Report title:
Preventing the risk of local government debt, boosting the steady development of City Investment Corporation --new limit on local government debt, land transfer fee collection, management and transfer tax authorities comment
Report release date: June 7, 2021
Analyst: Zhang XuPracticing Certificate Number: S0930516010001
Contact Person: Li ShuchuanPracticing Certificate Number: S0930521040004
Summary
Event
Event 1:The Ministry of Finance issued a new local government debt limit of 4,267.6 billion yuan in 2021 (more than The budgetary quota is 202.4 billion yuan less), of which the general debt limit is 800 billion yuan (20 billion yuan less than the budgetary quota), and the special debt limit is 3467.6 billion yuan (182.4 billion yuan less than the budgetary quota).
Incident 2: The Ministry of Finance issued the "Four Items of Income from the Assignment of State-owned Land Use Rights , Special Income from Mineral Resources, Sea Area Use Gold, Non-Resident Island Use Gold Government Non-tax Income Transfer to Taxation Department Collection Notice on Relevant Issues (Cai Zong [2021] No. 19), which transfers four government non-tax incomes, including income from the transfer of state-owned land use rights, to the tax authorities for collection.
Comments
Event 1: Reducing the new government debt limit, reflecting the intention of preventing local government debt risks and stabilizing fiscal policy space, the reduction of the limit may be carried over from to balance funds, and local government debt risk management in two aspects However, the proportion of the reduced quota is not large, which does not affect the overall orientation of fiscal policy throughout the year.
Under the relevant assumptions , we predict that the net financing of government bonds in each month from June to September is expected to be close to 1 trillion. Although the new quota has been reduced, the pressure on government bonds to issue will not decrease ; The issuance pressure will ease in the fourth quarter, and the monthly net financing will be roughly 600 billion yuan.
Incident 2: The transfer of income from the transfer of state-owned land use rights to the tax department is just a change in the collection and management agency, which is a manifestation of "further deepening the reform of budget management". The relationship with the city investment company is the proper meaning of preventing and resolving hidden debts, and it also helps to promote the steady development of the city investment company.
Risk warning
The epidemic has been repeated recently, uncertainties of global economic recovery still exist, the domestic economy is still in the process of recovery, and there are still many uncertainties in the future.
1, Events
Event 1: The Ministry of Finance issued a new local government debt limit of 4,267.6 billion yuan in 2021, including a general debt limit of 800 billion yuan and a special debt limit of 3,467.6 billion yuan; Circular on Issues Concerning the Transfer of Government Non-tax Income to Taxation Departments (Cai Zong [2021] No. 19), which transfers state-owned land use rights Four types of government non-tax income, including income, are transferred to the tax department for collection.
2, comment
The reduction of the newly added government debt limit reflects the intention of preventing local government debt risks and stabilizing the fiscal policy space. The reduction of the limit may be carried out from two aspects: carryover and surplus funds and local government debt risk classification management. The proportion of the reduced quota is not large, and it does not affect the overall orientation of the fiscal policy throughout the year.
The Ministry of Finance issued a new local government debt limit of 4,267.6 billion yuan in 2021, of which the general debt limit is 800 billion yuan and the special debt limit is 3,467.6 billion yuan.During the "two sessions" this year, the Fourth Session of the Thirteenth National People's Congress reviewed and approved the Ministry of Finance's 2021 budget arrangement to increase the local government debt limit of 4.47 trillion yuan, of which the general debt limit is 820 billion yuan and the special debt limit is 3.65 trillion yuan. The new local governments issued this year are 202.4 billion yuan less than the budgeted quota, including 20 billion yuan less in general debt and 182.4 billion yuan in special debt. Compared with 2019 and 2020,
's issuance of new local debt quota is different this year, which is mainly reflected in the following aspects: The first difference of
is that the time to issue the new local debt quota in advance is obviously later . Before 2019, the issuance of local government bonds was relatively late, and the issuance scale in the first quarter was also smaller than that in the other three quarters. On December 29, 2018, the National People's Congress authorized the State Council to issue an additional debt limit for local governments in the next year in advance (no need to re-authorize within three years), and the limit should be controlled within 60% of the new local government debt limit for the current year. On the basis of authorization, the Ministry of Finance issued a new bond limit for 2019 to the local government in advance at the end of December 2018, of which the local government increased the general debt limit by 580 billion yuan and the new special debt limit by 810 billion yuan, totaling 13,900 yuan. billion. In the first quarter of 2019, local governments actually issued 1,406.6 billion yuan of local bonds, but 782.1 billion yuan was actually issued before the two sessions, and the authorized amount was sufficient for local governments to use. The implementation of this policy can allow local governments to issue a certain scale of local bonds before the national "two sessions", and can play the role of local bonds earlier, so as to better cope with the continued downward pressure on economic growth. The new special debt limit in 2020 will be issued earlier. On November 28, 2019, the Ministry of Finance announced that some new special debts in 2020 will be limited to 1 trillion yuan in advance, accounting for 47% of the 2.15 trillion yuan of new special debts in 2019. The issuance of the new local debt limit this year has been postponed to early March 2021.At that time, the Ministry of Finance issued ahead of schedule the new local government debt limit of 2,358 billion yuan in 2021 (49.8% of the new local debt in the 2020 budget), of which the new general debt limit was 588 billion yuan (compared with the new local debt in the 2020 budget). Increase the ratio of local general debt by 60%), and increase the special debt limit by 1.770 billion yuan (47.2% of the new local special debt in the 2020 budget), which is 3 times later than the new debt limit in 2020. many months.
