{
  "title": "Local Government Financing Platforms in China: A Fortune or Misfortune?",
  "publication": "IMF Working Papers, December 16, 2013",
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  "summary": "China’s rapid credit expansion in 2009–10 brought local government financing platforms (LGFPs) into the spotlight. This paper discusses their function, reasons behind their recent expansion, and risks they are posing to the financial sector, local governments, and sovereign balance sheet.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- China’s rapid credit expansion in 2009–10 brought local government financing platforms (LGFPs) into the spotlight.\n- The paper discusses LGFPs’ function, reasons behind their recent expansion, and risks they are posing to:\n  - the financial sector,\n  - local governments, and\n  - the sovereign balance sheet.\n- Central argument: LGFPs were a fortune for China in the past, but would turn out to be a misfortune if the causes of the rapid expansion of LGFPs are not addressed promptly.\n- Proposed ways to avoid misfortune:\n  - acknowledging and addressing the revenue and expenditure mismatches at the local government level;\n  - establishing a comprehensive framework to regulate and supervise local government budgets;\n  - ensuring the sustainability of the financial resources obtained from the sale of land use rights;\n  - developing local government bond markets and promoting financial reforms."
    },
    {
      "heading": "Key findings and risks",
      "content": "- LGFPs expanded rapidly following the 2009–10 credit expansion.\n- Risks identified include pressures on:\n  - the financial sector,\n  - local government fiscal positions, and\n  - the sovereign balance sheet.\n- The paper emphasizes the conditional nature of LGFPs’ value: beneficial historically, potentially harmful going forward if underlying causes are unaddressed."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Acknowledge and address revenue and expenditure mismatches at the local government level.\n- Establish a comprehensive framework to regulate and supervise local government budgets.\n- Ensure the sustainability of financial resources derived from the sale of land use rights.\n- Develop local government bond markets.\n- Promote financial reforms.\n\n---\n\n Content in this bundle\n\n- wp13243\n  - wp13243 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp13243 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/local-government-financing-platforms-in-china-a-fortune-or-misfortune-41131"
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    "Authors: Miss Yinqiu Lu, Tao Sun",
    "Published: December 16, 2013",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475599671.001",
    "China’s rapid credit expansion in 2009–10 brought local government financing platforms (LGFPs) into the spotlight.",
    "The paper discusses LGFPs’ function, reasons behind their recent expansion, and risks they are posing to:",
    "Central argument: LGFPs were a fortune for China in the past, but would turn out to be a misfortune if the causes of the rapid expansion of LGFPs are not addressed promptly.",
    "Proposed ways to avoid misfortune:",
    "LGFPs expanded rapidly following the 2009–10 credit expansion.",
    "Risks identified include pressures on:",
    "The paper emphasizes the conditional nature of LGFPs’ value: beneficial historically, potentially harmful going forward if underlying causes are unaddressed.",
    "Acknowledge and address revenue and expenditure mismatches at the local government level.",
    "Establish a comprehensive framework to regulate and supervise local government budgets.",
    "Ensure the sustainability of financial resources derived from the sale of land use rights.",
    "Develop local government bond markets.",
    "Promote financial reforms.",
    "**_wp13243**"
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