BEIJING, May 28 (Reuters) - China urged local governments on Wednesday to quicken the pace of budgetary spending to guarantee construction of key projects and boost the slowing economy.
The finance ministry also said local fiscal agencies must finish allocating 2014 budget money by the end of June, or risk the money being called back by the central government by the end of September.
“The move is to further push ahead economic structural reforms, improve people’s livelihood and make the fiscal spending an important boost to the economy,” the ministry said in a statement on its website, www.mof.gov.cn
It also said the central government would consider cutting next year’s budget quota for those local departments which failed to spend the amount allocated for this year.
“We noticed problems that the fiscal payment is relatively slow, with large amounts of budget money being carried over to next year, which leaves a big amount of treasury deposits in the coffers,” it added.
The ministry reiterated that the budget money for key infrastructure projects must be paid in a timely manner, while spending on some projects could be front loaded.
Chinese leaders have ruled out the possibility of any big fiscal stimulus to spur economic growth, as they tolerate a gradual slowdown while pushing ahead with structural reforms.
The government is trying to deal with the lingering hangover of a 4 trillion yuan ($640 billion) stimulus package implemented in 2008-2009, which resulted in piles of local government debt.
Beijing has unveiled a slew of targeted measures this year to help shore up the economy, including cutting reserve requirement ratios for rural banks, quickening construction of railway and public housing and tax cuts for smaller enterprises.
Premier Li Keqiang said last week that China’s economy still faces “relatively big” downward pressures and timely policy fine-tuning is needed.
China’s economy grew at its slowest pace in 18 months in the first quarter, and a Reuters poll shows analysts expect growth of 7.3 percent in 2014, the weakest in 24 years.
$1 = 6.2486 Chinese Yuan Reporting by Aileen Wang and Kevin Yao; Editing by Kim Coghill