The meeting of the Political Bureau of the CPC Central Committee held on July 28 proposed to make good use of local government special bond funds and support local governments to make full use of special debt limits.

Source: People's Daily

How to use government special bonds well (front-line research)

——Search on the use of special bonds in Jinan City, Shandong Province

Data source: Ministry of Finance

Layout design: Cai Huawei

Local government special bonds are an important means to implement positive fiscal policies. The meeting of the Political Bureau of the CPC Central Committee held on July 28 proposed to make good use of local government special bond funds and support local governments to make full use of special debt limits.

In order to drive the expansion of effective investment and stabilize the economy, the issuance of special bonds this year is significantly faster than in previous years. In this case, how can local governments make full use of special bond funds? How to choose a good project? How to ensure that the project can form physical workload as soon as possible? How to better evaluate performance? These issues have attracted a lot of attention. To this end, our reporter selected Jinan City as a sample for in-depth research and found out.

——Editor

On August 17, after paying a project payment, the 300 million yuan special bond funds for the Dongcheng Comprehensive Smart Heat Source Support Heating Pipe Network Project of Jinan Heat Group Co., Ltd. (hereinafter referred to as "Smart Heat Source") have been paid in place. At the construction site of Panwang Road, the "three connections and one leveling" work in the gas power workshop is in full swing. At each operation point, trench excavation, fence binding, well point precipitation, pipeline installation and steel sheet pile support operations are being carried out simultaneously.

Previously, the State Council Executive Meeting further deployed a package of measures to stabilize the economy, proposing that this year's special bonds will be basically used before the end of August.

htmlOn June 30, the municipal finance of Jinan City this year's special bond funds have been allocated to the district and county level. On August 31, all projects have basically completed expenditures. How to make full use of special bond funds? How to choose a good project? How to ensure that the project can form physical workload as soon as possible? How to better evaluate performance? The reporter went to the project unit and relevant departments to find out. How to choose a special bond project for

?

department cooperates to ensure the reserves of major projects, expand the scope of review, and strictly screen

to open the Jinan local debt management system. Li Luxue, a financial staff member of Jinan Energy Group, filled in the key projects of each company one by one, uploaded the electronic version of the relevant procedures, and made preparations for applying for bonds in advance.

Because infrastructure projects involve large funds, financial institutions have stricter financing review, and more information is needed. For some new projects, construction land planning license , land use certificate and other documents are also required, and it takes a lot of time to apply for a loan. "It is a relatively difficult stage from the start of the project to obtaining financing for financial institutions. At this time, government special bonds have a great effect. They can not only alleviate the problem of funding shortage in the early stage of the project, but also leverage funds from other channels." Chen Qianqian, director of the Government Debt Management Office of the Jinan Municipal Finance Bureau, gave an example and said that on September 29 last year, the Jili Road cross-yellow tunnel , known as the "first tunnel of the Yellow River" of , was officially opened to traffic, and Jinan took a solid step in the development of cross-Yellow River. As the special bond funds were in place in time, the total investment of the "Three Bridges and One Tunnel" (Qilu Bridge, Jile Expressway South Extension Bridge, Phoenix Bridge, Passhuang Tunnel) project was 22.7 billion yuan, and special bonds were issued 7.416 billion yuan, driving social financing agreement amount of 32.02 billion yuan, and actual loans were 10.7 billion yuan, driving 47.5 billion yuan of social investment in the area.

Jinan Municipal Finance Bureau Director Zhou Zhiyong introduced that Jinan City has established a joint meeting system for major project planning, reserves and funds for the city, led by the Municipal Party Committee Secretary and Mayor, and coordinated by the Development and Reform, Finance and other relevant departments. The Municipal Finance Bureau prepares project implementation plans and pre-performance evaluation reports in advance. "At present, we have a lot of mature projects. Every year, we can give priority to selecting projects with complete procedures from the project database to maximize the special bond quota." Zhou Zhiyong said.

In the view of Li Yihua, professor of the School of Economics of Shandong University, to make full use of government special bonds, the allocation of quotas should be tilted towards high-quality projects, and "pepper" should not be sprinkled.

Infrastructure areas such as heat and gas pipeline network are the focus of government special bond investment and are also the key areas that Jinan Energy Group has always paid attention to.However, when applying for the smart heat source project, Li Luxue discovered that new changes have occurred in the review mechanism.

According to regulations, applying for special bonds must have the "one case and two letters" issued by an intermediary agency, namely the "Special Bond Project Implementation Plan", "Project Financial Evaluation Report", and "Project Legal Opinions", which is also an important basis for the financial department to evaluate and judge. However, "one case, two letters" only put forward basic requirements for the rationality of project returns, and there is no rigid unified standard for other situations. In order to further improve the quality of issuance of new special bond projects, the Jinan Municipal Finance Bureau increased its review of the compilation of "one case, two books" last year. Chen Qianxi introduced that for example, land is the key to the smooth progress of the project. During the review, we must also sort out whether the ownership of the land property rights is clear, whether the pre-examination of land use and other procedures are complete, and whether the balanced land income is reused.

