The credit rating of the Khanty-Mansiysk Autonomous Okrug-Ugra (hereinafter, the Region) is based on high regional economic indicators, low debt load, and balanced budget profile indicators.
The Region is located in the Ural Federal District. It is an administrative subject of the Russian Federation and at the same time is part of the Tyumen Region1. The Region’s population is 1.77 mln (1% of Russia’s population). According to the Region’s estimates, its GRP amounted to RUB 9.8 tln in 2024. Over 40% of the total volume of Russian oil is produced in the territory of the Region. Each year, the Region’s GRP amounts to around 5% of the total GRP of Russia’s regions.
1 A portion of corporate income tax revenues collected in the Region goes to the Tyumen Region’s budget (this portion is regulated by a relevant agreement between the Tyumen Region and the Region and amounts to 29.5%).
KEY ASSESSMENT FACTORS
Low debt load and sufficient budget liquidity. At the beginning of this year, the Region’s debt consisted of infrastructure budget loans and special treasury loans. As of the end of 2024, the debt-to-current revenue ratio was 2.7%, which is viewed by ACRA as a low debt load. In case the Region raises debt to finance the budget deficit indicated in the current version of the budget law, the debt load will grow to 16%, which will still correspond to the minimum level. The annual debt repayment volume does not exceed 7% of the total debt. The ratio of debt to GRP is insignificant. Interest expenses are not burdensome.
The quality assessment of the Region’s debt profile is high: the weighted average debt repayment period far exceeds four years, there are no overdue accounts payable, the current account balance is regularly positive, the debt of public sector and municipal enterprises is low, and indirect liabilities are insignificant.
The amount of budget account balances as of January 1, 2025 was several times higher than the total debt of the Region on the same date. The liquidity ratio last year was 376%, and by the end of this year, it may be 72% if the budget is executed with the projected deficit. Since the Region regularly receives a significant volume of interest income, the score for the liquidity ratio has been elevated by one notch (from three to two).
The quality assessment of the liquidity profile is also high: there are almost no refinancing risks; there is no need to attract additional liquidity; the Region did not borrow loans and did not open credit limits due to lack of necessity. On average, last year’s account balances were twice as high as the average monthly budget expenditures for 2024.
High budget self-sufficiency. The past year’s budget deficit amounted to 4% of tax and non-tax revenues (TNTR), and it was covered with accumulated liquidity. In 2024, expenditures grew significantly on the backdrop of higher current expenses, while revenues remained almost unchanged in absolute terms, although their structure changed due to a decline in corporate income tax revenues and an increase in personal income tax revenues. According to the budget law, the 2025 budget will be deficit since expenditures. both current and capital, are expected to grow further and revenues are expected to decline mostly on the back of falling interest income (at the moment, it seems unlikely). This year’s budget deficit is expected to be mostly covered by borrowed funds.
In 2021–2025, the averaged2 share of TNTR should amount to 89% of total revenues (excluding subventions). Since this indicator regularly amounts to 90% or more and the Region is one of innumerable donors of the federal budget, the value is adjusted to 90%. The ratio of the current account balance to current revenues averaged over 2021–2025 will be about 14%. The ratio of the averaged modified budget deficit to current revenues will be at -4%, which indicates that the Region needs to raise some debt or use account balances. The share of capital expenditures for the specified period will be almost 19%. The quality assessment of the flexibility of budget expenditures is moderately high: the main source of financing capital expenditures is the Region’s own funds; the possibilities for increasing capital expenditures correspond to the needs of the Region; the current account balance after interest income and expenses is regularly positive.
The quality assessment of the budget profile is at the maximum level. The Region conservatively plans corporate income tax revenues, while the planning of personal income tax revenues and property tax revenues is realistic; violations of budget legislation that may affect the budget profile are unknown; tax benefits are viewed as significant for the regional budget.
2 Hereinafter, averages are calculated according to the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation.
The Region is a federal budget donor, producing more than 40% of Russian oil. The sectoral structure of the Region’s GRP is stable and the contribution of the mineral extraction sector exceeds a half of the GRP. Over 40% of Russian oil is produced in the Region where the largest oilfields of Samotlor, Fyodorovskoe, Mamontovskoe, and Priobskoe are located. Most of taxes and charges collected in the Region are transferred to the federal budget, while a lesser portion goes to the consolidated budget of KhMAO-Ugra. The Region’s tax revenues form a significant share of the federal budget’s total tax revenues.
Each year, the Region’s GRP per capita exceeds the national average by more than three times. In 2021−2024, the ratio of averaged wage to averaged regional subsistence minimum amounted to 5.3, and the Region’s unemployment rate (according to the ILO’s methodology) was significantly lower than the national average.
KEY ASSUMPTIONS
-
Budget deficit not exceeding the Region’s projections.
-
Maintaining a prudent debt policy.
potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A negative rating action may be prompted by:
-
Critical shrink of production volumes in the Region, declining macroeconomic indicators;
-
Sustainably negative current account balance;
-
Significantly lower budget liquidity;
-
Debt load exceeding 30% of current revenues;
-
Significant changes in inter-budgetary relations in Russia.
ISSUE RATINGS
There are no outstanding issues.
REGULATORY DISCLOSURE
The credit rating of the Khanty-Mansiysk Autonomous Okrug-Ugra has been assigned under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of the Khanty-Mansiysk Autonomous Okrug-Ugra was published by ACRA for the first time on September 26, 2017. The credit rating of the Khanty-Mansiysk Autonomous Okrug-Ugra and its outlook are expected to be revised within 182 days following the publication date of this press release as per the Calendar of sovereign credit rating revisions and publications.
The credit rating was assigned based on data provided by the Khanty-Mansiysk Autonomous Okrug-Ugra, information from publicly available sources (the Ministry of Finance, the Federal State Statistics Service, and the Federal Tax Service), and ACRA’s own databases. The credit rating is solicited and the Government of the Khanty-Mansiysk Autonomous Okrug-Ugra participated in the rating process.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to the Government of the Khanty-Mansiysk Autonomous Okrug-Ugra. No conflicts of interest were identified in the course of credit rating process.
