China plans a wider budget deficit this year as the government adds fiscal fuel to monetary stimulus to cushion the economy’s slowdown while risks such as a local-government debt binge are reined in.
The government projects a budget shortfall of 1.62 trillion yuan ($258 billion) in 2015, the Ministry of Finance said in a report presented to the National People’s Congress in Beijing today. That amounts to about 2.3 percent of gross domestic product, it estimated.
China’s central government is assuming some of the debt incurred by local-government financing vehicles as it reshapes its fiscal framework. Premier Li Keqiang last week called for more active fiscal policy, while the central bank on Saturday announced its second interest-rate cut in three months.
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