BEIJING (Reuters) - China’s fiscal revenue tumbled 26.1% in March from a year earlier, officials said on Monday, extending the previous month’s slump as the coronavirus pandemic ravaged the economy.

The massive hit to receipts is expected to increase the government’s reliance on borrowing to fund the stimulus needed to prop up collapsing economic growth.

Fiscal revenues fell 14.3% in the first quarter from a year earlier to 4.598 trillion yuan ($649.75 billion), Liu Jinyun, an official at the finance ministry said, attributing the decline to the coronavirus outbreak and tax relief offered. He expected the revenue to fall in the second quarter.

“Affected by the development of epidemic at home and abroad, fiscal revenues are still declining in the second quarter, but the pace of fiscal revenue decline will gradually moderate,” Liu told a briefing.

Some local governments are struggling to maintain basic operations and pay wages, although central government efforts to step up payments to regional authorities could relieve some of this pressure, finance ministry officials said.

Data on Friday showed China’s economy contracted for the first time on record in the first quarter as the coronavirus shut down factories and shopping malls.

Fiscal expenditures for the January-March period fell 5.7% from a year earlier to 5.528 trillion yuan.

Tax revenue fell 16.4% year-on-year in the March quarter while non-tax revenue increased 0.1%. Revenues from value-added tax fell 23.6%, consumption tax fell 16.4% and corporate tax fell 12.8%.

Finance ministry officials said China is studying plans to allow the annual budget deficit to increase as a proportion of gross domestic product but did not give specifics.

Last month, the ruling Communist Party’s Politburo said it was considering raising the annual budget deficit ratio and issuing more local government special bonds and special treasury bonds.

Sources have told Reuters that China is set to unleash trillions of yuan of fiscal stimulus to revive the economy, while the central bank will dole out more easing.

The finance ministry plans to issue another 1 trillion yuan ($141.3 billion) advance quota for local government special bonds, officials told the briefing. Such debt is used to fund major infrastructure projects.

Local governments have issued 1.16 trillion yuan in special bonds as of April 15, accounting for 90% of the advance quota allocated for such debt, the ministry said.

These jurisdictions aim to complete the issuance under the advance quota by the end of May, officials said.

In total, local governments have issued 1.57 trillion yuan of both general and special purpose bonds, as of April 15, which is 85% of the advance quota for such debt.