Moody's lauds new govt financing model

The central government has taken key steps toward increasing the responsibility of individual regional and local governments for their own borrowing and investment decisions, according to a report by Moody's, the global credit rating, research and financial analysis firm.

The new guidelines, announced on Oct 2 by the State Council, represent an important move toward establishing a new direct-borrowing model for local governments, Moody's said.

The guidelines will restrict indirect borrowing, such as borrowing through local government financing vehicles, known as LGFVs, thereby leading to a deceleration of local government debt, which has been climbing sharply in recent years.