MOF Encourages Resolution of Existing Debts of Financing Platforms through PPP (April 2015)

source：　 date：2015-05-01　 author：

The Ministry of Finance ("MOF") has recently issued the Guidelines on the Demonstration of the Fiscal Capacity for Public-Private Partnership Projects (the "Guidelines") for implementation as of the date of promulgation.

The Guidelines encourage regions included in the list of regions subject to early warnings of high risk of local government debts to adopt the mechanism of public-private partnership ("PPP") to resolve the existing debts of local financing platform providers, while remaining prudent in controlling the scale of new PPP projects. The Guidelines specify that the main responsibilities of fiscal expenditure throughout the life cycle of a PPP project cover equity investments, operating subsidies, risk obligations and investments in supporting facilities. Financial departments (or PPP centres) shall take into consideration various factors such as the characteristics, scenarios and probability of occurrence of all kinds of expenditure responsibilities and conduct separate estimates of the fiscal expenditure responsibilities for each project throughout its life cycle. The expenditure arranged for all PPP projects out of the general public expenditure budget each year shall not exceed 10% of the budget.