WASHINGTON D.C., April 29, 2016 – China gets support from the World Bank in its efforts to further develop a modern fiscal system, as the Bank’s Board of Executive Directors has approved a loan of US$22 million aimed to inform the design and implementation of the Chinese government's fiscal reform program and to improve its capacity in public financial management.
The project supports China’s ambitious and comprehensive reform agenda released in November 2013, which requires significant changes in China’s fiscal system. In 2014 the government endorsed a program of reform to the nation’s tax system, budgeting practices and center-local fiscal relations. The government aims to fully develop a modern fiscal system by 2020, by improving the tax system, budget management, and allocation of governmental functions and spending responsibilities among levels of government.
“In this context, China’s government seeks technical assistance in implementing key reforms in public finance. They are looking to the World Bank for global knowledge and international experience,” said Karlis Smits, World Bank’s Senior Economist and Team Leader for the project.
The Building a Modern Fiscal System Technical Assistance Project will support the government’s efforts to strengthen core budget and tax systems. Policy research financed under the project will focus on seven areas including: basic framework of a modern public finance system; a modern budget management system; a road map for tax policy reforms; inter-governmental fiscal relationships; accrual-based financial reporting; the legal framework for China’s fiscal and tax policies; and institutional arrangements for learning and knowledge sharing within Ministry of Finance.
The project will also support government’s objective to make fiscal policy more effective in facilitating an orderly transition to a more balanced, equitable and sustainable growth trajectory through policy research, developing tools and increasing capacity to analyze linkages between economic growth and fiscal policy.
The project cost is estimated to be US$28.15 million, to be financed through an IBRD loan of US$22 million and counterpart funds of around RMB 40 million. The project will be implemented in the next five years.
The Ministry of Finance of China will be the direct beneficiary of the project. The ultimate beneficiaries will be China’s people through better access to public services that will result from more equitable and efficient allocation of budgetary resources.
For more information on this project, please visit: www.worldbank.org/projects
For more information on the World Bank program in China, please visit: www.worldbank.org/china