Saturday, April 04, 2009

Record fiscal budget within safe limits

CHINA'S 950 billion yuan (US$139 billion) fiscal budget for 2009 is under control, Wang Jun, vice finance minister, said yesterday at the China Development Forum 2009 in Beijing.

Faced with the economic downturn under the impact of the global financial crisis, China has taken an active fiscal policy and increased central spending since the second half of 2008. The national fiscal deficit was 110 billion yuan last year, less than 1 percent of its total GDP.

Wang described this year's sum as never seen before in history, but stressed the risks were controllable considering China's economic foundation.

The planned 950 billion yuan, a majority of which would be raised through bond issuance, accounted for about 2.9 percent of GDP. Government bonds were estimated to take up about 20 percent of GDP in 2009.

Both figures were within the international safety line set for the proportion of deficit and government bonds to a nation's GDP, which is 3 percent and 60 percent, respectively.

An active fiscal policy would bring about some fiscal risks, according to Wang. He said the government has been working on measures against possible financial threats.

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