explore the establishment of a debt repayment reserve system. For projects with better income, explore the establishment of a mechanism for early repayment of special bonds.
In addition, the "Plan" also requires the implementation of the main responsibilities of special bond projects. For example, the municipal and county people's governments assume the main responsibility for all special bond projects at the same level. Responsible for the necessity and compliance of project construction at this level, the rationality and feasibility of debt repayment sources, and the authenticity and integrity of project information, and the main government responsible person will make a commitment. Those who illegally borrow debts, falsely report projects to defraud bond funds, intercept and misappropriate bond funds, and other illegal acts will be held accountable in accordance with relevant laws and regulations; if suspected of committing a crime, they will be transferred to judicial authorities for handling.
