The credit rating of the city of Bratsk (hereinafter, the City) is based on its low debt load, substantial debt refinancing risks, as well as the moderate operational efficiency of the budget. The rating is additionally supported by the stable development indicators of the municipal economy, which, however, is limited in terms of its ability to increase budget revenues. The credit rating is constrained by the City’s strong dependence on transfers from the budget of the Irkutsk Region (hereinafter, the Region) and low available liquidity.
Bratsk is located in the Irkutsk Region, Siberian Federal District. The City’s population is about 219,000. According to ACRA’s estimates, the City’s annual share in the gross regional product (GRP) of the Region may exceed 10%.
KEY ASSESSMENT FACTORS
Moderate budget profile indicators1. The averaged2 ratio of the current account balance to current revenues will be 3% for 2022–2026. The current account balance will remain positive by the end of 2025 and in accordance with the budgetary allocations approved for 2025, may amount to 2% of the City’s current revenues. The values of the indicator show that the City’s current revenues are high enough to cover current expenditures in full.
The share of capital expenditures in total expenditures (excluding subventions) averaged for 2022–2026 will be 21%. At the same time, the quality assessment of the flexibility of budget expenditures corresponds to the fifth category. Capital expenditures are annually financed mostly by transfers from the higher budget, which limits the ability to reduce these expenditures if necessary. The current account balance after interest income and expenditures is often negative, which means that interest expenses have to be covered using additional sources of financing. The modified free cash flow indicator of the City’s budget is consistently negative, which indicates the need to finance capital expenditures also using additional funds.
The averaged share of tax and non-tax revenues (TNTR) in the City’s revenues (excluding subventions) for the abovementioned period will not exceed 56%. The City is largely dependent on transfers from the Region’s budget, with subventions accounting for an average of more than 60% of transfers annually.
The ratio of the averaged modified budget deficit (MBD) to current revenues will amount to -1% for 2022–2026, which indicates the moderate need of the City’s budget for additional financing. Given that the City’s debt load is low, ACRA has adjusted the score for the ratio of averaged MBD to current revenues upward.
The quality assessment of the City’s budget profile corresponds to the second category. The City has conservative budget planning: periodically, significant deviations of actual tax revenues from planned assignments are observed. The amount of lost tax revenues due to the use of tax benefits is insignificant for the City’s budget. ACRA has no information on cases of violation of budget legislation that could affect the credit quality of the City.
In 2025, the revenue side of the City’s budget may increase by 3% compared to 2024, while TNTR, according to the current version of the budget decision, may grow by 10%. Growth will mainly be driven by personal income tax revenues (+18%) and taxes on total income (+3%). Transfers are expected to remain at the same level as last year. The City plans to increase its expenditures by 4%, which will lead to the formation of a budget deficit of around 6% of TNTR, which will be fully financed using internal funds.
1 In the calculation of budget indicators, the City’s capital expenditures and capital transfers do not take into account other intergovernmental transfers of a capital nature, which, in the opinion of the Agency, are of a one-time nature. According to the City, such transfers were not planned for 2025.
2 Hereinafter, averages are calculated according to the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation.
Low debt load and substantial refinancing risks. As of January 1, 2025, the City’s debt was RUB 1.9 bln. The debt portfolio included both commercial and budget loans (89% and 11%, respectively). The debt repayment schedule as of the beginning of the year indicated significant debt refinancing risks. According to the schedule, the City was to repay or refinance 60% of its debt obligations (RUB 1.1 bln) this year. As of July 1, 2025, the City’s debt had increased by 9%, and its structure had changed. As of that date, 85% of debt was commercial loans, 10% was budget loans, and 5% was a short-term loan from the Federal Treasury Department (FTD).
As a result of the borrowings and repayments that took place, as of July 1, 2025, the City had 26% of its debt obligations left to repay by the end of the year.
In 2025, the ratio of the City’s debt to current revenues may amount to 13.7%. The City’s interest expenditures are expected to grow in 2025 and increase by almost twofold. This is due to both high interest rates in the economy in general and the fact that the City replaces budget loans received from a higher budget with bank debt at a higher rate. The ratio of averaged interest expenditures to total expenditures (excluding subventions) for 2022–2026 will be just over 3%.
