Preliminary SPB quotas drop
China’s finance ministry (MoF) has allocated a preliminary special-purpose bond (SPB) and general-purpose bond quota for 2024.
- 21st Century Biz reported the news on Thursday, saying the quotas were allocated in December.
Some context: China’s parliament (NPC) approves full-year quotas for both types of bonds at its annual meeting in March.
- However, the MoF allocates preliminary quotas – usually at the end of the previous year – so local authorities can fund public works from January through March.
21st Century Biz didn’t report the size of the 2024 quotas. However, the MoF can approve preliminary SPB quotas of up to 60% of the previous year’s full-year quota.
- Given 2023’s full-year quota was RMB 3.8 trillion, 2024's preliminary quota can be as high as RMB 2.28 trillion.
Citing unnamed sources, the paper said the preliminary quotas of some medium- and low-risk provinces increased more than 10% from last year, while high-risk provinces received a lower quota.
That’s no surprise.
- In October, Reuters reported the State Council had imposed borrowing restrictions on 12 heavily indebted provinces.
For these 12 provinces, lower SPB quotas might be offset by funds received from the central government’s issuance of RMB 1 trillion in treasury bonds for disaster relief and prevention.
- 21st Century Biz reports those funds are being disproportionately distributed to high-risk provinces.
Get smart: The December Central Economic Work Conference called on strong provincial economies to ramp up economic support.
- It looks as though strong provinces will borrow more – while central authorities support weaker provinces.