The second difference is that the new quota issued this time is less than the budgeted quota. In previous years, after the National People's Congress reviewed and approved the budget report, the Ministry of Finance generally issued the local government's new debt limit and balance limit to the local government immediately. In cases where the limit is less than the budgeted arrangement.
The different arrangements for the issuance of new quotas for local government bonds this year are related to the delay in the issuance of local government bonds this year, which makes the issuance of local government bonds this year significantly different from previous years, and also makes the interest rate bond market. Some new features have appeared.
Regarding the new quota issued this year being less than the budget, we believe:
First, the reduction of the quota this time reflects the intention of preventing local government debt risks and stabilizing fiscal policy space. The proportion of the reduced quota issued by this time is not high, but it reflects the intention of appropriate adjustment of fiscal policy according to actual needs. There are roughly two levels behind it: the first is the prevention of current local government debt risks. Since the second half of 2018, local government debt supervision has become one of the main lines of fiscal policy.In 2020, due to the impact of the epidemic, the scale of new local government bonds will increase significantly (4.73 trillion yuan, 1.65 trillion yuan more than in 2019. If the local government should take into account the repayment part of the special anti-epidemic national debt, the scale will be further increased. ), and the growth rate of local government debt has accelerated. As the results of epidemic prevention and control continue to stabilize and the economy continues to recover, fiscal policy will be withdrawn appropriately this year. The national government's new debts arranged in the 2021 budget will decrease by 30 billion yuan from the central government and 260 billion yuan from the local government (of which deficit debt and special debt have decreased by 160 billion and 100 billion respectively). Moderate withdrawal from the local government side. This time, by reducing the new limit, the scale of new local government debt for the whole year (compared with 2020) is further reduced, and the intention to prevent local government debt risks is self-evident. In addition, the scale of my country's government debt has continued to rise in recent years, and the government debt interest payment has also increased accordingly. In recent years, the annual growth rate has been maintained at more than 20%, which is 10 percentage points higher than the growth rate of fiscal expenditure; debt interest payment is in government expenditure. The proportion is close to 4%, and the proportion continues to increase. Appropriately reducing debt arrangements is conducive to stabilizing the space for fiscal policy.
Second, the reduction of the assigned limit may be carried out from two aspects: carryover and surplus funds and local government debt risk classification. In our report "Five Current Hot Topics from the Fiscal "Impossible Triangle" - The Fourth Research Series on Fiscal Policy" released on May 15, 2021, we calculated that there will be a large amount of fiscal funds in 2020. The carry-over balance will be used this year. This part of the funds mainly comes from the carry-over of special treasury bonds and special bonds, and this is the key to explaining the delay in the issuance of local government bonds from January to March. Therefore, for provinces with a relatively high concentration of carryover and surplus funds from last year, appropriately reducing the scale of new debts this year is a necessary move to improve the efficiency of the use of fiscal funds.On the other hand, the Ministry of Finance issued the "Measures for Risk Assessment and Early Warning of Local Government Statutory Debt" (Caiyu [2020]118) last year, setting four risks of red, orange, yellow and green according to the level of statutory debt ratio from high to low Classified management is implemented for areas in different grades, and areas in the red grade are not allowed to increase government debt. We believe that the implementation of this policy has also caused the new local debt quota originally arranged in some regions to be withdrawn by the higher-level financial department because the tranche level cannot be lowered temporarily, so that the final new quota issued is less than the budgeted quota.
Thirdly, the proportion of newly increased quotas and reduced quotas is not large, which does not affect the overall orientation of fiscal policy throughout the year. The new quota issued by the Ministry of Finance to local governments is 202.4 billion yuan less than the budgetary arrangement, and the reduction in the quota is only 4.5% compared with the 4.47 trillion yuan in the previous budgetary arrangement (of which the proportion of general debt and special debt is 2.4% respectively. %, 5%). After excluding the reduced amount, the government's target deficit rate this year fell to 3.18% from the previous 3.2%. In addition, in "Five Current Hot Topics from the Fiscal "Impossible Triangle" - The Fourth Research Series on Fiscal Policy", we put forward two more practical concepts of deficit rate, the generalized deficit rate and the elimination of government payment. The “generalized deficit ratio” refers to the annual new debts obtained by adding up the central and local government bonds (including government bonds, special government bonds, local general bonds, and local special bonds, etc.) Its ratio to the GDP of the current year; and the "generalized deficit ratio excluding government interest payment" is considered to be a consumptive expenditure that will weaken the effect of fiscal policy counter-cyclical regulation, so it needs to be excluded.After the new quota was reduced, we re-calculated the two deficit ratios, which dropped from 6.5% and 5.0% to 6.29% and 4.85% respectively. The overall deficit level remained at a relatively high level, and the fiscal overall remained in the "wide fiscal" channel. Medium (starting roughly in 2019).
For the follow-up local government bond issuance forecast: the government bond financing from June to September is nearly 1 trillion yuan, and the issuance pressure will ease in the fourth quarter.
As of the end of May this year, the net financing of government bonds was 281.29 billion yuan. According to the arrangement of this year's budget report, it is still There are 2.47 trillion yuan unissued, accounting for 89.8% of the annual plan; the newly added local government bonds are 946.46 billion yuan, and there are still 3.32 trillion yuan unissued (calculated according to the new quota issued), accounting for 77.8% of the annual plan. A total of 5.79 trillion yuan of government bonds has not been issued, accounting for 82.5% of the annual issuance plan.
