The credit rating of the Chelyabinsk Region (hereinafter, the Region) is based on the positive operational efficiency of the budget and a significant share of capital expenditures in total expenditures (excluding subventions). The rating is constrained by the moderate development indicators of the Region’s economy, as well as the budget’s substantial need for additional sources of financing. The outlook has been changed to Negative to reflect the Agency’s expectations that some budget profile indicators, having declined, will remain at low levels in the medium term.
The Region is part of the Ural Federal District. According to the Region’s estimates, its gross regional product (GRP) for 2025 amounted to RUB 3,078 bln, which is almost 6% higher than the estimate for 2024 in nominal terms and 2% lower in real terms.
KEY ASSESSMENT FACTORS
Positive operational efficiency of the budget and a substantial need for additional financing. The Region’s tax and non-tax revenues (TNTR) slightly declined (by less than 1%) in 2025 compared to 2024. The decrease in the indicator was largely due to the continued decrease in corporate income tax revenues, while the increase in personal income tax revenues and revenues from the management of budget funds almost completely compensated for this decrease. The expenditure side of the budget increased by 6% in 2025: current expenses increased by 16%, while capital expenditures decreased by 10%. The end-of-year deficit was equivalent to 27% of TNTR (before exemptions) or 0% of TNTR (after exemptions). The deficit was covered with borrowed funds (budget and commercial loans) and accumulated liquidity. According to the current version of the budget law, the Region’s TNTR will grow by 10% in 2026 compared to 2025, while transfers will decrease by the same amount in relative terms. The expenditures are to be increased by 3%, so that the yearly deficit may amount to 20% of TNTR (before deducting possible exceptions). ACRA believes that this year’s expenditures may fall below the planned level, and therefore the deficit will be below the planned value.
The averaged1 ratio of the Region’s current account balance to current revenues for 2022–2026 will be below 18%. The current account balance will remain positive by the end of the year and will be sufficient to finance part of the Region’s expected capital expenditures.
The averaged share of capital expenditures in total expenditures will be 35% for 2022–2026. The quality assessment of the flexibility of budget expenditures corresponds to the first category. Annual capital expenditures are significant and almost completely financed by the Region’s budget. Thanks to recurring capital investments, the Region’s utility, transport and social infrastructure has been actively developing over the past years. The current account balance, after interest income and expense, is consistently positive, so that interest expenses are covered by current revenues. The modified free cash flow is rather volatile (in certain years the indicator has been well below zero), which explains why the Region periodically needs to partly finance capital expenditures using additional funds.
The averaged share of TNTR in the Region’s revenues (excluding subventions) will be 89% for 2022–2026. The ratio of the modified budget deficit to current revenues for the abovementioned period is expected to be -16%, however, given that the indicator is close to the category threshold and may grow in the forecast period, ACRA applies an adjustment for the boundary value. The final score for this indicator corresponds to the second category because, after the adjustment, the debt load is assessed as low.
The quality assessment of the budget profile corresponds to the first category. There are no cases of violation of budget legislation. The Region additionally transfers to lower budgets revenues from personal income tax, tax levied in connection with the application of the simplified taxation system, and tax on the extraction of minerals. The volume of lost tax revenues due to the application of tax benefits expected for 2026 is considered insignificant for the Region’s budget. ACRA notes significant deviations of some actual budget revenues from planned indicators, since a significant portion of revenues comes from volatile industries. Such deviations occur for reasons beyond the Region’s control.
1 Hereinafter, averages are calculated according to the Methodology for Assigning Credit Ratings to Regions and Municipal Entities under the National Scale for the Russian Federation.
Increased debt load. As of the end of 2025, the Region’s debt had increased by 43% year-on-year to RUB 109.6 bln, which was due to the receipt of budget and commercial loans. As of the start of 2026, the Region’s budget portfolio included budget loans (81%), commercial loans (16%), bonds (3%), and guarantees (the remainder). As per the debt repayment schedule as of January 1, 2026, the Region will have to repay 22% of its debt obligations this year and 7% in 2027. The Regions expects that a portion of budget loans will be waived this year and intends to further borrow commercial and budget loans and issue bonds. As a result, the debt may increase by 50% this year to 56% of current expenditures. ACRA adjusts this indicator to the first category because as of January 1, 2026 the Region’s debt included an infrastructure budget loan issued for a territorial development project2.
The ratio of the Region’s interest expenditures to total budget expenditures (excluding subventions) averaged for 2022–2026 will amount to around 1%.
The quality assessment of the Region’s debt portfolio corresponds to the first category. The average weighted debt maturity, regardless as significant short-term debt, exceeds four years. The debt mainly includes budget loans. The budget’s operational efficiency is predominantly positive, which indicates that current expenditures are covered by current revenues. The debt load of the Region’s municipalities is very low: the ratio of total debt to TNTR of the municipalities was 2% in 2025. The financial debt and payables of public sector enterprises as of October 1, 2025 were insignificant for the Region’s budget. There were no overdue payables as of January 1, 2025 and October 1, 2025. Payments under indirect liabilities are not burdensome for the Region.
