The statement followed local media reports last week which claimed the ministry is planning to secure Yuan 400bn directly from the government and a further Yuan 400bn from bond issuance. The reports stated that the Yuan 200bn already secured - half of which is from the China Development Bank, which was reportedly reluctant to lend the money, and the other half from a new tranche of railway construction bonds - was insufficient to meet the demands of its current projects which it is estimated will cost between Yuan 800bn and Yuan 1 trillion to complete.
According to reports, these funds are not even enough to cover what the ministry already owes various contractors that have worked on projects, let alone interest payments required on loans that will mature this month, or to restart suspended projects.
The Ministry needs to redeem Yuan 40bn in railway construction bonds and super and short-term commercial paper this month, and has a further Yuan 340bn in debt maturing over the next 12 months. At the end of June, MOR's total debt stood at Yuan 2.09 trillion.
Reports in the domestic media stated that the Ministry of Finance, the National Development and Reform Commission, and the China Banking Regulatory Commission had been instructed by the state council to arrange a cash injection for MOR.
However, the Ministry refuted these suggestions, and instead pointed towards a statement issued on November 4 which said that it will pay off some of its creditors before November 20 to ensure funding for projects already under construction. "With the support of relevant departments, the ministry has enhanced its fundraising efforts and will soon channel the funds to project contractors," the statement said, with no further details provided.