Beijing nominates local government debt ceiling for 2016

BEIJING – China’s Ministry of Finance has detailed a new ceiling on local government debt for 2016. The Ministry says total outstanding debt must be kept under RMB17.2 trillion (US$2.7 trillion), as set down in Chia’s new budget approved by the National People’s Congress in March.

China is determined to rein in local government debt mainly caused by borrowing over the past few years. A debt swap mechanism allows local governments to convert their debt to low-interest bonds, which subsequently eases the debt burden without disrupting the broader economy.