Close the loopholes in fiscal and financial risks, and achieve full policy coverage through local de

After six ministries and commissions including the Ministry of Finance issued documents to further regulate the borrowing and financing behavior of local governments, and made clear requirements for various cooperative behaviors between the government and social capital parties such as PPP and government investment funds in accordance with the law and regulations, the Ministry of Finance recently issued another document to point out the disguised borrowing and financing behavior under the guise of government purchasing services. The relevant person in charge of the Ministry of Finance stated that this means that China has initially achieved full coverage of policies on the main illegal and irregular financing methods of local governments and their departments.

This is called the Notice of the Ministry of Finance on Resolutely Stopping Local Illegal Financing in the Name of Government Purchasing Services, which is mainly aimed at some regions' borrowing financing in disguised form in the name of government purchasing services. There are problems such as expanding the scope of government purchasing services in violation of laws and regulations, extending the period of purchasing services beyond the management authority, and so on, in order to plug financial risk loopholes.

In recent years, local governments have been promoting investment in order to stabilize growth, and some places have used fake government purchase service forms to speed up project financing. Professor Tan Yunming from the University of Finance and Economics told Securities Daily that due to the divestment of government financing functions from local government financing platforms, local governments have packaged government procurement projects into government purchase service projects and entrusted construction agencies, Agree to pay for construction funds in the name of government purchase of services, and implicitly increase local government debt.

The Notice requires all regions to strictly implement government procurement services in accordance with the scope of services determined by the Government Procurement Law. It is strictly prohibited to use infrastructure construction projects such as railways, highways, airports, communication, water, electricity, and gas, as well as education, technology, healthcare, culture, sports, and other fields, as well as pre development of reserve land, and construction projects such as farmland and water conservancy as government procurement services. It is strictly prohibited to include financing activities provided by non-financial institutions such as financial institutions and leasing companies in the scope of government procurement services.