China introduces emergency plan for debt risks

Beijing, Nov 14 (IANS) Following rising concern over local government debt, China floated a four-grade emergency plan on Monday that could mean “fiscal re-balancing”.

With Grade I being the most serious, the classification involves the nature and impact of any incident, Xinhua news agency cited a State Council announcement as saying.

The city and county governments will fiscally re-balance if their annual interest payment on general debt is 10 per cent higher than its public spending budget, or if interest on special debts is 10 per cent more than its government fund budget.

The central government will not become involved in bailouts and local government officials involved in graded incidents will be held accountable.