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IBI-Rating has affirmed the credit rating and rating of investment attractiveness of Bila Tserkva city

17.07.2019
National rating agency IBI-Rating informs on affirming of the credit rating of Bila Tserkva city at uaВВВ+ grade, with a «stable» outlook and the rating of investment attractiveness at invА- grade.

Such ratings grades represent the city’s high investment attractiveness and sufficient ability to pay off its financial commitments. The «stable» outlook, with the highest probability, implies immutability of the rating on the horizon for 12 months.

Mr. Dmytro Zadesenets, Director of the municipal department of the IBI-Rating agency, has announced: «Bila Tserkva has a fairly powerful industrial complex, excellent logistics and tourism potential, as well as a moderately diversified economy, which ensures a positive trend in budget revenues and its financial capabilities. The city authorities pursues a balanced financial policy, keeping the budget liquidity and debt burden at an acceptable level. At the same time, key enterprises are still sensitive to the stability of sales markets, and the need to update the capital base of the urban economy remains significant, which can lead to increased activity of the city and utilities in the borrowing market in the midterm».

Mr. Oleksandr Prylutskyi, Head of the Bila Tserkva Strategic Development Agency stressed: «One of the priorities of the Agency and the city council remains to support the development of small and medium-sized businesses and the creation of a favorable investment environment. Under these conditions, the investment resources are capable of ensuring the formation of a modern infrastructure both in the utility sector and in business. First of all, it regarding to development of a multimodal complex which based on the Municipal Enterprise Bilotserkivskyi Cargo Aviation Complex, the creation of a business hub for the full implementation of business incubation and acceleration programs, as well as other projects that are an integral part of the development policy of every European city».

Were taken into account:

1. The structure of the economic complex of the city and the dynamics of its key indicators

Bila Tserkva has a diversified economy, which provides additional competitive advantages over other cities of Ukraine. In 2018, there was a further growth in a number of indicators of socio-economic development: mastered capital investments compared with 2017 increased by 76% to UAH 1 billion, retail turnover - by 16.7% to UAH 4.3 billion, the volume of completed construction work - by 24.7% to UAH 0.31 billion. Although the average wage has grown by almost by 25% over the last year, it remains lower than the national average. In general, most indicators of the economy and the economic complex of the city (compared with per capita) correspond to the national average, but are lower to Kyiv and some regional industrial centers.

2. Competitive advantages and disadvantages in comparison with other cities of the country

Bila Tserkva has excellent logistics, a significant number of educational institutions (for different profiles) and a developed service, communal and social infrastructure. There are 2 industrial parks, with a total area of about 50 hectares, key regional institutions for the provision of administrative services are also located in the city (Center For The Provision Of Administrative Services, permitting center). Competition for business and the cost of labor resources is moderate in comparison with Kyiv and some regional centers. At the same time, there is some competition for labor resources versus Kyiv, due to the relative proximity of the capital to Bila Tserkva.

3. Financial policy efficiency and the budget indicators

Compared with 2017, total revenues of the city budget it 2018 were increased by 7.2% and amounted to UAH 1.98 billion. The city’s own budget revenues for the corresponding period were increased by 17.2% to UAH 0.9 billion, while the share of tax revenues in their structure was 91%. These revenues are quite diversified by payers and sources, which ensures relative stability and predictability of budget revenues. The level of fiscal security in 2018 is amounted to UAH 4.3 thousand, which is slightly below the average for local budgets. The city’s budget is remains dependent on funding from the budgets of other levels, since such revenues make it possible to finance a significant part of social expenditures. In 2018, the city budget was executed with a deficit of UAH 11.7 million, which was due to a significant amount of capital expenditures in the corresponding period (UAH 255.4 million in 2018 against UAH 173.5 million in 2017). This deficit was covered from expense of fund balances, which led to a reduction in budget liquidity (4.4% at the end of 2018, versus 4.8% at the end of 2017).

4. The sensitivity of the budget and the city economy to the impact of negative factors

The level of consolidated debt burden on the budget revenue (excluding transfers) was increased by 1.1 pp in 2018 – to 4.1% on 01 January 2019. The city has a need to attract additional funding, including the restoration of urban infrastructure and housing and utilities, which can lead to a significant amount of debt financing by the city’s utility sector and the subsequent increase of consolidated debt in the medium term.

According to the Agency opinion, the impact of negative factors on the economy and financial viability of the city remains significant. The cities industrial complex partially adapted to the risks that arose due to the military conflict in the east of Ukraine and the introduction of trade restrictions between Ukraine and the Russian Federation. However, the transformation processes of one of the key manufacturing enterprises (PJSC «Rosava») can have a significant impact on revenues of the city budget, the functioning of related sectors of the local economy and the level of payments for utilities.

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

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