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Rating agency «IBI-Rating» has affirmed the credit rating of Kharkiv city at uaА+ grade, with a «stable» outlook

18.05.2018
The independent certified Rating agency «IBI-Rating» informs on affirming of the credit rating of Kharkiv city at uaА+ grade, keeping the «stable» outlook.

The credit rating of Kharkiv city reflects the importance of the city as one of the major cities in Ukraine, and as a regional center, cultural and educational center, diversification of the city economic complex, contributing to rapid recovery of sources of filling of revenues of the city budget, as well as its growth.

Development of Kharkiv city economy in the 2017 continues to be influenced by the general situation in the economy of a country that is under restoration and in conditions of political instability. In this regard, the city's economy shows a gradual increase in the volume of sales of industrial products, capital and foreign direct investment, construction works and the commissioning of housing. The development of the labor market was characterized by further reduction of unemployment, wage growth and population growth. At the same time, there was an increase in wage arrears that occurred at the expense of bankrupt enterprises, while the ratio of debt to the average monthly wage fund remains higher than the average for Ukraine.

There is a positive trend of growth of the main indicators of the socio-economic development of the city of Kharkiv, most of which equal or exceed the average per country's per capita.

Measures for the decentralization of budgetary relations and delegation the powers to the cities on collection of certain state taxes and fees, as well as changes in fiscal legislation on tax regulations in the local budgets, the indexation of land valuation, as well as measures of tax administration, fees at the local level as well as improving business activity allowed Kharkiv to further increase revenues to the budget.

By results of 2017 the volume of revenues of Kharkiv increased compared with the same period previous year by 35.5% and amounted to UAH 15 236,4 million, of which its own revenues increased to UAH 8 035.5 million by 33.4%. This contributed to the growth of tax (+ 33.2%) and non-tax revenues (+ 40.2%), income from capital transactions (+ 13.1%), as well as transfers from the state budget (+ 37.8%). Unlike the previous two years, the budget of the city was reduced to a deficit of UAH 643.0 million. The indicator of total liquidity of the budget of Kharkiv decreased from 9.9% to 2.0% as of 01.01.2018.

The financial policy of the Kharkiv authorities allows maintaining the debt burden at an acceptable level: the ratio of direct debt to the revenue side of the budget (excluding transfers) as of January 1, 2018 amounted to 4.5%, consolidated - 14.8%. The consolidated debt is formed by the obligations of the Kharkiv City Council to the State Treasury of Ukraine for medium-term loans, the repayment of which must be regulated at the legislative level, under the guarantee of a loan granted by the IBRD to the municipal enterprise under the guarantees of the city authorities, as well as the debt of municipal enterprises for other loans, in including those provided by international financial organizations.

Positively on the city's credit rating may affect: the further increase in the revenue side of the budget of Kharkiv city, exceeding the average Ukrainian values of social and economic development; reduction of the consolidated debt of the city. Negatively on the city's credit rating may affect: deterioration in performance of budget revenues, reduced liquidity, the growth of debt, further deterioration of the political and economic situation in Ukraine and the region.

In order to conduct the analytical research the materials provided by Kharkiv city, have been 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 credible.

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