December 7, 2018

IBI-Rating Has Affirmed the Rating of Investment Attractiveness of Cherkasy city

National rating agency IBI-Rating informs on affirming of the credit rating of Cherkasy city at uaBBB grade with a «stable» outlook and the rating of investment attractiveness at invВВВ+ grade.

Such rating grades represent the sufficient investment attractiveness and sufficient capacity of the city to pay off its debt obligations. The «stable» outlook, with the highest probability, implies immutability of the rating on the horizon for 12 months.

The affirming of ratings grade of Cherkasy is conditioned by high level of social and economic development of the city and budget provision (per capita); diversification of the economic complex by types of economic activity and the main tax payers and other obligatory payments, as well as the gradual development of the service, communal and social infrastructure.

Rating grades are supported by
meaning of the city as a regional center, as well as by an increase in local budget revenues in almost all major budget items. In addition, Cherkasy’s ratings are positively influenced by low indicators of direct and moderate indicators of consolidated debt load on the revenue part of the city budget. At the same time, the agency notes the high sensitivity of the city’s budget to currency risks due to the significant amount of local guarantees provided by loans from international financial organizations denominated in foreign currency; the need for significant capital investments in local infrastructure due to the high level of depreciation of fixed assets, including housing stock, engineering and transport infrastructure; preservation of the difficult economic situation in the country and the continuation of the military conflict in certain regions, , which has negatively effects on the growth potential and solvency of taxpayers.

Key indicators of the Cherkasy city economy in the first half of 2018:

1. The volume of industrial products per capita amounted to UAH 48.6 thousand, which is in 20.3% more than in the corresponding period of last year and almost on 70% more than the average indicator of the country.
2. The average monthly salary (UAH 7 967 in the 2nd quarter) increased by 6% and is in 10% lower than the average in Ukraine. At the same time, the size of the existing population, staff and registered unemployed have not undergone significant changes compared with their values at the beginning of the year.
3. Capital investment per capita increased by 9.8%, FDI by 4%, although they remain lower than their national average.
4. The volume of revenues to the city budget grew by 15.9% to UAH 1,802.5 million compared to the same period last year, of which own income increased by 22.6% to UAH 856.1 million, which was facilitated by an increase in tax revenues and revenues from the privatization of property and land.
5. The city budget was executed with a surplus of UAH 99.1 million. Development expenditures (capital expenditures) were directed from the city budget in the amount of UAH 107.5 million, which is 62.7% of the indicator of the corresponding period of 2017.
6. The level of budget security was UAH 3.1 thousand. The city budget remains a donor budget, transferring to the state budget a reverse subvention (UAH 21.1 million for January-June 2018, against UAH 14.7 million for the corresponding period in 2017). At the same time, the volume of transfers from the state budget amounted to 52.8% in the total volume of the revenue part of the budget, which are mainly directed towards financing social protection expenditures, educational and medical spheres.
7. The consolidated debt of the city budget decreased by 10.2% to UAH 533.3 million as of July 1, 2018, the debt load on the revenue side of the budget – by 7.3 pp to 29.6%, which corresponds to an acceptable level.

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