The Ministry of Finance said in its 1H fiscal policy execution report that risks
from stock implicit local government debt have been effectively mitigated. It
reported localities had issued 1.73 trillion yuan of replacement bonds by
end-July, completing 86.7% of the 2026 2 trillion yuan quota. The ministry said
it will accelerate reform and transformation of local government financing
vehicles (LGFVs), guide localities to resolve LGFV stock implicit debt, legally
clarify government versus enterprise responsibilities, and speed the removal of
financing functions from platforms. It will coordinate with financial regulators
to optimize financial support policies for debt-risk resolution and guide
financial institutions to use measures such as debt restructuring to reduce
LGFVs’ liquidity risks and interest burdens.
