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

05.07.2021
National rating agency ІВІ-Rating informs on affirming of the credit rating of Odesa at uaА grade with an «evolving» outlook, and the rating of investment attractiveness at invAA- grade.

Such rating grades represent the excellent investment attractiveness and strong ability of the city to pay off its financial commitments. The «evolving» outlook, with the highest probability, implies of rating changes during the year. Currently, such rating outlook is applied to all clients of the Agency. It is due to increased uncertainty regarding the actions of authorities and business entities in case of aggravation of the epidemiological situation in Ukraine and the world. The notation «-» indicates an intermediate rating category relative to the main category.

The affirmed rating grades are due to

1. The structure of the economic complex of the city and the importance of indicators of socio-economic development
Odessa city is the economic center of the southern part of Ukraine and one of the largest logistics centers in Ukraine. The city has a developed industrial complex, characterized by significant diversification in terms of economic activities. A number of indicators of the socio-economic development of Odessa per 1 inhabitant exceeds the indicators for Ukraine as a whole, in particular: the volume of retail turnover, foreign trade turnover of services, the volume of housing commissioned.

2. The level of budget support of the city and the debt burden
The level of budgetary provision is high: the volume of own budget revenues per capita based on the results of 2020 amounted to UAH 8.11 thousand, which is higher than the indicator for Ukraine as a whole (UAH 7.5 thousand). The implementation of the budget of the city of Odessa in 2020 took place in the context of a slowdown in the growth of the country's economy due to the implementation of sanitary and epidemiological measures. According to the results of 2020, the budget deficit amounted to UAH 580.99 million.
Odessa City Council and utilities attract funds from domestic banks and international organizations, including for the modernization of infrastructure facilities. The direct and consolidated debt burden of the Odessa City Council is moderate. At the same time, maturities are diversified in time, which avoids peak loads.

3. Sensitivity of the budget and the city's economy to the influence of negative factors
Odessa's budget is moderately sensitive to negative factors. It is characterized by a low concentration of revenues by major taxpayers: revenues to the 2020 budget from TOP-20 taxpayers accounted for only 7.68% of the total amount of tax revenues. Despite the introduction of quarantine, the own budget revenues of Odessa by the results of 2020 increased by 3.22% compared to 2019 and amounted to UAH 8,235.89 million. According to the results of 2020, the overall plan for budget revenues was fulfilled by 93.55%.

4. Business development potential
Favorable geographical position and natural and climatic conditions are advantages for the development of foreign economic activity and attracting investors. The provision of health care, education and culture institutions, as well as the presence of historical monuments, makes it possible to develop tourism. The industrial complex of Odessa has the potential for further development of the processing industry, transport, construction and logistics, in which significant volumes of investments have already been involved.
The local government pays significant attention to the development of small businesses and improving the investment climate, including through the creation of free economic zones. The city has a strong personnel potential due to the presence of numerous universities, vocational education institutions, as well as scientific institutes. At the same time, the cost of labor resources is lower in comparison with the capital. Odessa has a positive experience in the implementation of investment projects, including with the attraction of funds from international investors. To improve effective interaction with investors, a municipal institution "Grant Office - Odesa 5T" was created.

In order to conduct the analytical research the materials obtained from Odesa 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