BEIJING -- The balance of local government debt stood at 16.5 trillion yuan ($2.6 trillion) by the end of 2017, below the government ceiling of 18.8 trillion yuan, official data showed Wednesday.

China's local governments raised 4.4 trillion yuan through debt issues in 2017, with general bonds and special bonds reaching 2.36 trillion yuan and 2 trillion yuan respectively, according to the Ministry of Finance (MOF) showed.

In breakdown: new debt stood at 1.6 trillion yuan while that issued through the debt-for-bond swap program reached 2.8 trillion yuan.

The swap program allows local governments to exchange higher-cost loans with lower-cost bonds, saving them interest costs while also giving lenders higher liquidity on their receivables.

In December alone, local governments raised 32 billion yuan through debt issues.

Local government debt soared during an investment and construction binge following the global financial crisis in 2008. Debt-for-bond swaps are one of the mechanisms introduced to reduce that burden.

The National Audit Office said in a report earlier that local government debt is under control, but some local governments were found to have raised funds through fake public-private partnerships and illegal borrowing.

China will continue to "block the back door" for illegal debt, while "opening the front door" to allow local governments to issue debts through proper channels, the MOF said.