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«IBI-Rating» has affirmed the credit rating of Sumy city

The independent authorized Rating agency IBI-Rating informs on affirming of the credit rating of Sumy city at uaА- grade, keeping the «stable» outlook.

The credit rating of Sumy city reflects significance of the city as a regional centre, diversification of the city economic complex, which contributes to recovery of sources of filling of the city budget revenues, as well as its growth.

In 2017, the development of Sumy city continued to be under the influence of political and economic instability in the country, although in some segments of the economy there is a gradual recovery.

In the above-mentioned conditions, the city’s economy demonstrated gradual recovery, which was accompanied by growing volumes of industrial products sold, capital investments assimilated and construction works performed and the commissioning of housing.

Actions on decentralization of budgetary relations and delegation to cities of the powers, introduced by the Government in 2015, on collecting of certain state taxes and duties, and changes in the budget legislation in the part of the regulation of paying taxes to the local budgets, indexation of land valuation, as well as measures of administration of taxes and duties at the local level, enabled Sumy city to continue to increase the budget revenues, to keep the indicator of the budget provision at a higher level than the average level in Ukraine.

In the first half of 2017, the volume of Sumy city budget revenues amounted to UAH 1 462.4 millions, having increased by 37.6% as compared to the same period in 2016, annual plan completed by 53.8%. This was contributed by growth of tax revenues (+29.3% to UAH 599.8 millions) and non-tax revenues (+21.4% to UAH 67.8 millions), as well as official transfers (+46.5% to UAH 792.4 millions). The city budget was consolidated with a surplus in the amount of UAH 14.9 millions, against 119.5 million UAH a year earlier. The indicator of total liquidity of the budget of Sumy city, which as of July 1, 2017 amounted to 25.8%, corresponds to a high level.

The financial policy of the local authorities allows to maintain at a low level indicators of debt burden on the budget revenues of Sumy city: as at 01.07.2017, the indicator of direct and consolidated debt burden accounted for 6.4% of the budget revenues (net of transfers). Local debt of Sumy City Council is formed by liabilities to NEFCO on the loan received for implementation of the investment project «Improved energy efficiency in educational establishments of Sumy city». At the same time, there are liabilities to the State Treasury of Ukraine on medium-term loans whose repayment must be regulated at the legislative level.

A positive impact on the credit rating may have, as follows: a sustainable increase in the budget revenues of Sumy city and improvement of most indicators of the city social and economic development per capita. A negative impact on the credit rating may have, as follows: decreased budget revenues indicators, reduced liquidity, a substantial increase of debt liabilities, deterioration of conditions on the borrowings market or a limited access to it for municipal formations.

In order to perform the analytical research the materials obtained from Sumy city have been used, including: indicators of social and economic development, statistical information, treasury statements, program materials, other necessary internal information, as well as the information from the public sources, which the Rating agency considers reliable.

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