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IBI-Rating has updated the credit rating and the rating of investment attractiveness of Ternopil city territorial community
25.12.2023
National rating agency IBI-Rating informs on affirming of the credit rating of Ternopil city territorial community (СTC) at uaA grade with «evolving» outlook and keeping on the CreditWatch list, as well as affirming the rating of investment attractiveness at invA+ grade.
Such rating grades reflect the high ability of the community to pay off its debt obligations and high investment attractiveness. The notation «+» indicates an intermediate rating category relative to the main category. The «evolving» outlook indicates a high probability of a change in the credit rating during the year. Being on the CreditWatch list is due to the deterioration of the business environment and increased uncertainty about the prospects for economic development amid ongoing military operations in Ukraine caused by aggression of the Russian Federation.
Were taken into account:
1. Structure of the economic complex and dynamics of key indicators
The production potential of Ternopil CTC consists of more than 110 industrial enterprises. The industrial sector employs almost 10.0 thousand people. The main share is made up of food processing, rubber and plastic products, light industry, and electrical and electronic equipment manufacturing.
Despite the large-scale military operations in the country, the economy of Ternopil community continues to operate and provide the domestic market with goods and services and plays a significant role in filling the community budget. The volume of products sold in January-June 2023 amounted to UAH 9,045,313.4 thousand, which is 118.8% compared to the corresponding period of 2022. The share in the regional indicator is 50.2%.
The current consumer market of the community is quite stable, saturated with goods and services, with a developed network of trade, restaurant and consumer services enterprises. The main factor behind the development of trade and consumer services is the significant amount of foreign remittances in the structure of households' aggregate resources, which leads to high levels of domestic consumption. The volume of retail trade turnover in the first half of 2023 amounted to UAH 6,930.0 million (compared to UAH 6,147.1 million in the first half of 2022). The foreign trade turnover in goods in January-June 2023 amounted to USD 334,677.3 thousand. This is 180.1% compared to the corresponding period of 2022.
In January-June 2023, construction companies in Ternopil city performed construction works worth UAH 665.2 million, which is 100.1% compared to the same period last year. The city commissioned 51.2 thousand square meters of housing (20.8 thousand square meters were commissioned in January-June 2022). Small businesses play an important role in the community's economy. Revenues from small businesses to the community budget in the first half of 2023 amounted to 32.8%.
2. Level of community budget support and debt burden
According to the results of the first half of 2023, the revenue part of the community budget amounted to UAH 1,923,430.7 thousand against the plan of UAH 1,624,611.1 thousand, which exceeds the planned indicator by 18.4%. Of these, general fund revenues amounted to UAH 1,788,882.9 thousand against the plan of UAH 1,577,303.8 thousand (113.4% of the planned), special fund revenues - UAH 134,547.8 thousand (against the plan of UAH 47,307.3 thousand, which is 2.84 times more than planned).
As for own revenues (excluding inter-budgetary transfers) the plan was fulfilled by 123.5% (UAH 1,579,484.5 thousand were received from the planned UAH 1,278,563.0 thousand), which exceeded the corresponding indicator of the last year by UAH 433,553.4 thousand or by 37.8%. The budget of Ternopil city territorial community is characterized by a sufficient level of liquidity. According to the results of budget execution for the first half of 2023, the ratio of the volume of balances on the accounts of the general fund to the expenditures of the general fund amounted to 37.19%, the liquidity of the special fund amounted to 38.74%.
The community budget has a low level of direct debt load. The ratio of direct debt as of 01.07.2023 to the planned own revenues of the Ternopil City Council budget for 2023 was 5.1%; the ratio of the guaranteed debt of the Ternopil City Council to the planned own revenues of the community for 2023 was 3.1%. The consolidated debt of the community (including credit and leasing obligations of public utilities) is significant, but a significant share of this debt is the loan of CP «Ternopilmiskteplocomunenergo» received under the state guarantee. In addition, the long-term period of repayment of the principal amount of debt under contracts and the absence of peak loads partially reduce the risks.
3. Potential for business development and investment attraction
Ternopil CTC is characterized by significant natural resource and agro-industrial potential, based on fertile soils, which contributes to the development of agriculture in the region, and on its basis – to the diversified food industry in the community. Ternopil CTC also has significant tourism potential due to the availability of water resources and green areas for recreation.
A number of traffic flows of national importance pass through the center of the community, which increases its role in Ukraine. The community has a sufficient amount of land and real estate that can be used for business activities. The community is also provided with commercial and office premises and branches of financial institutions.
A significant advantage of the community is the saturation of scientific and educational institutions and a high proportion of the working-age population, which ensures a high human resource potential. The local authorities pursue a transparent and effective industrial and investment policy aimed at developing small businesses, supporting local producers, and expanding international cooperation.
Over the past decade, the community has been approving and implementing programs funded from the community budget aimed at developing entrepreneurial activity. Efforts are underway to reduce administrative barriers, improve business culture, promote community investment opportunities, and create a favorable institutional environment.
An important task is the development of the Ternopil Industrial Park. The functional purpose of the park is to provide processing industry (primary and secondary processing of agricultural raw materials, food production, production of baby food); professional scientific and technical activities (research activities to improve product quality and use of new technologies, IT cluster).
