Print
IBI-Rating has affirmed the credit rating and rating investment attractiveness rating of Kharkiv city
19.11.2019National rating agency ІВІ-Rating informs on affirming of a credit rating of Kharkiv at uaА+ grade with a «stable» outlook, and the rating of investment attractiveness at invAA grade.
Such ratings grades represent the city’s excellent investment attractiveness and high 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.
Were taken into account:
1. The structure of the economic complex of the city and the dynamics of its key indicators
Kharkiv has a powerful industrial complex and one of the largest and most diverse economies among other cities in Ukraine. During the analyzed period, there was a further increase in key indicators of socio-economic development: for the I half of 2019, the amount of industrial products increased by 2.2%, capital investments – by 13.7%, retail trade turnover – by 16.2%. Since the beginning of the year, 81.2 thousand m2 of buildings was commissioned in the city. In general, the most indicators of the state of the economy and the economic complex of the city (including in terms of per capita) exceed or correspond to the national average.
2. Competitive advantages and disadvantages in comparison with other cities of the country
The key regional government bodies of the region are localized in Kharkiv. The city has good logistics, strong educational institutions (for different profiles) and well-developed service, utilities and social infrastructure. At the same time, competition for business and labor costs are lower compared to the capital.
3. Financial policy efficiency and the budget indicators
The budget of Kharkiv according in January-June 2019 was executed with a surplus in the amount of UAH 429.7 million; total revenues to the city budget for this period amounted to UAH 11.5 billion. Own revenues of the city budget against the corresponding period in 2018 increased by 20.1% - up to UAH 5.4 billion; the share of tax revenues in the structure of the city's own income for January-June 2019 amounted to 94%. Moreover, these revenues are diversified by payers and sources, which ensures relative stability and predictability of budget revenues. The level of budgetary provision in January-June 2019 amounted to UAH 3.7 thousand and exceeds the average value for local budgets. The city budget is the donor-budget, transferring the reverse subsidy to the state budget.
4. The sensitivity of the budget and the city economy to the impact of negative factors
The city still needs to attract additional financing, including for the modernization of urban infrastructure and housing and communal services. This has already led to the attraction of a significant amount of debt financing by the municipal sector of the city and a corresponding increase in the volume of consolidated debt in previous periods. At the same time, in 2019 the growth in the volume of borrowings was insignificant, and in relative terms the level of the consolidated debt burden on the budget revenues (excluding transfers) decreased from 20.8% at the beginning of 2019 to 18.0% as of July 1, 2019 According to the agency, the impact of negative factors on the economy and financial capacity of the city remains moderate - the industrial complex has largely adapted to the risks arising from the military conflict in eastern Ukraine and the introduction of trade restrictions between Ukraine and the Russian Federation.
Mr. Mykhailo Fatieiev, Deputy Mayor, Director of the Department of Economics and Municipal Property of the Kharkiv City Council, commented the rating confirmation: «The credit rating grade and investment attractiveness rating grade of Kharkiv indicates significant achievements of the city as a reliable borrower and partner for investors. City authorities provide to a favorable conditions for doing business, and independent assessments from reputable rating agencies are further proof as additional confirmation of the effectiveness of such steps. We will continue to implement a policy of maximum transparency and will try to ensure effective management, a balanced budget policy, a high level of budget participation in the development of the city, as well as positive dynamics of key economic and social indicators».
Mr. Victor Shulyk, PMO of the IBI-Rating rating agency, emphasized: «During the analyzed period, the key indicators of the socio-economic development of the city had positive dynamics. It has ensured the growth of budget revenues and, accordingly, the city’s ability to finance development expenses. Kharkiv has a powerful industrial complex and a diversified economy, which has largely adapted to the effects of external shocks. The city authorities provide a balanced financial policy, maintaining indicators of budget liquidity and debt burden at an acceptable level. At the same time, the need to repair the capital base of the municipal economy remains substantial, which in the future will require significant funding for the relevant costs and is the main reason for the increased interest of the city and utilities in attracting new loans».
ІBI-Rating is the largest Ukrainian rating agency. It has been operating since 2005 and has the status of an authorized rating officer from the National Commission for the Securities Market. The agency provides professional credit rating and counseling services. It is only agency in Ukraine that has bilateral partnership with the European rating agency BCRA, certified by ESMA.