Regarding the issuance arrangements of government bonds in June and the following months of this year, we make relevant predictions based on the following assumptions:
1) The overall rhythm of issuance of government bonds and local government bonds. In the subsequent months of , the issuance of local government bonds was the mainstay in the second and third quarters, and the issuance of government bonds was the mainstay in the fourth quarter. The overall rhythm was similar to that of 2019.
2) issuance arrangements for national debt. plans to issue 43 treasury bonds in the second quarter (14, 14, and 15 in April, May, and June, respectively), with a total issuance of 495.84 billion yuan in April and a net financing of -30.31 billion yuan; The financing amounted to 206.37 billion yuan. We assume that the issuance of various types of treasury bonds in June refers to the average issuance of treasury bonds in 2021Q1 (the average issuance of major treasury bonds in each quarter after 2020Q2 has increased compared with 2019, and 2020 will be affected by the issuance of special treasury bonds, which is also not for reference), combined with According to the situation of treasury bonds in the period, it is estimated that the total issuance of treasury bonds in June was 539.58 billion yuan, the net financing was 296.69 billion yuan, and the net financing was roughly 300 billion yuan. According to the announced issuance plan, as of June 9, a total of 256 billion yuan of national debt has been issued, and it is relatively easy to achieve a net financing of 300 billion yuan in June.For the issuance of treasury bonds in the third quarter, we assume that the monthly net financing in July, August and September is 300 billion yuan respectively, and the remaining quota is distributed evenly in each month in the fourth quarter. Combined with the maturity of existing treasury bonds, we can calculate the issuance of treasury bonds this year. See the table below.
3) issuance arrangements for local government bonds. 1-May, the newly issued local government general bond was 362.46 billion yuan, accounting for 45.3% of the annual issuance plan; the newly issued local government special bond was 584 billion yuan, accounting for 16.8% of the annual issuance plan. In November 2020, the Ministry of Finance issued the "Opinions on Further Doing a Good Job in the Issuance of Local Government Bonds" (Cai Ku [2020] No. 36), requiring "local financial departments should disclose the local government bonds in the region for the next month before the 20th of each month. Issuance plan, before March, June, September and December 20th, disclose the local government bond issuance plan in the region for the next quarter.” Therefore, at the end of March, the local government should focus on publicizing the issuance plan of the local government bonds in the second quarter. According to the disclosed situation, the local government planned to issue 636.8 billion yuan of local bonds in April, but actually issued 775.82 billion yuan, and there were disclosed issuance plans but no actual issuance (a total of 120.2 billion yuan), undisclosed issuance plans but actual issuances (a total of 192.6 billion yuan), disclosed issuance plans but the actual issuance exceeded the planned issuance size (a total of 66.7 billion yuan), etc. From this point of view, the current issuance plans disclosed by local governments may not be strictly constrained, and the later the time is, the greater the difference between the issuance plans and the actual issuance.
Therefore, we believe that the currently announced June release plan does not have much reference to the actual release. We forecast the issuance in the following months in the following way: In terms of
general bonds, the remaining quota is 437.54 billion yuan based on the issuance of
from January to May. Considering the wide use of general bonds, it is assumed that new issuances will be issued from June to December this year. If the amount is the same, the new issuance in each month is 62.51 billion yuan.In terms of
special bonds, 584 billion yuan was newly issued from January to May, and the remaining quota from June to December was 2,883.6 billion yuan (accounting for 83.2%). Since the scope of use of special bonds is relatively fixed, in order to maximize the benefits of the use of special bonds as soon as possible and prevent a large amount of funds being carried over this year, we believe that the rhythm of subsequent issuance of special bonds may still be similar to that in 2019 and 2020, that is, the proportion of issuance in the first three quarters High, while the proportion of Q4 issuance is low. Referring to 2020Q4 here, assuming that the proportion of Q4 issuance is 10%, the total issuance proportion from June to September this year is 73.2%, and the monthly new issuance amount is 634.21 billion yuan; the monthly new issuance amount from October to December The same, 115.59 billion yuan. In addition, since the Ministry of Finance implements quota management on local government refinancing bonds, generally mature local government bonds cannot be reissued entirely by issuing refinancing bonds. According to statistics, in 2020, local government general bonds (including unclassified bonds before 2015) and special bonds are due 1,423.36 billion yuan and 651.33 billion yuan respectively, while the refinancing general bonds and special bonds issued in 2020 are 1,352.75 billion yuan and 538.58 billion yuan respectively. , 95.0% and 82.7% of the funds due. However, considering that this year's local government refinancing bonds have replaced the implicit debt of local governments, we believe that the issuance of refinancing bonds may break through the above-mentioned issuance model in 2020. Therefore, we assume that the subsequent maturity of local government general bonds, special The scale of debt refinancing is consistent with the scale of maturity in the current month.
Total issuance of government bonds and local bonds:
1) The net financing of government bonds in each month from June to September this year is expected to be close to 1 trillion yuan. Although the new quota has decreased, the pressure of government bond issuance from June to September will not be reduced;
2 ) The issuance pressure eased in the fourth quarter, and the monthly net financing was roughly 600 billion yuan;
3) Looking back at 2020, the net (new) financing of government bond issuance in the month was 1 trillion yuan in May, August, and September, respectively 1.37, 1.34, and 1.01 trillion yuan. During this period, the capital market is under certain pressure. We believe that investors should properly manage their capital at that time to cope with possible capital fluctuations.