Li Luxue opened the smart heat source implementation plan, which includes the basic project situation, investment estimation and fund raising plans, income balance calculation, social benefit analysis, pre-project performance evaluation report and other contents. Among them, the project planning approval clearly stated that on October 28 last year, a reply letter to the planning site selection opinion issued by the Jinan Municipal Natural Resources and Planning Bureau was obtained, and the approval and approval of the Administrative Approval Bureau the next day. In May this year, we have obtained planning permits for construction projects of each project.

In addition, the rationality of the pre-performance evaluation indicators, the project capital and bank loans are in place, whether the future source of income is clear, whether the coverage multiple meets the standards, and whether the project applicant involves hidden debts and litigation, etc. are included in the review scope of the "one case and two letters". The project implementation plan also requires the project unit, the project unit's supervisory unit, and the financial department at the same level to stamp it, and then jointly confirm and report it to the Shandong Provincial Department of Finance.

In the legal opinion on smart heat source, Jinan Heat Group Co., Ltd., as the project implementation agency, has all the qualifications of the main body. After checking the enterprise information system, the opinion confirms that the institution has not been included in the list of persons subject to execution and breach of trust. In the "Project Financial Assessment Report", the main source of income for smart heat sources is hot sales. After being put into use, it is expected that the total revenue in 2024 will reach 112 million yuan, and it will increase year by year. According to the analysis of the accounting firm, the fund coverage rate of the principal and interest of the project can reach 1.86 times. If the principal and interest are repaid after 20 years, there will still be a cash balance, and there will be no funding gap in between. "This project is very well prepared in the early stage, which has bought time for rapid approval and cleared obstacles for applying for special bonds." Chen Qianxi said.

"Accelerating the use of government special bonds is the first step to screen out high-quality projects. In recent years, Jinan City has increased departmental coordination to improve the efficiency of government services, and effectively guaranteed the quantity and quality of projects entered into the warehouse." Zhou Zhiyong said.

On October 25 last year, Li Luxue uploaded the "one case, two books" of the smart heat source project, "Project Application Report", pipeline geophysical exploration map and other materials in accordance with the new requirements, and initiated the application for a government special bond project. Unexpectedly, he received the Jinan City warehouse entry notice in 4 days, which was more than half a month faster than before.

On May 29 this year, 300 million yuan of government special bonds were allocated. "This year's special bonds have significantly accelerated from application to issuance, which has effectively promoted the progress of the project," said Li Luxue.

How to spend special bond funds?

has issued management measures to clarify the negative list, improve the integration of finance and business departments, and accelerate the formation of physical workload

Special bond funds are in place, how should they be spent? Before

, this problem has been plaguing the financial staff of the project unit. Li Luxue gave an example, saying that in July 2020, Jinan Energy Group was established by integrating the city's heat and gas. The subsidiaries do not have the same understanding of how government special bond funds are used.

"Due to the lack of specific operating rules for the management and use of special bond funds, many subsidiaries do not know which document to find the basis and solution ideas when encountering specific problems. When asked about the headquarters, we don't know how to reply." Li Luxue said that, for example, according to the requirements of bonds for capital expenditures, all related to assets can be paid. So, can special bond funds be used for project land expropriation and demolition? Can it be used for preliminary expenses for consulting, design and other projects?

When confused, Li Luxue often consults Chen Qianxi.Chen Qianxi will bring out a blue book with a thick brick, which is a compilation of government debt policies, covering policies and measures on government debt by various departments such as development and reform, finance, and housing and construction. "It turns out that we basically look for policies from here, but it is just a system framework. The specific details are still to rely on artificially judging whether the expenditure is reasonable." Li Luxue said.

problem guides the direction. Last year, the Jinan Municipal Finance Bureau conducted in-depth research on national policies and combined with the audit consensus, it issued the "Interim Measures for the Management of Special Bond Funds for Local Governments in Jinan City" on December 12, 2021, clarifying the negative list.

"The method is clearly defined, and our problem is solved easily, which will greatly contribute to the company's financial control and audit compliance." Li Luxue said that on May 17 this year, Jinan Energy Group also issued the "Regulations on the Management of Local Government Special Bond Funds" to uniformly manage the special bond funds of each subsidiary.

funds have rules to follow, and the payment progress has been greatly accelerated. In the past, the financial and business departments had low integration and many misunderstandings. The use of funds was scheduled by people, and management was limited to the use of funds and project construction. Dong Linqiang, director of the Finance Department of Jinan Energy Group, introduced that a multi-dimensional management mechanism such as declaration management, issuance management, supporting financing, asset management, and performance management have been established. The financial department adjusts the pace and spends quickly. The work of the business department is progressing smoothly, and the physical work has been accelerated, which has truly played a leading role in investment. How to evaluate the performance of

special bonds?

Establish a fiscal budget performance review center to achieve full management of special bond projects

Recently, Cao Chen, director of the Debt Evaluation Department of Jinan Financial Budget Performance Review Center, was busy. Before the end of September, all projects using special bond funds last year will be completed.

