ACRA assigns A+(RU) to the Altai Krai, outlook Stable

The credit rating assigned to the Altai Krai (hereinafter, the Region) is based on the relatively high indicators of the Region’s budget profile, low debt load, and high budget liquidity. The rating is limited by the Region’s relatively low economic development indicators and the high share of transfers from the federal budget in the Region’s income.

The Altai Krai is located in the Siberian Federal District and borders three Russian regions and Kazakhstan. In 2018, the Region was home to 1.6% of the country’s population and its GRP (gross regional product) amounted to 0.7% of the total GRP for all regions of the Russian Federation. The Region ranks first among Russian regions to the east of the Ural Mountains in terms of the volume of shipped agricultural products.

Key rating assessment factors

Low debt load and high budget liquidity. The ratio of the Region’s debt to operating income (calculated according to ACRA’s methodology) was 1.8% as of the end of 2019, and may reach 3.1% by the end of 2020, which corresponds to the minimum risk level. As of January 1, 2020, budget loans repayable by 2034 accounted for 99.75% of the Region’s debt obligations, while the insignificant remaining share (0.25%) is made up of Region’s government guarantees. Debt servicing expenses are minimal due to this debt structure (the average level1 of interest expenses in 2016–2020 should equal less than 0.03% of aggregate budget expenses, excluding subventions). ACRA expects the ratio of debt to internal revenues of the Region in 2020–2022 to stay within the target range set by the Russian Ministry of Finance for restructuring budget loans. ACRA notes the low likelihood of regional public sector bodies requesting support. The Region’s budget is characterized by its high level of liquidity: account balances for regional budget funds exceeded the Region’s debts by almost 9x as of the end of 2019, and exceeded average expenses in 2019 by almost 2x.

1Hereinafter, averages are calculated according to the Methodology for Credit Ratings Assignment to Regional and Municipal Authorities of the Russian Federation.

Moderately high operational efficiency of the regional budget and a high share of transfers from the federal budget. The average share of the Region’s internal revenues in its total income (excluding subventions) for 2016–2020 will amount to 57% and is on a downward trajectory. In 2016–2109, internal revenues grew by 15% and transfers from the federal budget increased 1.5x, primarily due to the 58% increase in budget equalization dotations. In 2016–2020, the average ratio of the balance of current operations to operating income will amount to 16%, while the ratio of the modified budget deficit to operating income is positive (1.3%). These indicators show that operating income is sufficient to cover current expenses and that the Region does not need to borrow in the aforementioned period. Average capital expenses in 2016–2020 amount to 19% of aggregate budget expenses; almost a quarter of these expenses are financed using transfers from the federal budget.

The economy is diversified, but development indicators lag behind the national averages. The agriculture sector is responsible for a significant part of the Region’s GRP, so the average per-capita GRP in comparison to the average national indicator in 2015–2018 was only 42%. Manufacturing enterprises contributed the most to the Region’s GRP — 19% in 2018. Retail and repair companies account for 15% of GRP, while agriculture contributes 13%. The largest share of tax revenues is contributed by manufacturing enterprises (around 21% in 2019). In 2015–2019, the average monthly wage to subsistence wage ratio in the Region increased from 2.1x to 2.6x. Unemployment fell from 8.6% in 2016 to 6.1% in 2018, however, this is still higher than the national average for Russia.

Key assumptions

  • Adhering to a conservative debt policy;
  • Maintaining tax and non-tax revenues at 2019 levels;
  • Increasing transfers from the federal budget by 10% in 2020 compared to 2019;
  • Maintaining a high level of budget liquidity.

Potential outlook or rating change factors

The Stable outlook assumes that the credit rating will most likely remain unchanged within the 12 to 18-month horizon.

A positive rating action may be prompted by:

  • Faster growth of the Region’s economic development indicators;
  • Continued sustainable growth of the average monthly wage relative to the regional subsistence wage;
  • Growth of budget self-sufficiency.

A negative rating action may be prompted by:

  • Growth of current expenses without growth of operating income;
  • Debt to operating income ratio exceeding 30%;
  • Significant fall in available liquidity.

Issue ratings

No outstanding issues have been rated.

Regulatory disclosure

The credit rating has been assigned under the national scale for the Russian Federation based on the Methodology for Credit Rating Assignment to Regional and Municipal Authorities of the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities.

ACRA has assigned a credit rating to the Altai Krai for the first time. The credit rating of the Altai Krai and its outlook are expected to be revised within 182 days following the publication date of this press release in compliance with the Calendar of planned sovereign credit rating revisions and publications.

The credit rating was assigned based on the data provided by the Government of the Altai Krai, information from publicly available sources (the Ministry of Finance, the Federal State Statistics Service, and the Federal Tax Service), as well as ACRA’s own databases. The credit rating is solicited and the Government of the Altai Krai participated in the rating process.

No material discrepancies between the provided data and the data officially disclosed by the Altai Krai in its financial statements have been discovered.

ACRA provided no additional services to the Government of the Altai Krai. No conflicts of interest were discovered in the course of credit rating assignment.

Log in

Forgot password

Sign up

Reset password

Reset password


Полное использование материалов сайта разрешается только с письменного согласия правообладателя, АКРА (АО). Частичное использование материалов сайта (не более 30% текста статьи) разрешается только при условии указания гиперссылки на непосредственный адрес материала на сайте . Гиперссылка должна быть размещена в подзаголовке или в первом абзаце материала. Размер шрифта гиперссылки не должен быть меньше шрифта текста используемого материала.