The transfer of income from the transfer of state-owned land use rights to the tax department is just a change in the collection and management agency, which is a manifestation of "further deepening the reform of budget management" and has no direct connection with "land finance". Relationship is the proper meaning of preventing and resolving hidden debts at present, and it also helps to promote the steady development of urban investment companies. The local government's land transfer fee shall be collected and managed by the taxation department. For this article, we believe that:
First, the main content of this document is the change of the collection and management agency, and the amount of land transfer remains unchanged. The four items of government non-tax income, including income from the assignment of state-owned land use rights, special income from mineral resources, sea area use fees, and uninhabited island use fees, were originally collected and managed by different collection and management departments, such as land transfer income . The province is levied and managed by the tax bureau, some are managed by the land department, and the other three types of non-tax income also have a similar situation.Cai Zong [2021] No. 19 clearly stipulates that the four items of government non-tax income are collected and managed by the tax bureau. For example, after the land was auctioned, the land purchaser obtained the land, and the sales revenue was handed over to the Ministry of Land and Resources (now the Ministry of Natural Resources). ), by the land department to the financial department, and then to the state treasury, and now the land purchaser directly handed it over to the tax bureau, so only the collection and management agency has changed, and the amount of land transfer remains unchanged.
Second, the transfer of the collection by the taxation department is conducive to improving the standardization of collection. The unified management of by the tax bureau can reduce the cost of collection and management, reduce the cost of taxpayers, and improve the efficiency of collection and management, which reflects the modernization of my country's governance system and governance capacity. The Third Plenary Session of the 18th CPC Central Committee proposed to build a modern fiscal and taxation system and support the modernization of the national governance system with a modern fiscal and taxation system, which should include reducing the cost of paying taxes and non-tax income for the common people, and reducing the cost of collection and management. In the past, these four types of income were scattered in various departments, and the collection and management were not unified. To collect a non-tax income, an agency must be established to manage it, and the collection and management costs and payment costs were high. The unified collection of the four non-tax incomes to the tax department can save capital costs and time costs, improve efficiency, and facilitate the unification and fairness of collection and management. The fairness is reflected in the fact that the collection and management of these non-tax incomes may be different in different provinces. In addition, different departments have different policy scales, and payers receive different treatment. Now, the collection and management are unified by the tax bureau, and the national standard is unified, which reflects the normative significance of government revenue collection and management, and is more fair.
Third, the transfer of the four non-tax revenues to the tax authorities for collection is not directly related to land finance. In my country's government fund budget revenue, local governments dominate. For example, in 2020, my country's government fund budget revenue (excluding bond issuance revenue) is 9,348.9 billion yuan, and local level revenue is 8,992.7 billion yuan, accounting for 96.2%.In the budgetary revenue of local government funds, the revenue from the transfer of state-owned land use rights occupies an absolute proportion. In 2020, the revenue from the transfer of state-owned land use rights will be 8,414.2 billion yuan, accounting for 93.4%. The revenue from the transfer of land use rights is a local government fund The main source of income, so after the release of Cai Zong [2021] No. 19, there was concern about the sharing of income from local land sales. However, from Circular 19, it is proposed that the four government non-tax revenue collection scope, objects, standards, reduction and exemption, sharing, use, management and other policies continue to be implemented in accordance with the current regulations, and the four items of income from the transfer of state-owned land use rights announced by the Ministry of Finance. From the perspective of the government's non-tax revenue collection and payment process, the adjustment of this collection and management work does not involve the adjustment of the central and local government revenue sharing and the adjustment of the land transfer process, and is not directly related to the so-called "land finance".
Fourth, it helps to further standardize the relationship between local governments and urban investment companies. It is the proper meaning of preventing and resolving hidden debts at present, and it also helps to promote the steady development of urban investment companies. Under the current system, urban investment companies are connected with land transfer in the following ways. The first is to purchase land through the primary market (mainly for construction land such as business land or industrial land), and the second is to allocate land free of charge by the government. The acquired land use rights (mainly for non-profit-oriented public rental housing, affordable housing and other public welfare land, provided that the land must be approved by the relevant departments in accordance with the law and the land is strictly used for designated purposes), and the third is to act as a proxy for land consolidation. The main body of construction participates in the primary development of land. It can be seen from that the transfer of land transfer collection and management mainly affects the first item.Because in the first item, there is a situation that the local government returns the land transfer fee to the urban investment company after purchasing land through the primary market, so as to rapidly expand the assets and equity scale of the urban investment company and reduce its liabilities from the balance sheet. At the rate of , urban investment companies can also make mortgage loans with land to indirectly meet the financing needs of local governments. In the institutional reform of the State Council in 2018, the national taxation bureaus and local taxation bureaus of all provinces (autonomous regions and municipalities directly under the Central Government) and cities under separate state planning were merged and listed in a unified manner. At present, the national tax system and the local government are relatively independent. After the land transfer work is transferred to the tax department, it will help to solve the problem of untimely payment of land transfer income, and will also reduce the occurrence of illegal returns. There will be a certain impact in areas where the gold inflated land income is serious. This type of operation by local governments before is also an important reason for the increase in the implicit debt of local governments. This time, the transfer of land transfer income to the taxation department is conducive to reducing irregular operations, preventing and resolving hidden debts in the current sense, and also contributing to the long-term stable development of Chengtou.
On the whole, the transfer of the four non-tax incomes to the taxation department is a manifestation of the implementation of "further deepening the reform of budget management", aiming to further standardize government work and help promote the healthy development of chengtou.
Risk Tips
Recently, the epidemic situation has repeated, uncertain factors of global economic recovery still exist, the domestic economy is still in the process of recovery, and there are still many uncertainties in the future.
