The mechanism for directly allocating emergency fiscal funds to primary-level governments should be a regular practice, Premier Li Keqiang said at the State Council executive meeting on April 27.
It was the third time the Premier mentioned the task in recent days. At the fourth State Council work conference on clean governance on April 26, he urged greater overall monitoring throughout the use of fiscal funds, and at another State Council executive meeting on April 21, he required solid implementation of this regular mechanism.
In the face of unprecedented shocks last year, the government rolled out policies on a large scale to safeguard employment, people's livelihoods, and market entities, initiating a mechanism to directly allocate newly added fiscal funds to prefecture- and county-level governments, the Premier said.
Those funds facilitated the implementation of tax and fee cuts at grassroots levels, he said.
"Past practices have shown that the mechanism for direct allocation of fiscal funds is a major move in innovative macro regulation, and provides important support for stabilizing the economic fundamentals," Premier Li said. "As required by the Government Work Report, the direct allocation mechanism will become a regular practice this year."
All regions and departments should ensure that related policies take effect and are implemented without delay to offer governments at prefecture and county levels more timely and robust financial support in delivering benefits to businesses and people, Premier Li said.
Direct funds to support employment, livelihoods
Last year, 1.7 trillion yuan went to the direct-benefit mechanism. The "lifeline support", as Premier Li called it during a press conference after the closing of this year's two sessions, reached some grassroots-level governments as soon as seven days. They played a key role in helping implement tax cuts, stabilize jobs, guarantee wages, and sustain operations.
Unlike last year, this year's directly funneled funds are mainly from existing resources. The allocation of funds and interests will be adjusted as needed. With the central government's subsidies for public well-being included, the total amount of funds under the mechanism will reach 2.8 trillion yuan.
"Although the economy generally maintains steady recovery, its foundation is not yet solid enough, and market entities have mixed results. So the government should set priorities for how to use the directly channeled funds, with a focus on bolstering the steadily recovering economy," Premier Li said.
This year's 2.8 trillion yuan should still be mainly used to support employment, livelihoods, and market entities. The funds will also help guarantee wages and normal functioning of primary-level governments, the Premier said.
More financial resources should target compulsory education, basic healthcare, and basic housing needs, as well as farmland and water conservancy projects, he added.
"While implementing the direct fiscal fund allocation mechanism last year, related departments of the State Council have focused on the overall situation with active moves, skipped the intermediate links by passing the fiscal funds directly to local governments. It led to higher efficiency and was favored by market entities and the people," the Premier said.
The Premier said the method is fast, direct, and efficient to prevent the funds from being wasted in the middle of any long transferring process.
Related departments have made solid efforts to adopt the direct fiscal fund system as a regular practice, the Premier said, adding that the quick channeling of funds to the primary level and its fast pay-off have neutralized the impact of the economic cycle and facilitated a steady and better economy.
Primary-level government to bear more responsibilities
Management and handling of the direct fiscal funds will pose a great challenge to capability, efficiency, transparency, and clean governance of primary-level governments, the Premier said, stressing that primary-level governments are key to the healthy operation of the mechanism.
With the funds going straight to them, primary-level governments will assume more power and responsibilities, the Premier predicted, calling for meeting the expectations of the Communist Party of China Central Committee, the State Council, and the people by managing and utilizing the funds to resolve the urgent needs of the people and market entities.
"The related departments of the State Council have only dropped handling of the funds, but still need to fulfill their duties in supervision of the direct funds," Premier Li said.
He pressed for better assessment management of fiscal funds to ensure that precious funds can be used in line with policy requirements for major demands and key domains.
Real-name records for the use of direct fiscal funds should be kept to show clear money flow details and verifiable accounts, the Premier said, urging efforts to enhance auditing, supervision, and follow-up evaluation of the fiscal funds.
While highlighting the best use of direct funds, the Premier added that irregularities, such as fraudulent claims and illegally withholding or diverting funds, will be seriously investigated and dealt with.
Making the direct fiscal fund allocation mechanism a regular practice is a key move in maintaining macro policies' consistency, stability, and sustainability, the Premier stressed, urging timely implementation of policies for the best outcome.