2 As part of the list of instructions in pursuance of the Address of the President of the Russian Federation to the Federal Assembly of the Russian Federation dated April 21, 2021.
Declining budget liquidity. The budget deficit for the previous year was mostly financed by funds held in the Region’s accounts, and therefore their volume decreased by the end of the year.
The Region’s budget liquidity ratio amounted to 110% at the end of 2025, which corresponds to a moderately high level. The ratio may decrease by the end of 2026 since the volume of short-term debt has increased. However, the score for the liquidity ratio has been adjusted upward because the Region regularly receives a significant volume of interest income from managing the balance in its single treasury account.
The quality assessment of budget liquidity corresponds to the first category. The Region has outstanding bonds in the debt market and plans to raise funds this year. Over the past 12 months, account balances were on average more than two times higher than the monthly budget expenditures. However, after financing the significant deficit of last year, account balances significantly decreased by January 1, 2026, which indicates that the Region has a need to use additional financial instruments. All credit line tenders held in 2025 were recognized successful. The Region did not obtain short-term loans from the Federal Treasury Department in 2024 and 2025. This year, the Region concluded an agreement for a short-term loan from the FTD to replenish its account balances, but no funds have been drawn down yet. Debt refinancing risks are assessed as minimal.
Moderate economic development indicators. According to ACRA’s calculations, over a third of the Region’s tax revenues may come from the metals sector annually. The peak values of this share were observed in 2021. There is no other significant concentration of tax revenues in the Region.
The Region’s averaged GRP per capita was 71% of the national average in 2020–2023. According to the Region’s estimates for the forecast period, this indicator is not expected to decline. The unemployment rate was 1.9% in 2024, and the averaged rate for 2021–2024 was 2.5%. The ratio of monthly wage to subsistence minimum averaged for 2021–2024 exceeded 4.
KEY ASSUMPTIONS
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Budget execution with expenditures and deficit lower that those specified in the current budget law.
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Maintaining the current level of liquidity.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Negative outlook assumes that the rating will highly likely be downgraded within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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The share of the Region’s TNTR in its revenues increasing (excluding subventions);
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Declining need of the Region’s budget for additional sources of funds;
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The ratio of the Region’s debt to current revenues declining below 30%.
A negative rating action may be prompted by:
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Growing concentration of the Region’s economy on the metals sector;
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Consistently lower operational efficiency of the budget;
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Significant increase in the volume of short-term commercial debt;
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Further decline in the volume of the Region’s temporarily idle funds.
rating components
Standalone creditworthiness assessment (SCA): аа.
Support: no.
ISSUE RATINGS
Chelyabinsk Region, 35001 (ISIN RU000A102FV5), maturity date: November 30, 2027, issue volume: RUB 7 bln — AA(RU).
Chelyabinsk Region, 35002 (ISIN RU000A102L61), maturity date: December 17, 2027, issue volume: RUB 8 bln — AA(RU).
Chelyabinsk Region, 35003 (ISIN RU000A102L79), maturity date: December 17, 2027, issue volume: RUB 8 bln — AA(RU).
Rationale. In ACRA’s opinion, the bonds of the Chelyabinsk Region are senior unsecured debt instruments, the credit ratings of which correspond to the credit rating of the Chelyabinsk Region. As per the Agency’s methodology, the simplified approach is applicable to determine the credit rating, according to which the recovery rate on the issues belongs to category II, therefore the credit rating of the issues is equivalent to that of the Region — AA(RU).
REGULATORY DISCLOSURE
The credit ratings of the Chelyabinsk Region and the bond issues of the Chelyabinsk Region have been assigned based on the following methodologies: the Methodology for Assigning Credit Ratings to Regions and Municipal Entities under the National Scale for the Russian Federation to calculate the SCA and determine the credit rating and the credit rating outlook of the Chelyabinsk Region under the national scale for the Russian Federation; the Methodology for Assigning Credit Ratings to Financial Instruments on the National Scale for the Russian Federation to determine the credit rating of the bond issues under the national scale for the Russian Federation; the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities to ensure consistent and uniform application of ACRA’s methodologies, rating scales, models, and key rating assumptions.
The credit rating of the Chelyabinsk Region under the national scale for the Russian Federation was published by ACRA for the first time on December 26, 2017. The credit ratings of the bond issues of the Chelyabinsk Region under the national scale for the Russian Federation were published by ACRA for the first time on: (ISIN RU000A102FV5) — December 1, 2020, (ISIN RU000A102L61, ISIN RU000A102L79) — December 21, 2020.
The Chelyabinsk Region’s credit rating and its outlook, as well as the credit ratings of the bond issues of the Chelyabinsk Region are expected to be revised within 182 days as per the Calendar of sovereign credit rating revisions and publications.
The credit ratings were assigned based on data provided by the Chelyabinsk Region, 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 rating analysis was performed using the RAS accounting statements of the Chelyabinsk Region as of January 1, 2026.
The credit ratings are solicited and the Chelyabinsk Region participated in their assignment.
In assigning the credit ratings, 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 Chelyabinsk Region during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
