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

05.06.2019
National rating agency IBI-Rating informs on affirming of the credit rating of Cherkasy city at uaBBB grade with a «stable» outlook and the rating of investment attractiveness at invВВВ+ grade.

Such rating grades represent the sufficient investment attractiveness and sufficient capacity of the city to pay off its debt obligations. 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 key indicators

Cherkasy has a sufficiently diversified economy and a powerful industrial complex. The basis of industry is formed by enterprises of the chemical, woodworking, food and mechanical engineering industries. More than 120 industrial enterprises operates in the city. The SME is represented by almost 4 thousand enterprises and 15.5 thousand entrepreneurs. In 2018 industrial production was increased by 15.7% and amounted to UAH 28.0 billion, the capital investments was increased by 10% - up to UAH 2.6 billion, retail and foreign trade turnover - by 16.3% to UAH 6.9 billion and by 24.1% to USD 486.1 million, respectively. Мost indicators of the economy and economic complex (including per capita) are higher or correspond to the national average.

2. Competitive advantages and disadvantages in comparison with other cities of the country

In Cherkasy are localized key state authorities of the region. In addition, the city has good logistics, a large number of educational institutions (on different profiles), and developed service, communal and social infrastructure. At the same time, competition for business and the cost of labor is lower, compared to the Kyiv.

3. Efficiency of financial policy and budget indicators

In 2018, the city's budget was the deficit of UAH 8.5 million. The city's own budget revenues grew by 17.5% compared to 2017 - up to UAH 1.8 billion (93.2% of the plan). The basis of budget revenues are tax revenues, which account for 50% of the revenue structure. Such revenues are diversified for payers and industries, which ensures the relative stability and predictability of budget revenues. The level of budget security in 2018 amounted to UAH 6.2 thousand. The city budget remains a donor budget, transferring to the state budget a reverse grant (UAH 42.2 million for 2018).

4. The sensitivity of the budget and the city economy to the impact of negative factors

The city needs to attract additional funding, including rehabilitation of urban infrastructure and housing and communal services. Due to the limited financial resources of its own, a part of the costs of capital infrastructure development is financed by the IFO's loan funds. In 2018, the volume of consolidated debt declined by 3.5% to UAH 573.5 million, while the level of consolidated debt load decreased by 4.8% to 32.1% as of January 1, 2019.

Mr. Dmytro Zadesenets, Director of the municipal department of the IBI-Rating agency, has announced: «The impact of the negative factors on the economy and the financial capacity of the city remains moderate: the industrial complex has largely adapted to the risks that arose in connection with the military conflict in eastern Ukraine and the introduction of trade restrictions between Ukraine and Russia, although some large enterprises of the city still are vulnerable».

In order to conduct the analytical research, the materials obtained from Cherkasy city have been used, including: indicators of the social and economic development, statistical data, 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