Hunan has banned all villages and townships from adopting deficit budgets next year in a bid to rein in debt. Village officials will be severely punished if they fail to comply. The measure is likely to extend to villages in other provinces. Official media warned that heavy debt generated by village authorities heightened rural instability. The latest issue of Banyuetan Magazine called for a thorough revamp of villages' leadership and their financial management after a survey revealed that village authorities in Hunan province had accumulated 5.93 billion yuan (HK$5.55 billion) of debt. 'Up to 88.4 per cent of village governments in the province have an average of two million yuan of debts,' the magazine quoted the survey as saying. 'It is a worrying situation since the financial conditions of many of these villages is deteriorating.' Investigators found out that most of the debts were the result of poor investment decisions, embezzlement or chaotic management.