Last week, the powerful National Development and Reform Commission saved the country’s Ministry of Railways from default by announcing that the bonds of the troubled agency have “government support.” The announcement followed a decision earlier this month to cut taxes on interest paid on railway bonds. Moreover, the Railways Ministry reached agreement with the central government to force state banks to support its nationwide building program. Reports indicated that some of these financial institutions had previously cut their quota of loans to the debt-ridden ministry.
The series of steps saved the country’s railroad-building program, which had been floundering. Due to a cash crunch, contractors had stopped payments to cement and steel companies, migrant workers had not received wages for months, and projects to build thousands of kilometers of track had been put on hold.
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