(Yicai Global) Feb. 15 -- Local governments cranked up the pace of new bond issuance last month, using about a third of the CNY1.79 trillion (USD282 billion) quota for this year that China’s finance ministry allocated ahead of schedule to help support the economy. Tax experts see the quota being fully used as early as the end of this quarter.

Local governments issued CNY583.7 billion worth of new bonds from the annual quota in January and CNY115.2 billion of refinancing bonds, according to data the ministry released yesterday. This year’s allocation is CNY328 billion for general bonds and CNY1.46 trillion for special bonds.

In January last year, local authorities issued CNY362.3 billion of refinancing bonds because the ministry did not allocate the yearly quota -- CNY3.65 trillion, of which CNY3.5 trillion was for special bonds -- earlier than scheduled.

China is advancing the construction of major projects to stabilize the economy and is speeding up the issuance of local bonds to finance them, tax experts told Yicai Global. They expect the annual quota to be basically exhausted by as soon as the end of the first quarter.

Debt sold by local governments in China is divided into two main categories. One is special bonds to finance specific projects, and the other is general bonds issued to cover the public fiscal deficit. For debt repayment, the former uses revenue, including those from government land transfers and project proceeds, while the latter uses government financial funds.

Almost 32 percent of the funds raised in January from new local government bonds were used to finance municipal and industrial infrastructure, with 22.5 percent going to build transport infrastructure, the ministry said. Some 16.9 percent went on social undertakings, and 11.1 percent on government-subsidized housing projects.

Editors: Tang Shihua, Futura Costaglione