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IBI-Rating has affirmed the credit rating of Odesa city at uaA grade
02.07.2018
IBI-Rating informs on affirming of the credit rating of Odesa city at uaA grade, keeping the «stable» outlook.
The affirmed credit rating grade of Odesa city is due to significance of the city as an economic center South of Ukraine, existing maritime transport hub, the city’s diversified economic complex, 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 Odesa 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. Under these conditions, the city's economy demonstrates a gradual recovery from 2016, accompanied by an increase in the volume of sales of industrial products, including export, capital investments, volume of the construction works, commissioning of housing, retail turnover, and the number of tourists.
The growth of the city's economy and average monthly wages, changes in the budget legislation in terms of tax regulations to local budgets, indexation of land valuation, expanding taxpayers, city fees, and measures to administer them allowed Odesa to continue increase its revenue share budget and support the budget security indicator at a level higher than the average in Ukraine.
According to the results of 2017, the amount of revenues to the budget of Odesa city grew by 25.8% up to amount UAH 9335.2 m, as compared to 2016, to this contributed the growth of tax revenues (by 30.0% up to amount UAH 5119.7 m) and non-tax revenues (by 29.7% up to amount UAH 845.8 m), revenues from capital transactions (by 6.2% up to amount UAH 180.5 m), and transfers from the budgets of higher levels (by 19.8% up to amount UAH 3188.9 m). In contradistinction to the previous year, the city budget was consolidated in 2017 with a deficit in the amount of UAH 928.9 m which is a consequence of an increase in expenditures of the city budget by 38.5% to UAH 10,264.1 m, of this amount the capital investments increase by 1.5 times up to UAH 3,098.3 m.
Every year, allocations from the city budget for infrastructure upgrading and energy efficiency activities are increasing, financing of which, including through loans from international and domestic financial organizations, affects the dynamics of the consolidated debt burden on the revenue side of the budget. During 2017, the consolidated debt of the Odesa City Council increased by 40.5% amounting to UAH 1 810.5m, as at 01.01.2018. The ratio of the city’s consolidated debt to the city budget revenues in 2017 (net of transfers) accounted for 29.5%, being an acceptable value.
A positive impact on the credit rating may have, as follows: increased revenues to Odesa 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 Odesa 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
press(at)ibi.com.ua
The affirmed credit rating grade of Odesa city is due to significance of the city as an economic center South of Ukraine, existing maritime transport hub, the city’s diversified economic complex, 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 Odesa 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. Under these conditions, the city's economy demonstrates a gradual recovery from 2016, accompanied by an increase in the volume of sales of industrial products, including export, capital investments, volume of the construction works, commissioning of housing, retail turnover, and the number of tourists.
The growth of the city's economy and average monthly wages, changes in the budget legislation in terms of tax regulations to local budgets, indexation of land valuation, expanding taxpayers, city fees, and measures to administer them allowed Odesa to continue increase its revenue share budget and support the budget security indicator at a level higher than the average in Ukraine.
According to the results of 2017, the amount of revenues to the budget of Odesa city grew by 25.8% up to amount UAH 9335.2 m, as compared to 2016, to this contributed the growth of tax revenues (by 30.0% up to amount UAH 5119.7 m) and non-tax revenues (by 29.7% up to amount UAH 845.8 m), revenues from capital transactions (by 6.2% up to amount UAH 180.5 m), and transfers from the budgets of higher levels (by 19.8% up to amount UAH 3188.9 m). In contradistinction to the previous year, the city budget was consolidated in 2017 with a deficit in the amount of UAH 928.9 m which is a consequence of an increase in expenditures of the city budget by 38.5% to UAH 10,264.1 m, of this amount the capital investments increase by 1.5 times up to UAH 3,098.3 m.
Every year, allocations from the city budget for infrastructure upgrading and energy efficiency activities are increasing, financing of which, including through loans from international and domestic financial organizations, affects the dynamics of the consolidated debt burden on the revenue side of the budget. During 2017, the consolidated debt of the Odesa City Council increased by 40.5% amounting to UAH 1 810.5m, as at 01.01.2018. The ratio of the city’s consolidated debt to the city budget revenues in 2017 (net of transfers) accounted for 29.5%, being an acceptable value.
A positive impact on the credit rating may have, as follows: increased revenues to Odesa 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 Odesa 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
press(at)ibi.com.ua