OREANDA-NEWS  On 19 September Credit-Rating, a nationally recognized credit rating agency in Ukraine announced that it assigned a long-term credit rating of uaA to the city of Poltava (`city`). In the course of the rating analysis Credit-Rating considered city`s social-economic and financial indicators for 2003-2007 and 1Q2008 and other inside information furnished by the city council.

An obligor or a debt liability with uaA credit rating is characterized with the HIGH STRONG creditworthiness as compared to other Ukrainian obligors or debt liabilities. This level of creditworthiness is susceptible to adverse changes in commercial, financial and economic conditions.

Factors maintaining the credit rating

High growth rates of the revenues in the city budget`s general fund exclusive of transfers in the past 3 years; in fact the incomes exceeded by 27.6% in 2005, by 24.1% in 2006, and by 43.6% in 2007 the indicators in the corresponding previous budget periods.

Stable growth in the city`s key figures in 2004-2007, specifically the fixed capital investments rose 1.9x to UAH2.1bn, the retail turnover increased 3.2x to UAH2.3bn, the homes delivered grew 1.8x to 96K sq.m., the industrial production sales advanced 1.9x to UAH5bn (over 2006-2007). All of the given indicators calculated per capita exceed the country`s annual averages.

The city`s social development indicators have improved over 2004-2007: the registered unemployment decreased (1.2%), and is currently far lower than the country`s average of 2.4%, accompanied by rise in monthly average salary, which is higher than the country`s average.

The city council does not have direct debts as of Aug.1, 2008, coupled with its low planned growth: the city`s estimated direct debt burden in case the planned loan raised to the city`s development budget, will account for 10.9% of the adjusted budget revenues approved for 2008 and exclusive of transfers.

Factors constraining the credit rating

The growth rates of the monthly average salary are lower than the country`s averages coupled with gradual decrease in the number of employees in certain highly-paid segments, accompanied by significant dependency of the city budget revenues upon gains from tax on individuals (the specific gravity of this source in the revenues of the city budget`s general fund exclusive of transfers rises annually and made up 77.5% in 2007).

High deterioration of the city`s infrastructure and housing sector, which requires significant investments for their renovation.