Rating agency «IBI-Rating» has affirmed the credit rating of Sumy city at uaА- grade

The independent authorized Rating agency IBI-Rating informs on affirming of the credit rating of Sumy city at uaА- grade, keeping the «stable» outlook.

The credit rating of Sumy city reflects significance of the city as a regional centre, diversification of the city economic complex, which contributes to recovery of sources of filling of the city budget revenues, as well as its growth.

In 2016, the development of Sumy city continued to be influenced by the overall situation in the country's economy, which was in the recession stage. In the above-mentioned conditions, the city's economy demonstrated gradual recovery, which was accompanied by growing volumes of industrial products sold, capital investments assimilated and construction works performed.

This trend enabled Sumy city to increase some indicators of social and economic development, most of which continued to be either equal or exceeded the average values per capita in the country, as well as to increase revenues to the local budget, which, inter alia, was achieved through the implemented reform of decentralization of public finances.

In 2016, the volume of Sumy city budget revenues amounted to UAH 2 357.7m, having increased by 39.4% as compared with 2015, the annual target was overachieved by 6.9%. This was contributed by growth of tax revenues (+46.2%) and non-tax revenues (+42.2%), as well as official transfers (+34.6%). The city budget was consolidated with a surplus in the amount of UAH 115.8m, which exceeded the indicator of 2015 by 1.7 times.

In 2016, further growth of the indicator of the budget provision was observed – its growth rate exceeded the average values for Ukrainian cities; the indicator of the overall budget liquidity also increased, as at 31.12.2016 it was 17.1%, being considered as high value.

The financial policy of the local authorities allows to maintain at a low level indicators of debt burden on the budget revenues of Sumy city: as at 31.12.2016, the indicator of direct and consolidated debt burden accounted for 7.8% of the budget revenues (net of transfers). Local debt of Sumy City Council is formed by liabilities to NEFCO on the loan received for implementation of the investment project «Improved energy efficiency in educational establishments of Sumy city». At the same time, there are liabilities to the State Treasury of Ukraine on medium-term loans whose repayment must be regulated at the legislative level.

A positive impact on the credit rating may have, as follows: a sustainable increase in the budget revenues of Sumy city and improvement of most indicators of the city social and economic development per capita. A negative impact on the credit rating may have, as follows: decreased budget revenues indicators, reduced liquidity, a substantial increase of debt liabilities, deterioration of conditions on the borrowings market or a limited access to it for municipal formations.

In order to perform the analytical research the materials obtained from Sumy city have been used, including: indicators of social and economic development, materials of statistical bulletins; annual Treasury statements, program materials, other necessary internal information, as well as the information from the public sources, which the Rating agency considers reliable.