Fiscal Vulnerabilities and Risks from Local Government Finance in China

Yuanyan Zhang and Steven Barnett

No 2014/004, IMF Working Papers from International Monetary Fund

Abstract: China weathered the global financial crisis better than most, thanks to a large and timely stimulus. This stimulus, however, was mainly in the form of off-budget infrastructure spending and thus not visible in the headline fiscal data. We construct a time series for the augmented fiscal deficit and debt—augmented to include off-budget activity—that better illustrates the counter-cyclical role of fiscal policy. The results also show that the augmented fiscal deficit and debt are both considerably higher than the headline government data suggest. Nonetheless, at around 45 percent of GDP, the augmented debt is still at a manageable level.

Keywords: WP; IMF staff estimate; debt stock; fiscal deficit; balance sheet; bank loan; government debt; net proceeds; Fiscal Vulnerabilities; Fiscal Risks; Local Government Finance; China; Land Finance; Gross Financing Needs; Debt sustainability; LGFV debt; debt shock; local government; maturing debt; debt issuance; debt estimate; government debt stock; SOE debt; augmented fiscal deficit; Government debt management; Infrastructure; Contingent liabilities; Global (search for similar items in EconPapers)
Pages: 29
Date: 2014-01-14
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)

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