Standard & Poor's says Sverdlovsk Region’s rating promotion is hindered by unstable budget, volatile profit tax income, increasing outgoings, and lack of investment
13 December 2007 (09:07)
Standard & Poor's confirmed Sverdlovsk Region’s long-term credit rating at BB, while the raging outlook was changed from Stable to Positive.
'We reconsidered the rating due to the ongoing economic growth within the region,’ says Irina Pilman, Standard & Poor’s credit analyst.
According to the agency’s official report, Sverdlovsk Region is one of Russia’s most developed industrial areas, yet its rating promotion is hindered by unstable budget, volatile profit tax income, increasing outgoings, and lack of investment. At the same time, these negative factors can be made up for by good economic growth indicators, the authorities’ attempts to keep the financial situation decent, and low medium-term debt level.
'We expect the region’s economic growth to go on, which means that the budget revenues are likely to grow as well. This, in its turn, will enable the authorities to raise the salaries of civil servants and modernize the region’s infrastructure,’ Ms Pilman observes.
'If the region comes up with a realistic program that covers its major infrastructure problems and that fits into the medium-term budget and borrowing schemes, its rating might be promoted. On the other hand, if Sverdlovsk Region fails to make its plans a reality, the rating outlook might be demoted back to Stable. The rating could also be affected by a dramatic drop in income or a dramatic increase in the amount of debt (which is not very likely, however),’ says Standard & Poor's.
'We reconsidered the rating due to the ongoing economic growth within the region,’ says Irina Pilman, Standard & Poor’s credit analyst.
According to the agency’s official report, Sverdlovsk Region is one of Russia’s most developed industrial areas, yet its rating promotion is hindered by unstable budget, volatile profit tax income, increasing outgoings, and lack of investment. At the same time, these negative factors can be made up for by good economic growth indicators, the authorities’ attempts to keep the financial situation decent, and low medium-term debt level.
'We expect the region’s economic growth to go on, which means that the budget revenues are likely to grow as well. This, in its turn, will enable the authorities to raise the salaries of civil servants and modernize the region’s infrastructure,’ Ms Pilman observes.
'If the region comes up with a realistic program that covers its major infrastructure problems and that fits into the medium-term budget and borrowing schemes, its rating might be promoted. On the other hand, if Sverdlovsk Region fails to make its plans a reality, the rating outlook might be demoted back to Stable. The rating could also be affected by a dramatic drop in income or a dramatic increase in the amount of debt (which is not very likely, however),’ says Standard & Poor's.
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