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IBI-Rating has upgraded the credit rating of Ternopil city to uaВВВ+ grade
21.05.2018IBI-Rating informs on upgrading of the credit rating of Ternopil city from uaВВВ to uaВВВ+ grade, keeping the «stable» outlook.
Upgrading of the credit rating grade is due to the long-term social and economic development of the city, growth of own revenues to the city budget while maintaining an acceptable level of debt burden on the consolidated budget revenues, given its expected growth in the future. Also, the grade of credit rating is determined by the value of the city as a regional center, the diversification of budget revenues and the level of budget security, which is comparable to the average for local budgets in Ukraine.
The development of Ternopil city in 2017 continued to be influenced by the overall situation in the economy, which is in the stage of recovery and political instability. Considering this, the city's economy has demonstrated gradual recovery, accompanied by an increase in the volumes of industrial output sold including for export, capital investments and FDI, construction works completed and commissioning of housing.
This trend helped ensure growth of the main indicators of social and economic development of Ternopil city, most of which are either equal to or exceed the average values in the country per capita, as well as to an increase in revenues to the local budget.
Measures of decentralization of budgetary relations and delegation of powers to cities to collect certain state taxes and duties, which have been implemented by the central government since 2015, and changes in the budget legislation norms in terms of payment of taxes to local budgets, indexation of land valuation, an increase in nominal wages, measures on administration of taxes and duties at the local level, as well as improving business activity allowed Ternopil city to further increase revenues to the budget.
According to the results of 2017, the volume of budget revenues increased by 35.4% as compared with 2016, amounting to UAH 2,341.0 m. This was facilitated by an increase in tax revenues by 38.2% to the amount of UAH 1,008.2 m and non-tax revenues by 2.9% to the amount of UAH 99m, as well as transfers from higher level budgets by 37.4% to the amount of UAH 1,218.1 m. Unlike with compared to previous years, the budget of the Ternopil city in 2017 was consolidated with a deficit in amount UAH 31.2 m, which was covered by changes in cash balances.
The city maintains a high level of depreciation of fixed assets, including housing stock, engineering and transport infrastructure facilities, hence the need for significant capital investments in the local infrastructure. Sources of financing of capital investments in the short-term perspective will also be loan funds from international financial institutions, which will have an impact on the dynamics of the indicator of consolidated debt burden on the budget revenues, which in 01/01/2018 amounted to 6.7% up to 6.9% in 01/01/2017 and continued to be at an acceptable level.
A positive impact on the credit rating may have, as follows: increased revenues to Ternopil city budget and improvement of most indicators of social and economic development in the city per capita. A negative impact on the credit rating may have, as follows: decreased budget revenues indicators, reduction in liquidity, a substantial increase in debt obligations, deterioration of the borrowings market conditions or limiting of the access to it for municipal formations.
In order to conduct the analytical research, the materials obtained from Ternopil city have been used, including: treasury statements of 2017, data on the implementation of the program of the city social and economic development and the city budget in 2017, statistics data, 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
Upgrading of the credit rating grade is due to the long-term social and economic development of the city, growth of own revenues to the city budget while maintaining an acceptable level of debt burden on the consolidated budget revenues, given its expected growth in the future. Also, the grade of credit rating is determined by the value of the city as a regional center, the diversification of budget revenues and the level of budget security, which is comparable to the average for local budgets in Ukraine.
The development of Ternopil city in 2017 continued to be influenced by the overall situation in the economy, which is in the stage of recovery and political instability. Considering this, the city's economy has demonstrated gradual recovery, accompanied by an increase in the volumes of industrial output sold including for export, capital investments and FDI, construction works completed and commissioning of housing.
This trend helped ensure growth of the main indicators of social and economic development of Ternopil city, most of which are either equal to or exceed the average values in the country per capita, as well as to an increase in revenues to the local budget.
Measures of decentralization of budgetary relations and delegation of powers to cities to collect certain state taxes and duties, which have been implemented by the central government since 2015, and changes in the budget legislation norms in terms of payment of taxes to local budgets, indexation of land valuation, an increase in nominal wages, measures on administration of taxes and duties at the local level, as well as improving business activity allowed Ternopil city to further increase revenues to the budget.
According to the results of 2017, the volume of budget revenues increased by 35.4% as compared with 2016, amounting to UAH 2,341.0 m. This was facilitated by an increase in tax revenues by 38.2% to the amount of UAH 1,008.2 m and non-tax revenues by 2.9% to the amount of UAH 99m, as well as transfers from higher level budgets by 37.4% to the amount of UAH 1,218.1 m. Unlike with compared to previous years, the budget of the Ternopil city in 2017 was consolidated with a deficit in amount UAH 31.2 m, which was covered by changes in cash balances.
The city maintains a high level of depreciation of fixed assets, including housing stock, engineering and transport infrastructure facilities, hence the need for significant capital investments in the local infrastructure. Sources of financing of capital investments in the short-term perspective will also be loan funds from international financial institutions, which will have an impact on the dynamics of the indicator of consolidated debt burden on the budget revenues, which in 01/01/2018 amounted to 6.7% up to 6.9% in 01/01/2017 and continued to be at an acceptable level.
A positive impact on the credit rating may have, as follows: increased revenues to Ternopil city budget and improvement of most indicators of social and economic development in the city per capita. A negative impact on the credit rating may have, as follows: decreased budget revenues indicators, reduction in liquidity, a substantial increase in debt obligations, deterioration of the borrowings market conditions or limiting of the access to it for municipal formations.
In order to conduct the analytical research, the materials obtained from Ternopil city have been used, including: treasury statements of 2017, data on the implementation of the program of the city social and economic development and the city budget in 2017, statistics data, 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