In December 2020, Jinan City established the Jinan Municipal Government and Social Capital Cooperation Service Center (Jinan Municipal Finance Budget Performance Evaluation Center), in which the Debt Evaluation Department is responsible for the performance evaluation of special bond projects at the municipal level.

"Special bond projects generally adopt a combination of self-evaluation and key evaluation. The provincial level requires projects with a total amount of special bond funds not less than 10% each year for key evaluation. You can hire third-party institutions or organize and implement them by the Debt Evaluation Department. Jinan City has self-pressed and actively increased this proportion to 30% in the city." Chen Qianxi introduced. How to evaluate

more reasonably? In October 2021, the Shandong Provincial Department of Finance issued the "Shandong Provincial Government Special Bond Project Fund Performance Management Measures", which strengthened full-process management through pre-performance evaluation, performance target management, , in-process performance operation monitoring, post-process performance evaluation management, and application of evaluation results, and other links, and promoted the improvement of bond funds allocation efficiency and use efficiency.

Before the self-evaluation of projects, only first-level indicators were set, and there were no refined goals for fund use, project progress, etc. Now, according to the method, measuring a project usually depends on four indicators: decision-making, project management, output and benefit, and there are also many secondary and third-level indicators. Li Luxue said: "For example, output indicators need to be refined into indicators such as quantity, quality, timeliness, and cost. The benefits are divided into indicators such as economic benefits, social benefits, ecological benefits, and sustainable impact."

is in the key evaluation link. "In the past, the evaluation focused on capital operation, revenue and expenditure budget, but now it is more concerned about the source of fiscal repayment capacity and principal and interest repayment, especially for projects put into production. The income will be evaluated in the focus." Cao Chen said.

Li Yihua introduced that the project income of special bonds reflects the comprehensive benefits, including the project driving effective social investment, the project supporting major national regional development strategies, and the satisfaction of the project's direct service targets.

After the project construction is completed and enters the operating period, the Jinan Municipal Finance Department, project management department and project units must conduct "three-party joint control" on the implementation of project income, monitor the deviation between the actual operating income of the project and the calculated income, and promptly correct the problems found in the monitoring.

At present, taking performance evaluation as a starting point, Jinan has achieved full management of special bond projects. At the end of last year, the construction of Jinan Thermal Power Self-Management Station was completed, and heating services can be provided during this year's heating season. The project revenue is considerable and lays the foundation for subsequent project application.

"Government bond project performance management is an important part of the comprehensive implementation of budget performance management." Chen Qianqian said that the evaluation results of the continuous construction project or the special bond project applied for again are an important basis for allocating funds.

In 2022, Jinan City’s level achieved full coverage of performance evaluation using 40 projects using 12.059 billion yuan of special bond funds in 2021, and the evaluation results were directly linked to the allocation of special bond quotas.

How to supervise special bond funds?

relies on the integrated budget management system to develop a local bond management system to solve the problem of data out-of-synchronization and conduct penetrating supervision of funds according to projects. After each project payment is paid, Li Luxue will import all original electronic certificates such as project supervision orders, bank payment orders, invoice contracts, etc. into the Jinan local bond management system to form a logical closed loop.

"In the past, the use of funds had to be reported step by step, and there were no so many details to be dispatched, which was basically a general idea." Li Luxue said, "Now each fund has rules to follow and traces to check, and the pressure on the project unit has been much less."

In order to meet the needs of normalization of special bond issuance and refined project management, in 2021, the Jinan Municipal Finance Bureau relied on the integrated budget management system to develop a local debt management system. The financial department can timely grasp the progress of the project in every link and every node, help analyze and judge risk points and take timely countermeasures, and realize closed-loop management from project reserves to project performance and asset management. At present, the system has been basically completed and started to be used.

Now, Chen Qianxi and her colleagues schedule weekly and report monthly to follow up on the progress and specifications of special bond projects. If there is a slow progress or payment problem, it will be clear at a glance in the system.

However, a project may involve many departments. In the past, the financial department could only conduct vertical supervision. How to ensure that the special bond funds are truly implemented and effective?

The answer is to capture the project. Chen Qianqian introduced that in order to solve the problems of insufficient business collaboration and information sharing among various links, Jinan City seamlessly connects the local debt management system with budget indicator management, treasury centralized payment management, budget performance management, and asset management systems. At present, data has been synchronized and shared, and all special bonds in the city have been managed according to the project, and all departments involved have been integrated and penetrated supervision. "Where these systems are connected, we can supervise them and truly manage special bond projects to the end," said Chen Qianxi.

Next, after the data is fully connected, penetrating supervision can realize the automatic docking and data collection of accounting information such as financial revenue and expenditure of local government debt management systems and special bond projects, bank account change information, and timely grasp the "borrowing and repayment" situation of project funds use, construction progress, operation management, etc.

"This is actually equivalent to including special bond funds in the supervision and assessment of the entire fiscal budget, so that special bond funds can better play an important role in driving investment." Chen Qianxi said.