The ratio of debt to gross municipal product is not calculated due to the absence of information about the latter. According to ACRA’s estimates, this ratio would be much lower than 20%.
The quality assessment of the City’s debt profile corresponds to the fourth category. The weighted average maturity of debt does not exceed two years. At the beginning of the year, bank loans formed almost 90% of the City’s debt portfolio. The City’s debt has been growing continuously since 2018, however, its debt load remains low. ACRA notes that the City’s debt policy does not contribute to minimizing the risks of refinancing debt obligations. The operational efficiency of the budget is often negative, but financing current expenditures using liquidity or borrowed funds is insignificant. According to the City, the financial debt of public sector companies is insignificant, and overdue payables amounted to around RUB 1.1 bln as of January 1, 2025. About 70% of this debt fell on BVK Municipal Unitary Enterprise. The debt of this enterprise is being repaid through accounts receivable and subsidies from the regional and city budgets.
Low budget liquidity. The balance of the City’s accounts as of January 1, 2025 covered 14% of the existing public debt on the same date and was equivalent to approximately 22% of the City's average monthly expenditures. According to the current version of the budget decision, in 2025 the City plans to spend the entire volume of available liquidity to finance the deficit planned for the current year.
The City’s liquidity ratio will be 18% as of the end of 2025.
The quality assessment of the liquidity profile of the City’s budget corresponds to the fourth category. The City uses short-term loans from the FTD to cover cash gaps, including this year. Debt refinancing risks are assessed as significant, since the City will have to make a rather large volume of repayments on commercial loans over the next two years. In 2025, the City has carried out 10 purchases of credit lines, five of which did not take place due a lack of bids for participation at the proposed interest rate. As of the beginning of the year, the City did not have open credit lines with a drawdown period of more than a year. Accounts payable are insignificant for the City’s budget; according to the results of last year, its volume decreased year-on-year.
The level of economic development is relatively high since large enterprises operate in the City. According to ACRA’s estimates, the transportation and storage segment occupies the largest share (about 35% averaged for 2021–2024) in the volume of shipped products; the second largest share (about 30%) belongs to the metals industry. The tax revenues of the City’s budget are strongly focused on the largest enterprises: according to the City, six of them account for more than 25% of TNTR.
The estimated share of the GRP of the Region formed in City may have exceeded 10% in the period from 2019 to 2023. The ratio of the nominal wage averaged for all entities in the City for 2021–2024 to the subsistence minimum of the City exceeded 3.0. The official unemployment in the City for 2024 was 0.3%. The averaged unemployment rate, as per the ILO’s methodology, according to ACRA’s assessment, may have amounted to about 2.7% in 2021–2024.
KEY ASSUMPTIONS
-
Execution of the budget in 2025 according to the parameters stipulated by the current version of the budget decision;
-
Maintaining a low debt load;
-
Continued strong dependence of the municipal budget on transfers from the higher budget.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Stable outlook assumes that the credit rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
-
Growth of the share of TNTR in the budget revenues (excluding subventions);
-
Lower need for borrowed financing;
-
Using longer-term debt instruments and minimizing refinancing risks;
-
Significant increase in budget liquidity.
A negative rating action may be prompted by:
-
Lower operating efficiency of the budget;
-
Lower capital expenditures of the City;
-
Debt load exceeding 30% of current revenues;
-
Using short-term debt instruments to refinance current debt, which further increases debt refinancing risks;
-
Increased need to provide (using the City’s budget) additional support to companies in the City that are part of the public sector.
ISSUE RATINGS
There are no outstanding issues.
REGULATORY DISCLOSURE
The credit rating of the city of Bratsk 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 city of Bratsk was published by ACRA for the first time on November 21, 2017. The credit rating 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 city of Bratsk, 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 Administration of the city of Bratsk participated in its assignment.
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 Administration of the city of Bratsk. No conflicts of interest were discovered in the course of credit rating assignment.
