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Rating agency «IBI-Rating» has affirmed the credit rating of Cherkasy city at uaВВВ grade

07.06.2018
Rating agency IBI-Rating informs on the affirmation of the credit rating of Cherkasy city at uaВВВ grade, with a «stable» outlook.

The credit rating of Cherkasy city reflects its importance as a regional center, diversification of the city's economic complex, which promotes the rapid restoration of revenue sources for the city's budget, as well as its growth.

Cherkasy's credit rating reflects its importance as a regional center, diversification of the city's economic complex, which promotes the rapid restoration of sources of revenue for the city's budget revenue, as well as its growth.

The development of Cherkasy city in 2017 continued to be influenced by the overall situation in the economy, which is in the stage of recovery and in conditions of political instability. In this regard, the city's economy demonstrates a gradual increase in capital and foreign direct investment, construction works and the commissioning of housing. The development of the labor market was characterized by a further decrease in the number of registered unemployed and rising wages.

The negative impact on the development of the city's economy in 2017 was influenced by the forced simplicity of the largest enterprise and the taxpayer to the city budget - PJSC «Azot», which was the result of a reduction in the supply of natural gas, which is the main raw material for production. This situation had a decisive impact on the decrease by 9.2% to UAH 24.2 billion volume of sales of industrial products in relative prices, by 15.5% to USD 159.0 million - export operations and an increase of 12.3 times to UAH 76.6 million wage arrears, the ratio of which to the average wage fund remains higher than the average for Ukraine.

Part of the decline in industrial production was offset by enterprises of other industries.

Some of the indicators of the city's socioeconomic development continues to equal or exceed the country's average per capita, including the budget security indicator, which in 2017 was comparable to the average for Ukraine.

According to the results of 2017, the volume of revenues in the city of Cherkasy grew by 30.3% compared to 2016 and amounted to UAH 2 931.7 million, which was facilitated by an increase in tax (+34.7%) and non-tax revenues (+18.0%), revenues from official transfers (+28.9%). Unlike in the previous two years, the budget of Cherkasy was reduced to a deficit of UAH 93.6 million.

The city maintains a high level of depreciation of fixed assets, including housing, engineering and transport infrastructure, which necessitates the implementation of significant capital investments in local infrastructure. Sources of investment financing are credit facilities of international financial organizations, which affects the dynamics of the consolidated debt burden on the revenue side of the budget, which decreased by 12.4 percentage points during the year and as of 01/01/2018 was 36.9% and is a moderate value.

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

In order to conduct the analytical research, the materials obtained from Cherkasy city were used, including: indicators of social and economic development, materials of statistical bulletins; annual treasury statements, program materials, other necessary internal information, as well as the information from the public sources, which the Rating agency considers reliable.

Municipal department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua