IBI-Rating has affirmed the credit rating of Odessa city at uaA grade

IBI-Rating informs on affirming of the credit rating of Odessa city at uaA grade, keeping the «stable» outlook.

The affirmed credit rating grade of Odessa city is due to significance of the city as an economic centre of the southern part of Ukraine, the city’s diversified economic complex, its keeping high indicators of social and economic development, some of which are either equal or exceed the average national values per capita.

The development of Odessa city in 2017 continues to be under the influence of the general situation in the economy of the country that is in the stage of recovery and in conditions of political instability. Given this process, against the background of an increase in the average monthly wages, and employment level, there was a further recovery of the economy after the downturn in 2014-2015, in particular the volumes of industrial products sold, including export, capital investments assimilated, retail turnover, completed construction works exceeded the national average values.

The mentioned tendency, measures on decentralization as well as expanding the range of taxpayers, fees to the city budget allowed the Odessa city to continue increasing the budget revenues, to improve diversification of the budget revenues and to maintain the indicator of the budget provision at a higher level than the average level in Ukraine.

According to the results of January-June 2017, the amount of revenues to the budget of Odessa city grew by 27.8% up to amount UAH 4 562.3 m, as compared to the same period previous year, to this contributed the growth of tax revenues by 33.7% up to amount UAH 2 399.5 m and non-tax revenues by 24.1% up to amount UAH 358.9 m, revenues from capital transactions by 21.9% up to amount UAH 107.7m, as well as transfers from the budgets of higher levels by 21.4% up to amount UAH 1 696.1 m.

The city budget was consolidated with a surplus in the amount of UAH 289,0 m, versus UAH 781.7 m of the previous year. The less volume of the surplus is a consequence of an increase in expenditures of the city budget by 53.2% to UAH 4,273.5 m, of this amount the capital investments increase by 3.5 times up to UAH 762.9 m. The city maintains a high level of depreciation of fixed assets, including housing stock, engineering and transport infrastructure facilities, hence the need for significant capital investments in the local infrastructure. Sources of financing of capital investments will also be loan funds from international financial institutions, which will have an impact on the dynamics of the indicator of consolidated debt burden on the budget revenues. During the first half of 2017, the consolidated debt of the Odessa City Council decreased by 5.6% amounting to UAH 1 216.5m, as at 01.07.2017. The ratio of the city’s consolidated debt to the city budget revenues at 01.07.2017 (net of transfers) accounted for 23.1%, being an acceptable value.

A positive impact on the credit rating may have, as follows: increased revenues to Odessa city budget, most indicators of social and economic development exceeding the average national values, reduction in the consolidated debt of the city. A negative impact on the credit rating may have, as follows: decreased indicators of the budget revenues, reduction in liquidity, an increase in debt obligations, further deterioration of the political or economic situation in Ukraine or the region.

In order to conduct the analytical research the materials obtained from Odessa city have been used, including: annual treasury statements, indicators of the city social and economic development and the city budget, 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