Report title:
Preventing the risk of local government debt, boosting the steady development of City Investment Corporation --new limit on local government debt, land transfer fee collection, management and transfer tax authorities comment
Report release date: June 7, 2021
Analyst: Zhang XuPracticing Certificate Number: S0930516010001
Contact Person: Li ShuchuanPracticing Certificate Number: S0930521040004
Summary
Event
Event 1:The Ministry of Finance issued a new local government debt limit of 4,267.6 billion yuan in 2021 (more than The budgetary quota is 202.4 billion yuan less), of which the general debt limit is 800 billion yuan (20 billion yuan less than the budgetary quota), and the special debt limit is 3467.6 billion yuan (182.4 billion yuan less than the budgetary quota).
Incident 2: The Ministry of Finance issued the "Four Items of Income from the Assignment of State-owned Land Use Rights , Special Income from Mineral Resources, Sea Area Use Gold, Non-Resident Island Use Gold Government Non-tax Income Transfer to Taxation Department Collection Notice on Relevant Issues (Cai Zong [2021] No. 19), which transfers four government non-tax incomes, including income from the transfer of state-owned land use rights, to the tax authorities for collection.
Comments
Event 1: Reducing the new government debt limit, reflecting the intention of preventing local government debt risks and stabilizing fiscal policy space, the reduction of the limit may be carried over from to balance funds, and local government debt risk management in two aspects However, the proportion of the reduced quota is not large, which does not affect the overall orientation of fiscal policy throughout the year.
Under the relevant assumptions , we predict that the net financing of government bonds in each month from June to September is expected to be close to 1 trillion. Although the new quota has been reduced, the pressure on government bonds to issue will not decrease ; The issuance pressure will ease in the fourth quarter,The monthly net financing is roughly 600 billion yuan.
Incident 2: The transfer of income from the transfer of state-owned land use rights to the tax department is just a change in the collection and management agency, which is a manifestation of "further deepening the reform of budget management". The relationship with the city investment company is the proper meaning of preventing and resolving hidden debts, and it also helps to promote the steady development of the city investment company.
Risk warning
The epidemic has been repeated recently, uncertainties of global economic recovery still exist, the domestic economy is still in the process of recovery, and there are still many uncertainties in the future.
1, Events
Event 1: The Ministry of Finance issued a new local government debt limit of 4,267.6 billion yuan in 2021, including a general debt limit of 800 billion yuan and a special debt limit of 3,467.6 billion yuan; Circular on Issues Concerning the Transfer of Government Non-tax Income to Taxation Departments (Cai Zong [2021] No. 19), which transfers state-owned land use rights Four types of government non-tax income, including income, are transferred to the tax department for collection.
2, comment
The reduction of the newly added government debt limit reflects the intention of preventing local government debt risks and stabilizing the fiscal policy space. The reduction of the limit may be carried out from two aspects: carryover and surplus funds and local government debt risk classification management. The proportion of the reduced quota is not large, and it does not affect the overall orientation of the fiscal policy throughout the year.
The Ministry of Finance issued a new local government debt limit of 4,267.6 billion yuan in 2021, of which the general debt limit is 800 billion yuan and the special debt limit is 3,467.6 billion yuan. During the National "Two Sessions" this year, the Fourth Session of the Thirteenth National People's Congress reviewed and approved the Ministry of Finance's 2021 budget arrangement to increase the local government debt limit of 4.47 trillion yuan.Among them, the general debt limit is 820 billion yuan, and the special debt limit is 3.65 trillion yuan. The new local governments issued this year are 202.4 billion yuan less than the budgeted quota, including 20 billion yuan less in general debt and 182.4 billion yuan in special debt. Compared with 2019 and 2020,
's issuance of new local debt quota is different this year, which is mainly reflected in the following aspects: The first difference of
is that the time to issue the new local debt quota in advance is obviously later . Before 2019, the issuance of local government bonds was relatively late, and the issuance scale in the first quarter was also smaller than that in the other three quarters. On December 29, 2018, the National People's Congress authorized the State Council to issue an additional debt limit for local governments in the next year in advance (no need to re-authorize within three years), and the limit should be controlled within 60% of the new local government debt limit for the current year. On the basis of authorization, the Ministry of Finance issued a new bond limit for 2019 to the local government in advance at the end of December 2018, of which the local government increased the general debt limit by 580 billion yuan and the new special debt limit by 810 billion yuan, totaling 13,900 yuan. billion. In the first quarter of 2019, local governments actually issued 1,406.6 billion yuan of local bonds, but 782.1 billion yuan was actually issued before the two sessions, and the authorized amount was sufficient for local governments to use. The implementation of this policy can allow local governments to issue a certain scale of local bonds before the national "two sessions", and can play the role of local bonds earlier, so as to better cope with the continued downward pressure on economic growth. The new special debt limit in 2020 will be issued earlier. On November 28, 2019, the Ministry of Finance announced that some new special debts in 2020 will be limited to 1 trillion yuan in advance, accounting for 47% of the 2.15 trillion yuan of new special debts in 2019. The issuance of the new local debt limit this year has been postponed to early March 2021. At that time, the Ministry of Finance issued an additional limit of 2.358 billion yuan in local government debt in 2021 ahead of schedule (49.8% of the new local government debt in the 2020 budget arrangement),Among them, the new general debt limit is 588 billion yuan (60% of the new local general debt in the 2020 budget), and the new special debt limit is 1,770 billion yuan (47.2% compared with the new local special debt in the 2020 budget). %), more than three months later than the issuance of the new debt limit in 2020.
