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29.03.2006
“uaBBB-” credit rating assigned to Brovary city
Today independent rating agency Credit-Rating announced the granting of a long-term "uaBBB-" credit rating according to Ukrainian national scale to the town of Brovary. The ratings forecast is stable. Credit rating to Brovary is assigned for the first time.
Factors supporting the credit rating's level :
- General growth of budget revenues excluding transfers in 20012005 from UAH 21.8 million to 67.0 million;
- No direct debt obligations as of 03.21.2006, full debt load is UAH 750 thousand;
- Growing demand for real estate and land in the town which manifests itself in annual increase of revenues to development budget (in the period from 2002 till 2005 this revenue item grew 10 times to UAH 17.7 million in 2005);
- Growth of basic showings of the towns economical development in 2001-2005: volume of retail turnover of goods grew 1.78 times to UAH 185.5 million in 2005, investments in the fixed capital 7.1 times to UAH 195.3 million; growth rates of production output of industrial produce in 2004 was 106.7%, in 2005 118.0%;
- Main showings of social development improved: decrease of unemployment level from 2% in 2002 to 1.5% in 2005 (national level of 2005 3.2%), growth of salary size from UAH 317.0 in 2001 to 1124.6 in 2005 with higher growth rates than average in the country; decrease of arrears in salaries from UAH 3.1 million in 2001 to 0.4 million in 2005;
- Gradual growth of population in Brovary in 2001-2005, economically active population prevailing in the age structure (71%);
- Close vicinity to Kyiv renders a positive impact on social and economic development of Brovary.
Factors restricting the credit rating's level :
- Little flexibility of incomes, their dependency on changes in interbudget relations, tax rates, which are revised on the government level;
- Low diversification of the towns fiscal revenues: individual income tax makes up over 50% of total budget revenues excluding transfers;
- Problems in housing and public utilities, in the first place due to unprofitable current tariffs on housing services and insufficient capital investments from the town budget especially in view of the expected 48.9% year-over-year decrease of budget expenditures on the housing and public utilities in 2006;
- Considerable outflow of able-bodied citizens (up to 30%) to work in Kyiv, which reduces the budget revenues from individual income tax while the expenditure budget remains the same;
- A limited part of municipal property can be sold by the town to refill the development budget or fulfill debt obligations;
- Political risks in view of elections to legislative bodies of different levels in 2006.
Besides, a scheduled 20% reduction of the towns budget revenues in 2006 was taken into consideration, which is related to the expected decrease of revenue from the sale of the town real estate.
For more detailed information, please contact
us.
Kyiv (+38044 490 25 50, fax +38044 490 25 54)
