The provincial governments of Jiangsu and Shandong will be added to a pilot financing program which lets local authorities sell bonds directly, Dow Jones Newswire reported Wednesday, citing insiders close to the matter.

Under a trial program launched by the Ministry of Finance (MOF) in October 2011, local governments in Guangdong Province, Zhejiang Province, Shanghai and Shenzhen are allowed to offer bonds without an intermediary. Other governments are prohibited from issuing debt securities on their own and are instead required to sell such products through the MOF after obtaining approval from the State Council.

Local governments enrolled in this scheme also have the right to set their own prices and appoint their own underwriters.

Participants are still subject though to issuing quotas from the State Council, while principal and interest payments are still doled out by the MOF on behalf of local authorities.

Despite these limits, the inclusion of more parties under this program shows that central authorities are committed to widening direct fundraising channels to cash-strapped governments looking to curb their debt risks, Sun Lijian, deputy director of the School of Economics at Fudan University, told the Global Times.

Restrictions on direct financing have prompted regional officials to establish numerous local government financing vehicles (LGFVs), which act as corporations that can secure bank loans and offer corporate debts to fund infrastructure projects. Poor supervision over these vehicles though has raised questions about hidden debt and financial risk at the local level.

A survey by accounting authorities found that 36 local governments held a combined total of 3.85 trillion yuan ($628.32 billion) in debt by the end of 2012, up 12.94 percent compared with the end of 2010, data released last Monday from the National Audit Office show.

Based on these figures, Citibank has estimated that China's total local government debt load may have hit 12.1 trillion yuan by the conclusion of 2012, representing a rise of 13 percent over the end of 2010.

"Compared with products from LGFVs, local government bonds are less risky and exposed to more transparency," Sun said.