The second difference is that the new quota issued this time is less than the budgeted quota. In previous years, after the National People's Congress reviewed and approved the budget report, the Ministry of Finance generally issued the local government's new debt limit and balance limit to the local government immediately. In cases where the limit is less than the budgeted arrangement.
The different arrangements for the issuance of new quotas for local government bonds this year are related to the delay in the issuance of local government bonds this year, which makes the issuance of local government bonds this year significantly different from previous years, and also makes the interest rate bond market. Some new features have appeared.
Regarding the new quota issued this year being less than the budget, we believe:
First, the reduction of the quota this time reflects the intention of preventing local government debt risks and stabilizing fiscal policy space. The proportion of the reduced quota issued by this time is not high, but it reflects the intention of appropriate adjustment of fiscal policy according to actual needs. There are roughly two levels behind it: the first is the prevention of current local government debt risks. Since the second half of 2018, local government debt supervision has become one of the main lines of fiscal policy. In 2020, due to the impact of the epidemic, the scale of new local government bonds will increase significantly (4.73 trillion yuan, 1.65 trillion yuan more than in 2019. If the local government should take into account the repayment part of the special anti-epidemic national debt, the scale will be further increased. ), and the growth rate of local government debt has accelerated. As the results of epidemic prevention and control continue to stabilize and the economy continues to recover,The fiscal policy will be withdrawn appropriately this year. The national government's new debts arranged in the 2021 budget will decrease by 30 billion yuan from the central government and 260 billion yuan from the local government (of which deficit debt and special debt have decreased by 160 billion and 100 billion respectively). Moderate withdrawal from the local government side. This time, by reducing the new limit, the scale of new local government debt for the whole year (compared with 2020) is further reduced, and the intention to prevent local government debt risks is self-evident. In addition, the scale of my country's government debt has continued to rise in recent years, and the government debt interest payment has also increased accordingly. In recent years, the annual growth rate has been maintained at more than 20%, which is 10 percentage points higher than the growth rate of fiscal expenditure; debt interest payment is in government expenditure. The proportion is close to 4%, and the proportion continues to increase. Appropriately reducing debt arrangements is conducive to stabilizing the space for fiscal policy.
Second, the reduction of the assigned limit may be carried out from two aspects: carryover and surplus funds and local government debt risk classification. In our report "Five Current Hot Topics from the Fiscal "Impossible Triangle" - The Fourth Research Series on Fiscal Policy" released on May 15, 2021, we calculated that there will be a large amount of fiscal funds in 2020. The carry-over balance will be used this year. This part of the funds mainly comes from the carry-over of special treasury bonds and special bonds, and this is the key to explaining the delay in the issuance of local government bonds from January to March. Therefore, for provinces with a relatively high concentration of carryover and surplus funds from last year, appropriately reducing the scale of new debts this year is a necessary move to improve the efficiency of the use of fiscal funds. On the other hand, the Ministry of Finance issued the "Measures for Risk Assessment and Early Warning of Local Government Statutory Debt" (Caiyu [2020]118) last year, setting four risks of red, orange, yellow and green according to the level of statutory debt ratio from high to low Grade grades, implement classified management for areas in different grades,Areas in the red rating are not allowed to increase government debt. We believe that the implementation of this policy has also caused the new local debt quota originally arranged in some regions to be withdrawn by the higher-level financial department because the tranche level cannot be lowered temporarily, so that the final new quota issued is less than the budgeted quota.
Thirdly, the proportion of newly increased quotas and reduced quotas is not large, which does not affect the overall orientation of fiscal policy throughout the year. The new quota issued by the Ministry of Finance to local governments is 202.4 billion yuan less than the budgetary arrangement, and the reduction in the quota is only 4.5% compared with the 4.47 trillion yuan in the previous budgetary arrangement (of which the proportion of general debt and special debt is 2.4% respectively. %, 5%). After excluding the reduced amount, the government's target deficit rate this year fell to 3.18% from the previous 3.2%. In addition, in "Five Current Hot Topics from the Fiscal "Impossible Triangle" - The Fourth Research Series on Fiscal Policy", we put forward two more practical concepts of deficit rate, the generalized deficit rate and the elimination of government payment. The “generalized deficit ratio” refers to the annual new debts obtained by adding up the central and local government bonds (including government bonds, special government bonds, local general bonds, and local special bonds, etc.) Its ratio to the GDP of the current year; and the "generalized deficit ratio excluding government interest payment" is considered to be a consumptive expenditure that will weaken the effect of fiscal policy counter-cyclical regulation, so it needs to be excluded. After the new quota was reduced, we re-calculated the two deficit ratios, which dropped from 6.5% and 5.0% to 6.29% and 4.85% respectively. The overall deficit level remained at a relatively high level, and the fiscal overall remained in the "wide fiscal" channel. Medium (starting roughly in 2019).
For the follow-up local government bond issuance forecast: the government bond financing in each month from June to September is nearly 1 trillion yuan, and the issuance pressure will be reduced in the fourth quarter.
As of the end of May this year, the net financing of government bonds was 281.29 billion yuan,According to the arrangement of this year's budget report, there are still 2.47 trillion yuan unissued, accounting for 89.8% of the annual plan; the newly added local government debt is 946.46 billion yuan, and 3.32 trillion yuan has not been issued (calculated according to the new quota issued), accounting for 946.46 billion yuan. 77.8% of the full year plan. A total of 5.79 trillion yuan of government bonds has not been issued, accounting for 82.5% of the annual issuance plan.
