The credit rating of the Kursk Region (hereinafter, the Region) reflects its low debt load and moderately high budget profile indicators. The rating is limited by the Region’s moderate economic development indicators and limited liquidity.
The Developing outlook is due to a number of factors that are beyond the control of the Region and are capable of significantly impacting both its economy and budget profile.
The Region is part of the Central Federal District. It accounts for around 0.5% of the total gross regional product (GRP) of Russia’s regions. The Region’s territory includes part of the Kursk Magnetic Anomaly.
KEY ASSESSMENT FACTORS
Conservative debt policy and low debt load. The Region has in the past adhered to a conservative debt policy and maintained a low-risk debt load over a long period. The ratio of the Region’s debt to current revenues1 was 17% in 2025. According to ACRA’s projections for 2026, this ratio will continue to correspond to a low debt load and amount to around 26%. The ratio of the Region’s debt to GRP ratio is consistently low.
In recent years, budget loans have occupied the dominating share in the structure of the Region’s debt. They amounted to 87% of the portfolio as of January 1, 2026, while bank loans accounted for 11%, and the remainder was issued guarantees. These bank loans were not short-term.
The share of debt to be repaid this year as of the start of the year amounted to 5%, while the share of debt subject to repayment in 2027 was 17% (including bank debt).
In 2025, the Region entered into a single supplementary agreement with the Russian Ministry of Finance on the restructuring of budget loans in accordance with Russian Government Decree No. 79 dated February 1, 2025, until November 30, 2039. The restructured debt amounted to RUB 8.1 bln, or two-thirds of the budget loan debt (excluding the short-term loan from the Federal Treasury Department).
Debt servicing costs are not burdensome for the Region’s budget due to the prevailing share of budget loans in total debt — the ratio of averaged2 interest expenses to averaged total budget expenditures (excluding subventions) will be 0.6% in 2022–2026.
The qualitative assessment of the Region’s debt profile corresponds to the first category. This is due to the weighted average maturity of debt exceeding four years, the predominance of budget loans in the debt structure, the absence of overdue accounts payable, as well as a significant amount of indirect liabilities, financial debt of public sector companies and debt of municipalities. In addition, the qualitative assessment is influenced by the stability of the debt policy, which is aimed at attracting long-term sources for financing the budget deficit.
The liquidity ratio is low — as of the end of last year it amounted to 67%, while this year it is expected to be just below 40%.
The qualitative assessment of the liquidity profile corresponds to the second category, which is due to the public credit history of the Region, as well as low relative liquidity, the likely need to attract liquidity, and the need to use short-term sources of liquidity. The assessment also takes into account the minimal amount and neutral dynamics of accounts payable.
1 Calculations of budget profile indicators do not take into account funds received by the Region in 2024–2025 in connection with the introduction of a state of emergency.
2 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.
Moderately strong budget profile with dependence on the metals sector. In 2024 and especially in 2025, the volume of transfers received by the Region increased significantly compared to the average level of previous years. Nevertheless, last year’s budget deficit was 12.6% (excluding permitted excesses). Without accounting for this obviously temporary increase in transfers, the deficit could have arisen due to current expenditures growing faster than tax revenues. The deficit was covered achieved using accumulated funds and, to a lesser extent, debt (both commercial and preferential). Other sources are insignificant.
This year, the Region expects corporate income tax revenues to increase by 37% compared to last year, and natural resource tax revenues to increase by 42% over the same period. ACRA is using more conservative assumptions, projecting an increase in these revenues roughly in line with inflation. Without adjusting other budget parameters (except interest expenditures), ACRA assumes that the Region’s budget deficit by the end of the year will significantly exceed the currently planned 3.6% (excluding permitted excesses).
The averaged share of the Region’s tax and non-tax revenues (TNTR) in its total revenues (excluding subventions) for 2022–2026 will be 70%. The averaged ratio of the current account balance to current revenues for this period will be 6%. The positive current account balance indicates that current revenues are sufficient to cover current expenditures. The ratio of the averaged modified budget deficit to averaged current revenues will be negative, which indicates that the budget’s need for debt financing is growing. The assessment of the factor has been adjusted to the second category due to the low debt load. The averaged share of capital expenditures in total expenditures (excluding subventions) will be 20% in 2022–2026, while expenditures during that period are uneven.
The qualitative assessment of the flexibility of budget expenditures corresponds to the fourth category due to a significant share of capital expenditures co-financed by the federal budget, the Region’s need to increase capital expenditures, a consistently positive current account balance after interest payments, as well as the significant negative value of the modified free cash flow.
The qualitative assessment of the budget profile corresponds to the first category, taking into account the following factors: the Region has not violated budget legislation that could affect the budget profile; regional tax benefits do not exceed 4% of TNTR annually; the Region transfers tax revenues to a lower level; and some of the regional tax revenues are volatile.
Moderate economic development indicators. Despite the sufficient level of economic diversification and tax revenues (their maximum share comes from the iron ore-mining segment and averaged 17% over 2021–2024, according to ACRA’s estimates), the dynamics of socioeconomic indicators and the replenishment of the regional budget depend on the situation in the global and domestic metals markets.
The ratio of the Region’s per capita GRP to the national average per capita GRP averaged for 2020–2023 was 67%. According to ACRA’s estimates, this indicator will remain within the current category in 2024–2026. The ratio of averaged wages to the subsistence minimum (for the working age population) exceeded 4.0 in 2021–2024. Local unemployment was 1.9% in 2024; unemployment averaged for the past four years was 2.4%.
KEY ASSUMPTIONS
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Growth in the share of transfers in the Region’s budget structure is temporary, however it will persist in the foreseeable period as needed;
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The dynamics of corporate income tax revenues and natural resource tax revenues will be more moderate this year, while the deficit will exceed the planned level.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Developing outlook assumes a variety of trends: the rating may stay unchanged, be upgraded or downgraded.
A positive rating action may be prompted by:
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Growth of the share of internal budget revenues coupled with stable leverage;
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Faster growth rates of the Region’s socioeconomic development indicators.
A negative rating action may be prompted by:
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Decrease in available liquidity;
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Debt to current revenues ratio exceeding 30%;
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Growing current budget expenditures not supported by an increase in current revenues.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): a+.
ISSUE RATINGS
There are no outstanding issues.
REGULATORY DISCLOSURE
The credit rating has been assigned to the Kursk Region based on the following methodologies: the Methodology for Assigning Credit Ratings to Regions and Municipal Entities under the National Scale for Russian Federation to calculate the SCA and determine the credit rating and the credit rating outlook of the Kursk Region under the national scale for the Russian Federation and 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 Kursk Region under the national scale for the Russian Federation was published by ACRA for the first time on September 1, 2017.
The credit rating of the Kursk Region is expected to be revised within 182 days as per the Calendar of sovereign credit rating revisions and publications.
The credit rating was assigned based on data provided by the Kursk 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 (financial) statements of the Kursk Region as of February 1, 2026.
The credit rating is solicited and the Kursk Region 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 Kursk Region during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
