(Yicai Global) Feb. 14 -- China’s local governments have been given the greenlight to issue CNY2.19 trillion (USD321.3 million) of special bonds in advance this year, 50 percent more than last year and the highest amount ever, to get major infrastructure projects underway as soon as possible and stabilize macroeconomic performance.

Some CNY2.19 trillion worth of special bonds can be issued before the annual National People’s Congress in March, when the year’s target is normally determined, Yicai Global has learned from the draft 2023 budgets released by provincial governments. This amounts to 60 percent of the amount issued last year. As of Feb. 12, more than CNY570 billion (USD83.6 billion) of this had already been issued.

The central government introduced the special bonds financing scheme in 2015 as a way of raising funding for infrastructure, utilities, energy and other public welfare projects. They are repaid from local government revenue or through revenue from the completed projects.

Since 2019, the National People’s Congress has allowed the finance ministry to release up to 60 percent of the previous year’s quota before the congress, so as to enable the proceeds from the debt issue to come into play as early as possible.

The government has approved the early issuance of the maximum amount permitted, reflecting the government’s urgent desire for the funds to be put to work and create results as soon as possible, Luo Zhiheng, chief economist of Yuekai Securities, told Yicai Global.

Although the amount of early issuance is large, this year’s quota of special bonds is expected to be between CNY3.8 trillion (USD557.2 billion) and CNY4 trillion, said Yang Yewei, chief fixed income analyst at the Guosheng Securities Institute. This is a slight increase of between 4 percent and 9.5 percent from the CNY3.65 trillion issued last year, as local governments’ debt is already high and more debt issuance will put extra pressure on repaying debt, he added.

Editors: Tang Shihua, Kim Taylor