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IBI-Rating has updated the credit rating and the rating of investment attractiveness of Nizhyn City Territorial Community
15.02.2023
National rating agency IBI-Rating informs on affirming of the credit rating of Nizhyn Territorial Community (hereinafter – Nizhyn CTC) at uaBBB+ grade with «negative» outlook and CreditWatch listing, as well as the rating of investment attractiveness at invA– grade.
Such rating grades represent the sufficient ability of the city to pay off its financial commitments and high investment attractiveness. The notations «+» and «–» indicate 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 economy of Nizhyn CTC is characterized by a developed industry, in which the most important role is played by enterprises of the machine-building complex and the food industry.
Despite the fact that the implementation of the community budget within 9 months 2022 took place in the conditions of martial law, the amount of own income of the community budget according to the results of 9 months 2022 by 28.97% (or UAH 94.59 million) exceeded their volume for the same period in 2021. During the analyzed period, own revenues formed 81.31% of the revenues of Nizhyn CTC budget (against 75.09% according to the results of 9 months 2021).
Plan for own income based on the results of 9 months 2022 was completed by 115.4%. Surplus of community’s budget for 9 months 2022 amounted to UAH 105.82 million (general fund surplus – UAH 114.38 million; special fund deficit – UAH 8.56 million).
The indicator of Nizhyn CTC budget fiscal capacity (personal income tax per inhabitant) is lower than the national average, which is why the horizontal equalization mechanism is applied – funds are transferring from the state budget to community budget in the form of a basic subsidy. In turn, the level of dependence on the equalization subsidy is insignificant.
The debt burden is low. The amount of consolidated debt as of October 1, 2022 was UAH 14,828.17 thousand. The ratio of consolidated debt to planned own budget revenues for 2022 is 2.84%.
2. Investment potential
Nizhyn city has a well-developed transport infrastructure, which makes it the ideal transport hub of the region. Work continues on the creation of a logistics platform in the industrial zone of the city and a multimodal logistics center «Dry Port» based on «Nizhyn» airfield.
A target program for the development of small business is implemented in the community: the majority of local tax rates are below the maximum level stipulated by the legislation, which creates conditions for the development of entrepreneurship; entrepreneurs are provided with consulting and financial support; a business support center (BusinessHub) was created.
Nizhyn City Council is very active and successfully implements investment projects in cooperation with investors, including international ones.
In order to conduct the analytical research, the materials obtained from Nizhyn CTC 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 sufficient ability of the city to pay off its financial commitments and high investment attractiveness. The notations «+» and «–» indicate 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 economy of Nizhyn CTC is characterized by a developed industry, in which the most important role is played by enterprises of the machine-building complex and the food industry.
Despite the fact that the implementation of the community budget within 9 months 2022 took place in the conditions of martial law, the amount of own income of the community budget according to the results of 9 months 2022 by 28.97% (or UAH 94.59 million) exceeded their volume for the same period in 2021. During the analyzed period, own revenues formed 81.31% of the revenues of Nizhyn CTC budget (against 75.09% according to the results of 9 months 2021).
Plan for own income based on the results of 9 months 2022 was completed by 115.4%. Surplus of community’s budget for 9 months 2022 amounted to UAH 105.82 million (general fund surplus – UAH 114.38 million; special fund deficit – UAH 8.56 million).
The indicator of Nizhyn CTC budget fiscal capacity (personal income tax per inhabitant) is lower than the national average, which is why the horizontal equalization mechanism is applied – funds are transferring from the state budget to community budget in the form of a basic subsidy. In turn, the level of dependence on the equalization subsidy is insignificant.
The debt burden is low. The amount of consolidated debt as of October 1, 2022 was UAH 14,828.17 thousand. The ratio of consolidated debt to planned own budget revenues for 2022 is 2.84%.
2. Investment potential
Nizhyn city has a well-developed transport infrastructure, which makes it the ideal transport hub of the region. Work continues on the creation of a logistics platform in the industrial zone of the city and a multimodal logistics center «Dry Port» based on «Nizhyn» airfield.
A target program for the development of small business is implemented in the community: the majority of local tax rates are below the maximum level stipulated by the legislation, which creates conditions for the development of entrepreneurship; entrepreneurs are provided with consulting and financial support; a business support center (BusinessHub) was created.
Nizhyn City Council is very active and successfully implements investment projects in cooperation with investors, including international ones.
In order to conduct the analytical research, the materials obtained from Nizhyn CTC 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