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05.07.2006
Odessa city credit rating has been upgraded to the investment level - Press-conference
Jul. 5, 2006 at Press Center LIGA BusinessInform a press-conference was held on Upgrade of credit rating of Odesa to investment level, attended by Bedrega Svetlana, Head of financial administration of Odesa city council, Dubko Stanislav, General Director of Credit-Rating agency and Pererva Grygoriy, General Director deputy of Credit-Rating agency.
Credit rating agency upgraded the long-term credit
rating of Odesa from uaBB to uaBBB. This was announced by the agencys General Director
Stanislav Dubko at the press-conference in Press Center LIGA BusinessInform.
Borrowers rating of uaBBB category indicates Odesa city councils sufficient capability to timely and fully fulfill its debt obligations in the conditions of Ukrainian financial market. Yet this kind of borrower is highly susceptible to adverse changes in commercial, financial and economic conditions, compared to borrowers of higher ratings. Minus stands for intermediary category in relation to basic categories.
The considerations for rating assignment included the improved situation with optimization of debt structure and servicing of the citys debts. A positive impact was also rendered by the growth of Odesas budget revenues (excluding transfers) in 2005 compared to 2004 by 23.3% to UAH 760.3 million.
Besides, the persisting positive development trends in Odesa labor market in 2005 were taken into consideration. The average number of regular employees (excluding small businesses) grew 3.2% compared to 2004. The level of official unemployment remained one of the lowest in Ukraine and equal to 0.3%. The average wages grew 31.5% year-over-year to UAH 860.58.
The rating upgrade was also promoted by the growth of the citys economic performance in 2005. The volume of sold products (works, services) of basic kinds of industrial activity in producers selling prices was 172.1% of sales volumes in 2004. Total foreign investments grew 15.1% compared to 2004, foreign trade turnover increased 24.7%, volume of retail turnover of goods was 141% of 2004 level.
Besides, last year saw an active development of small business sector in Odesa. The number of companies grew 7.2% year-over-year, volume of goods (services) produced grew 94%, receipts from single tax grew 29.1%
When upgrading the rating, attention was paid to land sales by auction in Odesa in 2005. According to experts, this might further the increase of development budget revenues. Returns from land sales in 2005 gave UAH 85.3 million compared to UAH 19.2 million in 2004.
Yet the factors restricting the credit ratings level include: a rather high level of debt burden on the city budget, execution of expenditures of budget general fund by 90.3% of the plan taking into consideration changes in fulfillment plan of general fund revenues by 90.7%, budget expenditures of special fund were executed 79.4%, revenue plan was 103.4% fulfilled.
The restricting factors also include the growth of arrears in wages by 11% to UAH 7.0 million, the decrease of volumes of investments in fixed-capital assets by 24.6% to the level of 2004 and further decrease of the city population (the decrease in 2005 was 0.5%).
