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IBI-Rating has updated the credit rating and the rating of investment attractiveness of Sumy City Territorial Community
13.02.2023
National rating agency IBI-Rating informs on affirming of the credit rating of Sumy City Territorial Community (hereinafter – Sumy CTC) at uaA– grade with «negative» outlook and CreditWatch listing, as well as the rating of investment attractiveness at invA- grade.
Such rating grades represent the high ability of the city to pay off its financial commitments and high investment attractiveness. The notation «–» indicates an intermediate rating category relative to the main category. The negative outlook indicates a high probability of credit rating downgrade during the year. The negative outlook and Credit Watch listing are due to the deterioration of operating conditions and increased uncertainty about the prospects for economic development against the backdrop of prolonged hostilities on the territory of Ukraine caused by RF aggression. Currently, this outlook applicable by agency to all subjects of rating.
Were taken into account:
1. The structure of the economic complex and effectiveness of financial policy
The Sumy CTC has rather high indicators of socio-economic development. About 500 economically active industrial enterprises operate on the territory of community. For 9 months 2022, the budget revenues of the Sumy CTC amounted to UAH 2.34 billion (+6.71% compared to the previous year). Own budget revenues based on the results of 9 months 2022 amounted to UAH 1.93 billion (+UAH 146.63 million compared to 9 months of 2021). Concentration by taxpayers is moderate – the volume of taxes paid to the budget by the TOP-20 payers for 9 months of 2022, amounted to UAH 538.11 million (30.20% of the total tax revenue received by the budget of CTC and 27.86% of community's own budget revenues).
The volume of community’s own budget revenues exceeds the average figures for local budgets. The indicator of the taxability of Sumy CTC budget (personal income tax per inhabitant) is higher than the national average, which is why the budget remains a donor budget, transferring a reverse subsidy to the state budget. The volume of reverse subsidies for 9 months of 2022 amounted to UAH 23.79 million, for 9 months of 2021 – UAH 75.65 million. The total volume of interbudgetary transfers from the budget of Sumy CTC for 9 months of 2022 amounted to UAH 35.31 million, for 9 months of 2021 – UAH 149.08 million. Community budget surplus for 9 months 2022 amounted to UAH 498.07 million (surplus of the general fund UAH 502.19 million and deficit of the special fund UAH 4.12 million). According to the results of 9 months 2021, there was a surplus – UAH 242.03 million.
As of October 1, 2022, the total amount of debt was UAH 89.49 million (3% of the community’s planned own income for 2022). The ratio of consolidated debt to community's own budget revenues is low: to revenues for 2021 – 8.5%, to planned revenues for 2022 – 7.1%. The low debt burden on the revenue part of the budget allows the city authorities to count on attracting additional financial resources, including loans, to finance the socio-economic development of the city and infrastructure projects.
2. Investment potential
A developed system of transport services operates in Sumy city. There is a large railway station on the territory of the city; 2 national highways and 2 regional highways pass through the city. There is a bus station from which international and intercity transportation is carried out. There is also a suburban bus station. The Sumy Airport is located within the city limits (located in the communal property of the Sumy Regional Council), operating in the mode of private transportation.
There are 2 mineral deposits on the territory of the Sumy urban territorial community: Sumy Plot of Koptievshchyna – a deposit of building sand, Pishchanske – a deposit of brick raw materials. The Sumy CTC is sufficiently provided with qualified personnel and has a strong human resources potential: the main higher and secondary specialized educational institutions of the region are concentrated in the city. There is a developed commercial, industrial and business infrastructure. Work is underway to create the Sumy Industrial Park.
On community’s territory there is a Target Program to support small and medium-sized businesses of the Sumy CTC for 2022-2024. Most local tax rates are below the maximum level provided by law, which creates conditions for the development of entrepreneurship. Since June 2019, the Sumy Business Hub has been operating in Sumy city – an open space for cooperation, training and exchange of ideas for representatives of the business community of Sumy region, within the framework of which various events are held to develop small and medium-sized businesses. The Sumy City Council has a coordinating council for the development of entrepreneurship.
The City authorities carry out activities on an ongoing basis to help attract investment from alternative sources. By the decision of the Executive Committee of July 22, 2022, the «Program for the Development of International Cooperation and the Promotion of the Formation of a Positive Investment Image of the Sumy City Territorial Community for 2022-2024» was approved. The Sumy City Council has experience in successfully implementing investment projects with the participation of international financial and donor organizations.