Regarding the issuance arrangements of government bonds in June and the following months of this year, we make relevant predictions based on the following assumptions:
1) The overall rhythm of issuance of government bonds and local government bonds. In the subsequent months of , the issuance of local government bonds was the mainstay in the second and third quarters, and the issuance of government bonds was the mainstay in the fourth quarter. The overall rhythm was similar to that of 2019.
2) issuance arrangements for national debt. plans to issue 43 treasury bonds in the second quarter (14, 14, and 15 in April, May, and June, respectively), with a total issuance of 495.84 billion yuan in April and a net financing of -30.31 billion yuan; The financing amounted to 206.37 billion yuan. We assume that the issuance of various types of treasury bonds in June refers to the average issuance of treasury bonds in 2021Q1 (the average issuance of major treasury bonds in each quarter after 2020Q2 has increased compared with 2019, and 2020 will be affected by the issuance of special treasury bonds, which is also not for reference), combined with According to the situation of treasury bonds in the period, it is estimated that the total issuance of treasury bonds in June was 539.58 billion yuan, the net financing was 296.69 billion yuan, and the net financing was roughly 300 billion yuan. According to the announced issuance plan, as of June 9, a total of 256 billion yuan of national debt has been issued, and it is relatively easy to achieve a net financing of 300 billion yuan in June. For the issuance of treasury bonds in the third quarter, we assume that the monthly net financing in July, August and September is 300 billion yuan respectively, and the remaining quota is distributed evenly in each month in the fourth quarter. Combined with the maturity of existing treasury bonds, we can calculate the issuance of treasury bonds this year. See the table below.
3) issuance arrangements for local government bonds. 1-May, the new issuance of local government general bonds was 362.46 billion yuan, accounting for 45.3% of the annual issuance plan; the new issuance of local government special bonds was 584 billion yuan,It accounted for 16.8% of the annual issuance plan. In November 2020, the Ministry of Finance issued the "Opinions on Further Doing a Good Job in the Issuance of Local Government Bonds" (Cai Ku [2020] No. 36), requiring "local financial departments should disclose the local government bonds in the region for the next month before the 20th of each month. Issuance plan, before March, June, September and December 20th, disclose the local government bond issuance plan in the region for the next quarter.” Therefore, at the end of March, the local government should focus on publicizing the issuance plan of the local government bonds in the second quarter. According to the disclosed situation, the local government planned to issue 636.8 billion yuan of local bonds in April, but actually issued 775.82 billion yuan, and there were disclosed issuance plans but no actual issuance (a total of 120.2 billion yuan), undisclosed issuance plans but actual issuances (a total of 192.6 billion yuan), disclosed issuance plans but the actual issuance exceeded the planned issuance size (a total of 66.7 billion yuan), etc. From this point of view, the current issuance plans disclosed by local governments may not be strictly constrained, and the later the time is, the greater the difference between the issuance plans and the actual issuance.
Therefore, we believe that the currently announced June release plan does not have much reference to the actual release. We forecast the issuance situation in the following months in the following way: As for
general bonds, the remaining quota is 437.54 billion yuan based on the issuance situation from January to May. If the amount is the same, the new issuance in each month is 62.51 billion yuan. In terms of
special bonds, 584 billion yuan was newly issued from January to May, and the remaining quota from June to December was 2,883.6 billion yuan (accounting for 83.2%). Since the scope of use of special bonds is relatively fixed, in order to maximize the benefits of the use of special bonds as soon as possible and prevent a large amount of funds being carried over this year, we believe that the rhythm of subsequent issuance of special bonds may still be similar to that in 2019 and 2020, that is, the proportion of issuance in the first three quarters High, while the proportion of Q4 issuance is low. Refer to 2020Q4 here,Assuming that the Q4 issuance ratio is 10%, the total issuance ratio from June to September this year is 73.2%, and the monthly new issuance amount is 634.21 billion yuan; the monthly new issuance amount from October to December is the same, which is 1155.9 billion. In addition, since the Ministry of Finance implements quota management on local government refinancing bonds, generally mature local government bonds cannot be reissued entirely by issuing refinancing bonds. According to statistics, in 2020, local government general bonds (including unclassified bonds before 2015) and special bonds are due 1,423.36 billion yuan and 651.33 billion yuan respectively, while the refinancing general bonds and special bonds issued in 2020 are 1,352.75 billion yuan and 538.58 billion yuan respectively. , 95.0% and 82.7% of the funds due. However, considering that this year's local government refinancing bonds have replaced the implicit debt of local governments, we believe that the issuance of refinancing bonds may break through the above-mentioned issuance model in 2020. Therefore, we assume that the subsequent maturity of local government general bonds, special The scale of debt refinancing is consistent with the scale of maturity in the current month.
Total issuance of government bonds and local bonds:
1) The net financing of government bonds in each month from June to September this year is expected to be close to 1 trillion yuan. Although the new quota has decreased, the pressure of government bond issuance from June to September will not be reduced;
2 ) The issuance pressure eased in the fourth quarter, and the monthly net financing was roughly 600 billion yuan;
3) Looking back at 2020, the net (new) financing of government bond issuance in the month was 1 trillion yuan in May, August, and September, respectively 1.37, 1.34, and 1.01 trillion yuan. During this period, the capital market is under certain pressure. We believe that investors should properly manage their capital at that time to cope with possible capital fluctuations.
