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China finds $84bn local government debt irregularities

National Audit Office said breaches included “irregular credit guarantees”, “irregular collateral” and “fraudulent and underpayment of registered capital”.

There are growing concerns about the amount of bad loans being held by local governments.Official figures show they held debt of 10.7tn yuan ($1.7tn; £1.1tn) in 2010.

“The State Council is studying proposals to enhance local government debt management and to address fiscal and financial risks,” the audit office said in the report.
‘Again and again’
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A lot of the local debt will be absorbed by the central government”
Michael Pettis Peking University

Local governments have been borrowing money from Chinese banks to fund projects aimed at maintaining economic growth.

According to the China Banking Regulatory Commission, local governments took up 80% of total bank lending in China at the end of 2010.

However, analysts said that although the lending had helped to spur investment and boost growth, it was now weighing on local governments.

“Whenever you look at lending that spurs growth miracles, it starts off with an increasing ability to pay the debt,” Professor Michael Pettis of Peking University told the BBC.

“But in every case that ability fades. That is the process that is happening in China,” he explained. “We are going to see stories like this again and again.”
Easing burden?

In October last year, China allowed four local governments to sell bonds for the first time in 17 year. It was hoped the sale would help them pay their loans.

However, the central government put a limit on the amount of bonds the local governments could issue despite the fact that there was a lot of interest among investors.

According to the Xinhua news agency, Shanghai’s bond sale received bids for three times the amount of bonds on offer.

As a result, many of the local governments still have sizeable debts and while the central government may let them raise money, it may also have to take further measures to solve the problem, analysts said.

“A lot of the local debt will be absorbed by the central government,” said Mr Pettis of Peking University.

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Late checks on Indonesia poll lists ahead of vote

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Abdul Hafiz Anshary (C), the head of the General Election Commission (KPU), poses with presidential candidate Jusuf Kalla (2nd L) and his running mate Wiranto (L), and presidential candidate Megawati Sukarnoputri (2nd R) and her running mate Prabowo Subianto (R) after their meeting in Jakarta July 6, 2009.

Late checks on Indonesia poll lists ahead of vote

JAKARTA (Reuters) – The two challengers for Indonesia’s presidency started cross-checking electoral rolls on the eve of polling on Tuesday, after lodging complaints that the sprawling country’s voter lists were riddled with irregularities.

Opinion polls have consistently shown that President Susilo Bambang Yudhoyono will trounce his rivals, winning a second term and a chance to quicken the pace of reform in Southeast Asia’s biggest economy.

The objections to the voting process, led by Yudhoyono’s challengers, former president Megawati Sukarnoputri and Vice President Jusuf Kalla, are not expected to derail the election.

However, analysts said the complaints could be a tactic aimed at fanning public doubt about the credibility of the process and pave the way for the losing contestants to challenge the result.

Security was stepped up in the capital, Jakarta, and other parts of the country on Tuesday because of fears that wrangling over the credibility of the register of some 176.3 million voters could spark protests in the world’s third-largest democracy.

“People should not be confused, and this should not make the world view what is happening in our country as abnormal,” Yudhoyono told reporters late on Monday, urging his rivals not to act improperly ahead of the vote.

A victory for Yudhoyono would most likely bring a renewed push for reform to attract foreign investment, create jobs and drive economic, which has slowed from 6.1 percent in 2008 and is expected to come in at between 3 and 4 percent this year.

If he wins the first round with more than half the votes, on the back of his modest success in tackling graft and the best economic performance in a decade, stocks, bonds and the rupiah are likely to surge on hopes of a more ambitious reform plan in his next five-year term and beyond.

However, the atmosphere was tense in Papua, where extra police and special forces were on standby after recent violence linked to separatists in the remote province.

Papuans wearing traditional penis gourds looked on as booths were set up using traditional woven bags instead of ballot boxes.

A victory for Yudhoyono would most likely bring a renewed push for reform to attract foreign investment, create jobs and drive economic, which has slowed from 6.1 percent in 2008 and is expected to come in at between 3 and 4 percent this year.

“We hope to be able to see a continuation of the reforms that we already started,” Trade Minister Mari Pangestu told Reuters in an interview, adding that the new government would need to send “a strong signal that we are moving in the right direction”.

If Yudhoyono takes more than half of the votes in the vote there will be no need for a run-off with the runner-up. A clear picture of the result should emerge by around 2 p.m. (0700 GMT).