The community's advantage in terms of attracting investment is its successful experience in implementing infrastructure projects, including those funded by international investors.
In order to conduct the analytical research the materials provided by Ternopil 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 reflect the high ability of the community to pay off its debt obligations and high investment attractiveness. The notation «+» indicates an intermediate rating category relative to the main category. The «evolving» outlook indicates a high probability of a change in the credit rating during the year. Being on the CreditWatch list is due to the deterioration of the business environment and increased uncertainty about the prospects for economic development amid ongoing military operations in Ukraine caused by aggression of the Russian Federation.
Were taken into account:
1. Structure of the economic complex and dynamics of key indicators
The production potential of Ternopil CTC consists of more than 110 industrial enterprises. The industrial sector employs almost 10.0 thousand people. The main share is made up of food processing, rubber and plastic products, light industry, and electrical and electronic equipment manufacturing.
Despite the large-scale military operations in the country, the economy of Ternopil community continues to operate and provide the domestic market with goods and services and plays a significant role in filling the community budget. The volume of products sold in January-June 2023 amounted to UAH 9,045,313.4 thousand, which is 118.8% compared to the corresponding period of 2022. The share in the regional indicator is 50.2%.
The current consumer market of the community is quite stable, saturated with goods and services, with a developed network of trade, restaurant and consumer services enterprises. The main factor behind the development of trade and consumer services is the significant amount of foreign remittances in the structure of households' aggregate resources, which leads to high levels of domestic consumption. The volume of retail trade turnover in the first half of 2023 amounted to UAH 6,930.0 million (compared to UAH 6,147.1 million in the first half of 2022). The foreign trade turnover in goods in January-June 2023 amounted to USD 334,677.3 thousand. This is 180.1% compared to the corresponding period of 2022.
In January-June 2023, construction companies in Ternopil city performed construction works worth UAH 665.2 million, which is 100.1% compared to the same period last year. The city commissioned 51.2 thousand square meters of housing (20.8 thousand square meters were commissioned in January-June 2022). Small businesses play an important role in the community's economy. Revenues from small businesses to the community budget in the first half of 2023 amounted to 32.8%.
2. Level of community budget support and debt burden
According to the results of the first half of 2023, the revenue part of the community budget amounted to UAH 1,923,430.7 thousand against the plan of UAH 1,624,611.1 thousand, which exceeds the planned indicator by 18.4%. Of these, general fund revenues amounted to UAH 1,788,882.9 thousand against the plan of UAH 1,577,303.8 thousand (113.4% of the planned), special fund revenues - UAH 134,547.8 thousand (against the plan of UAH 47,307.3 thousand, which is 2.84 times more than planned).
As for own revenues (excluding inter-budgetary transfers) the plan was fulfilled by 123.5% (UAH 1,579,484.5 thousand were received from the planned UAH 1,278,563.0 thousand), which exceeded the corresponding indicator of the last year by UAH 433,553.4 thousand or by 37.8%. The budget of Ternopil city territorial community is characterized by a sufficient level of liquidity. According to the results of budget execution for the first half of 2023, the ratio of the volume of balances on the accounts of the general fund to the expenditures of the general fund amounted to 37.19%, the liquidity of the special fund amounted to 38.74%.
The community budget has a low level of direct debt load. The ratio of direct debt as of 01.07.2023 to the planned own revenues of the Ternopil City Council budget for 2023 was 5.1%; the ratio of the guaranteed debt of the Ternopil City Council to the planned own revenues of the community for 2023 was 3.1%. The consolidated debt of the community (including credit and leasing obligations of public utilities) is significant, but a significant share of this debt is the loan of CP «Ternopilmiskteplocomunenergo» received under the state guarantee. In addition, the long-term period of repayment of the principal amount of debt under contracts and the absence of peak loads partially reduce the risks.
3. Potential for business development and investment attraction
Ternopil CTC is characterized by significant natural resource and agro-industrial potential, based on fertile soils, which contributes to the development of agriculture in the region, and on its basis – to the diversified food industry in the community. Ternopil CTC also has significant tourism potential due to the availability of water resources and green areas for recreation.
A number of traffic flows of national importance pass through the center of the community, which increases its role in Ukraine. The community has a sufficient amount of land and real estate that can be used for business activities. The community is also provided with commercial and office premises and branches of financial institutions.
A significant advantage of the community is the saturation of scientific and educational institutions and a high proportion of the working-age population, which ensures a high human resource potential. The local authorities pursue a transparent and effective industrial and investment policy aimed at developing small businesses, supporting local producers, and expanding international cooperation.
Over the past decade, the community has been approving and implementing programs funded from the community budget aimed at developing entrepreneurial activity. Efforts are underway to reduce administrative barriers, improve business culture, promote community investment opportunities, and create a favorable institutional environment.
An important task is the development of the Ternopil Industrial Park. The functional purpose of the park is to provide processing industry (primary and secondary processing of agricultural raw materials, food production, production of baby food); professional scientific and technical activities (research activities to improve product quality and use of new technologies, IT cluster).
The community's advantage in terms of attracting investment is its successful experience in implementing infrastructure projects, including those funded by international investors.
In order to conduct the analytical research the materials provided by Ternopil 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