Municipal department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua
Such ratings grades represent the city’s excellent investment attractiveness and high 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.
Were taken into account:
1. The structure of the economic complex of the city and the dynamics of its key indicators
Kharkiv has a powerful industrial complex and one of the largest and most diverse economies among other cities in Ukraine. During the analyzed period, there was a further increase in key indicators of socio-economic development: for the I half of 2019, the amount of industrial products increased by 2.2%, capital investments – by 13.7%, retail trade turnover – by 16.2%. Since the beginning of the year, 81.2 thousand m2 of buildings was commissioned in the city. In general, the most indicators of the state of the economy and the economic complex of the city (including in terms of per capita) exceed or correspond to the national average.
2. Competitive advantages and disadvantages in comparison with other cities of the country
The key regional government bodies of the region are localized in Kharkiv. The city has good logistics, strong educational institutions (for different profiles) and well-developed service, utilities and social infrastructure. At the same time, competition for business and labor costs are lower compared to the capital.
3. Financial policy efficiency and the budget indicators
The budget of Kharkiv according in January-June 2019 was executed with a surplus in the amount of UAH 429.7 million; total revenues to the city budget for this period amounted to UAH 11.5 billion. Own revenues of the city budget against the corresponding period in 2018 increased by 20.1% - up to UAH 5.4 billion; the share of tax revenues in the structure of the city's own income for January-June 2019 amounted to 94%. Moreover, these revenues are diversified by payers and sources, which ensures relative stability and predictability of budget revenues. The level of budgetary provision in January-June 2019 amounted to UAH 3.7 thousand and exceeds the average value for local budgets. The city budget is the donor-budget, transferring the reverse subsidy to the state budget.
4. The sensitivity of the budget and the city economy to the impact of negative factors
The city still needs to attract additional financing, including for the modernization of urban infrastructure and housing and communal services. This has already led to the attraction of a significant amount of debt financing by the municipal sector of the city and a corresponding increase in the volume of consolidated debt in previous periods. At the same time, in 2019 the growth in the volume of borrowings was insignificant, and in relative terms the level of the consolidated debt burden on the budget revenues (excluding transfers) decreased from 20.8% at the beginning of 2019 to 18.0% as of July 1, 2019 According to the agency, the impact of negative factors on the economy and financial capacity of the city remains moderate - the industrial complex has largely adapted to the risks arising from the military conflict in eastern Ukraine and the introduction of trade restrictions between Ukraine and the Russian Federation.
Mr. Mykhailo Fatieiev, Deputy Mayor, Director of the Department of Economics and Municipal Property of the Kharkiv City Council, commented the rating confirmation: «The credit rating grade and investment attractiveness rating grade of Kharkiv indicates significant achievements of the city as a reliable borrower and partner for investors. City authorities provide to a favorable conditions for doing business, and independent assessments from reputable rating agencies are further proof as additional confirmation of the effectiveness of such steps. We will continue to implement a policy of maximum transparency and will try to ensure effective management, a balanced budget policy, a high level of budget participation in the development of the city, as well as positive dynamics of key economic and social indicators».
Mr. Victor Shulyk, PMO of the IBI-Rating rating agency, emphasized: «During the analyzed period, the key indicators of the socio-economic development of the city had positive dynamics. It has ensured the growth of budget revenues and, accordingly, the city’s ability to finance development expenses. Kharkiv has a powerful industrial complex and a diversified economy, which has largely adapted to the effects of external shocks. The city authorities provide a balanced financial policy, maintaining indicators of budget liquidity and debt burden at an acceptable level. At the same time, the need to repair the capital base of the municipal economy remains substantial, which in the future will require significant funding for the relevant costs and is the main reason for the increased interest of the city and utilities in attracting new loans».
ІBI-Rating is the largest Ukrainian rating agency. It has been operating since 2005 and has the status of an authorized rating officer from the National Commission for the Securities Market. The agency provides professional credit rating and counseling services. It is only agency in Ukraine that has bilateral partnership with the European rating agency BCRA, certified by ESMA.
Municipal department
For more information please contact:
Press service of IBI-Rating
(044) 362-90-84
press(at)ibi.com.ua