Analysts say a victory for Yudhoyono, widely known as “SBY”, would come on the back of his modest success in tackling graft and the best economic performance in a decade.

Stocks, bonds and the rupiah have rallied this year on the prospect of a Yudhoyono win, and analysts see them rising further on hopes for a heftier reform drive in his next five-year term.

The rupiah , the best-performing currency in Asia so far in 2009, eased 0.3 percent against the dollar in afternoon trade on Tuesday. Indonesian stocks, which are up 50 percent so far this year, were up about 1 percent

Indonesian sovereign bond prices have also rallied in the last few months, with yields set to fall further if foreign investors return after the presidential election, traders said.

Concern over the voting lists arose first in the run-up to a parliamentary election in April, when duplicate and fictitious names were found on rolls and some voters were not registered.

Tension over the issue was partly defused on Monday when key demands made by Kalla and Megawati were met, including their request to receive copies of the electoral rolls.

Indicating that Yudhoyono’s opponents were backing away from earlier suggestions they could ask for the poll to be postponed, Megawati on Tuesday urged her supporters to go out and vote.

But her running-mate, Prabowo Subianto, said he still believed there were a minimum of 10 million names with problems.

“We expect it could be potentially as many as 20 million names,” the former general told a news conference.

An economist at the Danareksa Institute played down the prospect of violence over the list dispute.

“I think the losing parties will complain but I don’t think they will challenge in a serious way,” said Purbaya Yudhi Sadewa.

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Congo Republic votes, opposition wants boycott

af.reuters.com

Congo Republic votes, opposition wants boycott

BRAZZAVILLE – Congo Republic voted on Sunday in an election widely expected to give President Denis Sassou-Nguesso another seven years in power and which opposition parties are boycotting over what they say are irregularities.

Investors are watching to see whether the vote sparks a repeat of the conflict and rows that have marred previous elections and disrupts political and economic stability in Africa’s fifth biggest oil producer.

Polling stations opened at around 0600 GMT in the capital, with few voters lining up in the early hours but numbers starting to pick up later in the morning.

“I have just voted. I hope that the president will win. But if he is re-elected, he must tackle the problem of unemployment, increase teachers’ salaries,” said 30 year-old Georges Itoua.

Congo has long produced large amounts of oil but Sassou-Nguesso’s critics say that only a small elite has benefited from it. He is one of three African presidents whose wealth is being investigated by a French judge.

Opposition parties, citing irregularities in voter lists and cards, had called for the vote to be postponed to allow for the creation of a new election commission and the clean up of voter lists, which were a source of complaints during 2002 polls.

“No one should go and vote on Sunday. Stay at home — we don’t want an electoral hold up or a parody of an election,” Clement Mierrassa, head of the Congolese Social Democratic Party, which is part of the coalition calling for a boycott.

The election commission says that some 2.2 million people will be eligible to vote for the 13 candidates. But many say they have not been issued with their cards while opposition parties say an extra 500,000 cards have been printed for fraud.

he European Union has also already criticised the lack of progress made in Congo since elections in 2002.

But the ruling party has mobilised large crowds during campaigning while the divided opposition has struggled to drum up support for its rallies, with some voters preferring to keep the political status quo rather than risk a return to violence.

“You should go and vote for your candidate Denis Sassou-Nguesso in peace. Fear not and go and vote. There will not be any more war in Congo,” the president told a final rally.

EU DISAPPOINTMENT

Disputes in the lead up to the poll have led to tensions and some residents have left the capital, but analysts say violence is unlikely.

Sassou-Nguesso has been in and out of power since a 1979 coup, losing multiparty elections in 1992 before sweeping back into power in a war that destroyed much of the capital in 1997.

He won the last election in 2002, when his main rivals were banned or withdrew, citing irregularities.

“In terms of the electoral process, not much has evolved since 2002 in terms of an administration which does not give clear figures on registration, electoral lists or the process itself,” Miguel Amado, head of the EU mission in Congo said.

“We expected more progress from the government,” he added.

The EU said it was not sending observers to monitor the vote due to priorities elsewhere.

Investors are looking for signs of stability before they diversify into other sectors of the economy such as mining and agriculture, and several deals hinge on the outcome of the poll.

A group of South African farmers have been told they must wait until after polling day to find out if they have secured a multi-million hectare land deal in Congo, one of the largest such deals on the continent.

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