In order to conduct the analytical research, the materials obtained from Sumy City Council 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
Such rating grades represent the high ability of the city to pay off its financial commitments and high investment attractiveness. The notation «–» indicates an intermediate rating category relative to the main category. The negative outlook indicates a high probability of credit rating downgrade during the year. The negative outlook and Credit Watch listing are due to the deterioration of operating conditions and increased uncertainty about the prospects for economic development against the backdrop of prolonged hostilities on the territory of Ukraine caused by RF aggression. Currently, this outlook applicable by agency to all subjects of rating.
Were taken into account:
1. The structure of the economic complex and effectiveness of financial policy
The Sumy CTC has rather high indicators of socio-economic development. About 500 economically active industrial enterprises operate on the territory of community. For 9 months 2022, the budget revenues of the Sumy CTC amounted to UAH 2.34 billion (+6.71% compared to the previous year). Own budget revenues based on the results of 9 months 2022 amounted to UAH 1.93 billion (+UAH 146.63 million compared to 9 months of 2021). Concentration by taxpayers is moderate – the volume of taxes paid to the budget by the TOP-20 payers for 9 months of 2022, amounted to UAH 538.11 million (30.20% of the total tax revenue received by the budget of CTC and 27.86% of community's own budget revenues).
The volume of community’s own budget revenues exceeds the average figures for local budgets. The indicator of the taxability of Sumy CTC budget (personal income tax per inhabitant) is higher than the national average, which is why the budget remains a donor budget, transferring a reverse subsidy to the state budget. The volume of reverse subsidies for 9 months of 2022 amounted to UAH 23.79 million, for 9 months of 2021 – UAH 75.65 million. The total volume of interbudgetary transfers from the budget of Sumy CTC for 9 months of 2022 amounted to UAH 35.31 million, for 9 months of 2021 – UAH 149.08 million. Community budget surplus for 9 months 2022 amounted to UAH 498.07 million (surplus of the general fund UAH 502.19 million and deficit of the special fund UAH 4.12 million). According to the results of 9 months 2021, there was a surplus – UAH 242.03 million.
As of October 1, 2022, the total amount of debt was UAH 89.49 million (3% of the community’s planned own income for 2022). The ratio of consolidated debt to community's own budget revenues is low: to revenues for 2021 – 8.5%, to planned revenues for 2022 – 7.1%. The low debt burden on the revenue part of the budget allows the city authorities to count on attracting additional financial resources, including loans, to finance the socio-economic development of the city and infrastructure projects.
2. Investment potential
A developed system of transport services operates in Sumy city. There is a large railway station on the territory of the city; 2 national highways and 2 regional highways pass through the city. There is a bus station from which international and intercity transportation is carried out. There is also a suburban bus station. The Sumy Airport is located within the city limits (located in the communal property of the Sumy Regional Council), operating in the mode of private transportation.
There are 2 mineral deposits on the territory of the Sumy urban territorial community: Sumy Plot of Koptievshchyna – a deposit of building sand, Pishchanske – a deposit of brick raw materials. The Sumy CTC is sufficiently provided with qualified personnel and has a strong human resources potential: the main higher and secondary specialized educational institutions of the region are concentrated in the city. There is a developed commercial, industrial and business infrastructure. Work is underway to create the Sumy Industrial Park.
On community’s territory there is a Target Program to support small and medium-sized businesses of the Sumy CTC for 2022-2024. Most local tax rates are below the maximum level provided by law, which creates conditions for the development of entrepreneurship. Since June 2019, the Sumy Business Hub has been operating in Sumy city – an open space for cooperation, training and exchange of ideas for representatives of the business community of Sumy region, within the framework of which various events are held to develop small and medium-sized businesses. The Sumy City Council has a coordinating council for the development of entrepreneurship.
The City authorities carry out activities on an ongoing basis to help attract investment from alternative sources. By the decision of the Executive Committee of July 22, 2022, the «Program for the Development of International Cooperation and the Promotion of the Formation of a Positive Investment Image of the Sumy City Territorial Community for 2022-2024» was approved. The Sumy City Council has experience in successfully implementing investment projects with the participation of international financial and donor organizations.
In order to conduct the analytical research, the materials obtained from Sumy City Council 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