June 12, 2020 / 5:48 AM / a month ago

China says will ensure centrally allocated funds reach local levels directly

BEIJING (Reuters) - China will ensure the special funds allocated from the central government this year will reach city and county levels directly to support firms and residents in difficulties, vice finance minister Xu Hongcai told reporters on Friday.

The government has said it would set up special transfer payments of 2 trillion yuan (224 billion pounds) from special treasury bonds and an increased budget deficit to local governments.

“The purpose of establishing a special transfer payment mechanism is to prevent local governments from not using all the funds at the grass-roots level and benefiting enterprises and residents,” Xu told a briefing.

Beijing has stepped up funding support for struggling local governments, as part of steps to revive the virus-ravaged economy and ward off mass job losses.

The increased funds will help support employment, expand consumption and investment, Xu said.

The government will set up a strict supervision system to track the fund distribution to prevent misappropriation and fraud, he added.

Beijing has set a 2020 budget deficit of at least 3.6% of GDP, up from last year’s 2.8%. The government will also issue 1 trillion yuan in special treasury bonds this year.

Reporting by Kevin Yao; Editing by Shri Navaratnam and Lincoln Feast.

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