The transfer of income from the transfer of state-owned land use rights to the tax department is just a change in the collection and management agency, which is a manifestation of "further deepening the reform of budget management" and has no direct connection with "land finance". relation,It is the proper meaning of preventing and resolving hidden debts at present, and it also helps to promote the steady development of urban investment companies.
For Cai Zong [2021] No. 19, the four non-tax incomes are transferred to tax authorities, especially local governments. The land transfer fee shall be collected and managed by the taxation department. For this article, we believe that:
First, the main content of this document is the change of the collection and management agency, and the amount of land transfer remains unchanged. The four items of government non-tax income, including income from the assignment of state-owned land use rights, special income from mineral resources, sea area use fees, and uninhabited island use fees, were originally collected and managed by different collection and management departments, such as land transfer income . The province is levied and managed by the tax bureau, some are managed by the land department, and the other three types of non-tax income also have a similar situation. Cai Zong [2021] No. 19 clearly stipulates that the four items of government non-tax income are collected and managed by the tax bureau. For example, after the land was auctioned, the land purchaser obtained the land, and the sales revenue was handed over to the Ministry of Land and Resources (now the Ministry of Natural Resources). ), by the land department to the financial department, and then to the state treasury, and now the land purchaser directly handed it over to the tax bureau, so only the collection and management agency has changed, and the amount of land transfer remains unchanged.
Second, the transfer of the collection by the taxation department is conducive to improving the standardization of collection. The unified management of by the tax bureau can reduce the cost of collection and management, reduce the cost of taxpayers, and improve the efficiency of collection and management, which reflects the modernization of my country's governance system and governance capacity. The Third Plenary Session of the 18th CPC Central Committee proposed to build a modern fiscal and taxation system and support the modernization of the national governance system with a modern fiscal and taxation system, which should include reducing the cost of paying taxes and non-tax income for the common people, and reducing the cost of collection and management. In the past, these four types of income were scattered in various departments, and the collection and management were not unified. To collect a non-tax income, it was necessary to establish an agency to manage it.Collection and administration costs and payment costs are high. The unified collection of the four non-tax incomes to the tax department can save capital costs and time costs, improve efficiency, and facilitate the unification and fairness of collection and management. The fairness is reflected in the fact that the collection and management of these non-tax incomes may be different in different provinces. In addition, different departments have different policy scales, and payers receive different treatment. Now, the collection and management are unified by the tax bureau, and the national standard is unified, which reflects the normative significance of government revenue collection and management, and is more fair.
Third, the transfer of the four non-tax revenues to the tax authorities for collection is not directly related to land finance. In my country's government fund budget revenue, local governments dominate. For example, in 2020, my country's government fund budget revenue (excluding bond issuance revenue) is 9,348.9 billion yuan, and local level revenue is 8,992.7 billion yuan, accounting for 96.2%. In the budgetary revenue of local government funds, the revenue from the transfer of state-owned land use rights occupies an absolute proportion. In 2020, the revenue from the transfer of state-owned land use rights will be 8,414.2 billion yuan, accounting for 93.4%. The revenue from the transfer of land use rights is a local government fund The main source of income, so after the release of Cai Zong [2021] No. 19, there was concern about the sharing of income from local land sales. However, from Circular 19, it is proposed that the four government non-tax revenue collection scope, objects, standards, reduction and exemption, sharing, use, management and other policies continue to be implemented in accordance with the current regulations, and the four items of income from the transfer of state-owned land use rights announced by the Ministry of Finance. From the perspective of the government's non-tax revenue collection and payment process, the adjustment of this collection and management work does not involve the adjustment of the central and local government revenue sharing and the adjustment of the land transfer process, and is not directly related to the so-called "land finance".
Fourth, it helps to further standardize the relationship between local governments and urban investment companies. It is the proper meaning of preventing and resolving hidden debts at present, and it also helps to promote the steady development of urban investment companies. under the current system,Chengtou Company has contact with land transfer in the following ways. The first is to purchase land through the primary market (mainly for construction land such as business land or industrial land), and the second is to obtain land use rights free of charge by means of government allocation ( Mainly for non-profit-oriented public rental housing, social security housing and other public welfare land, the premise is that it must be approved by the relevant departments in accordance with the law and the land must be strictly used for designated purposes), and the third is to participate in the land level as the main body of land consolidation. development. It can be seen from that the transfer of land transfer collection and management mainly affects the first item. Because in the first item, there is a situation that the local government returns the land transfer fee to the urban investment company after purchasing land through the primary market, so as to rapidly expand the assets and equity scale of the urban investment company and reduce its liabilities from the balance sheet. At the rate of , urban investment companies can also make mortgage loans with land to indirectly meet the financing needs of local governments. In the institutional reform of the State Council in 2018, the national taxation bureaus and local taxation bureaus of all provinces (autonomous regions and municipalities directly under the Central Government) and cities under separate state planning were merged and listed in a unified manner. At present, the national tax system and the local government are relatively independent. After the land transfer work is transferred to the tax department, it will help to solve the problem of untimely payment of land transfer income, and will also reduce the occurrence of illegal returns. There will be a certain impact in areas where the gold inflated land income is serious. This type of operation by local governments before is also an important reason for the increase in the implicit debt of local governments. This time, the transfer of land transfer income to the taxation department is conducive to reducing irregular operations, preventing and resolving hidden debts in the current sense, and also contributing to the long-term stable development of Chengtou.
On the whole, the transfer of the four non-tax incomes to the tax authorities is a manifestation of the implementation of "further deepening the reform of budget management".It aims to further standardize government work and help promote the healthy development of urban investment.
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