2011-02-22 17:43

The Ministry of Railways will face a debt peak in 2014, the China Economic Weekly said Monday, citing an audit report.

According to the ministry's 2009 annual audit report released by the National Audit Office, the ministry's total liabilities reached 1.3 trillion yuan at the end of 2009. The short-term financing bills, medium-term notes and railway construction bonds totaled 562.7 billion yuan ($85.5 billion) – of which only 100 billion yuan has been cashed, according to the news report.

The Ministry of Railways announced Feb 14 that it would issue the second batch of ultra-short-term (180 days) financing bills worth 10 billion yuan on Feb 15. The funds raised will finance railway construction, the magazine said.

Statistics released by the Ministry of Railways show the ministry invested 606.7 billion yuan in infrastructure construction in the first 11 months of 2010. But it earned only 412 billion yuan in transport revenue during the same period, which showed a significant imbalance.

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According to the 2010 Annual Report of China's Transportation issued by Minsheng Bank, the rapid growth of debt financing has overwhelmed the ministry. It paid more than 40 billion yuan in interest in 2009, and the number is expected to exceed 100 billion yuan in the future.

The revised Mid- and Long-term Railway Network Planning showed that construction of 16,000 kilometers of high-speed railway tracks will be completed by 2020. Half of the investment will come from debt financing, the magazine reported.