Exclusive: Ghana's John Mahama on his planned presidential comeback
Exclusive: Ghana's John Mahama on his planned presidential comeback
Exclusive: Ghana's John Mahama on his planned presidential comeback
Exclusive: Ghana's John Mahama on his planned presidential comeback
Exclusive: Ghana's John Mahama on his planned presidential comeback
Exclusive: Ghana's John Mahama on his planned presidential comeback
China on Friday, November 8, made a bold move to address mounting economic pressures with a massive $1.4 trillion debt swap programme aimed at refinancing local government debt.
This unprecedented initiative, approved by the Standing Committee of the National People’s Congress, is designed to stabilise the world's second-largest economy amid a backdrop of slowing growth and increasing financial risks.
"The arrangement of a 6 trillion yuan debt limit to replace the existing hidden debts of local governments is a major decision made by the Party Central Committee after fully considering the international and domestic development environment, ensuring the smooth operation of the economy and finance, the actual debt of local governments and other factors. It is the highlight of a series of incremental policies this year," Finance Minister Lan Fo’an said during a press conference.
The debt swap plan allows local governments to issue new bonds to replace existing off-balance-sheet debt, often called "hidden debt." This hidden debt, accumulated over the years through local government financing vehicles, has significantly burdened regional economies.
By swapping this debt, local governments can reduce their interest payments and free up resources for investment and consumption.
The move would raise "the local government debt limit by six trillion yuan, which will be used to replace existing hidden debts, freeing up space for local governments to better develop the economy and protect people's livelihood," state broadcaster CCTV said.
China's economy has been struggling with several challenges, including the aftermath of strict pandemic controls, a real estate crisis, and a slowdown in global demand.
The debt swap is part of a broader strategy to mitigate these issues and ensure economic stability. The plan includes raising the local government debt ceiling to 35.52 trillion yuan, allowing for the issuance of six trillion yuan in special bonds over three years.
Finance Minister Lan Fo’an highlighted that the debt swap could save around 600 billion yuan in interest payments over five years. This saving is expected to boost local economies by providing much-needed funds for infrastructure projects and other growth-stimulating activities.
