BEIJING -- China will continue to follow a proactive fiscal policy and a prudent monetary policy in 2012, and make policies more targeted, flexible and forward-looking, according to a government work report to be delivered by Premier Wen Jiabao Monday morning.

China will keep the deficit and government debt at "appropriate levels", said the report distributed to media ahead of the annual session of the National People's Congress (NPC), China's top legislature.

According to the report, the government is projecting a deficit of 800 billion yuan ($127 billion), a decrease to around 1.5 percent of the gross domestic product (GDP), which consists of 550 billion yuan in central government deficit and 250 billion yuan of bonds issued on behalf of local governments.

Last year, the budgeted deficit was 900 billion yuan.

"We aim to promote steady and robust economic development, keep prices stable, and guard against financial risks by keeping the total money and credit supply at an appropriate level," said the report.