The credit rating of the Penza Region (hereinafter, the Region) has been upgraded due to the significant decline of the Region’s debt following the write-off of part of budget loan obligations and the related stabilization of debt load at a low level.
The credit rating reflects the low risks of refinancing debt obligations, as well as the moderately high shares of capital expenditures in the Region’s total expenditures (minus subventions) and tax and non-tax revenues (TNTR) in total revenues (excluding subventions). The credit rating is constrained by the declining operational efficiency of the budget and the moderately low level of temporarily free funds in the Region’s accounts.
The Penza Region is located in the Volga Federal District. The Region is home to around 1% of Russia’s population. According to the Region’s estimates, its gross regional product (GRP) for 2025 exceeded RUB 810 bln.
key assessment factors
Low debt load. Last year, the Region’s debt declined by 23% year-on-year and amounted to RUB 17.1 bln. The debt portfolio was almost entirely made up of budget loans, while guarantees provided by the Region stood at around 2% of its debt. According to the repayment schedule as of January 1, 2026, the Region had to repay no more than 9% of its debt liabilities annually over the next three years.
As of April 1, 2026, the Region’s debt and its repayment schedule were largely unchanged. Nevertheless, according to the Region’s data, around RUB 6 bln of budget loan debt is expected to be written off in 2026, which may additionally reduce the total volume of debt.
The ratio of the Region’s debt to current revenues was 18% by the end of 2025, which corresponds to a low debt load. ACRA assumes this indicator will be largely unchanged by the end of this year.
Interest expenditures are not a burden for the Region due to the non-commercial nature of debt — interest expenditures averaged1 for 2022–2026 amount to less than 1% of total budget expenditures (excluding subventions). The ratio of debt to projected GRP at the end of this year will be around 2%. Both metrics will not lead to an adjustment of the debt load indicator.
The qualitative assessment of the Region’s debt profile corresponds to the second category. The weighted average debt repayment period significantly exceeds four years. The debt portfolio is almost entirely represented by budget loans. The operational efficiency of the budget is declining, but remains positive. As of the start of 2026 and as of the end of Q1, the Region did not have any overdue payables. The debt load of municipalities is moderate — the ratio of the debt of municipalities to their total TNTR was 26% as of the end of 2025 (with Penza accounting for more than 85% of the total debt of the municipalities). Expenditures on indirect obligations are not provided for in the Region’s budget for 2026–2028.
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.
Declining operational efficiency of the budget coupled with a moderate need to use additional financing. The averaged ratio of the current account balance to current revenues for 2022–2026 will be 6%, although in 2026 the current account balance may be close to zero due to growth of the Region’s current expenditures outpacing its current revenues.
The averaged share of capital expenditures in total expenditures in 2022–2026 will amount to 14%. The qualitative assessment of the flexibility of budget expenditures corresponds to the second category. In certain years, the lion’s share of capital expenditures has been financed using funds from the higher budget. The current account balance after taking into account interest income and expenditures is consistently positive. The modified free cash flow is volatile, which explains the periodic need to partly finance capital expenditures using additional funds.
The averaged share of TNTR in the Region’s total revenues for 2022–2026 (excluding subventions) will amount to 71%, which in ACRA’s opinion, indicates a moderately low dependence on the higher budget. The ratio of the averaged modified budget deficit (MBD) to current revenues for the above period is expected to be -1%. ACRA estimates the budget’s need for additional funds as moderate. The Agency assumes that the MBD for 2026 will be around 4% of the Region’s current revenues, which is comparable to the volume of accumulated balances at the beginning of 2026. Nevertheless, the Agency has adjusted the above metric to the second category in view of the Region’s low debt load.
The qualitative assessment of the budget profile corresponds to the first category. No cases of violation of budget legislation have been identified. The Region transfers to lower budgets part of the personal income tax revenues collected from foreign citizens and taxes collected in connection with the application of the simplified taxation system, as well as a part of the state fee for the performance of legally significant actions by federal authorities. The actual volume of lost tax revenues associated with the application of tax incentives in 2024 was insignificant for the regional budget. The Agency notes significant annual deviations of some actual budget revenues from the targets.
The Region’s budget was executed with a deficit of -4% of TNTR in 2025, which was financed using funds in the Region’s accounts.
According to the budget allocations approved as of April 1, 2026, this year the Region’s revenues will remain at a level comparable to last year’s revenues and TNTR will increase slightly. Despite the decline in corporate income tax revenues (-5% year-on-year), personal income tax revenues will increase by 6%. Transfers have been approved at slightly below the level of 2025 (-5%), while capital transfers are planned to decline by 12%. The expenditure side of the Region’s budget will be largely unchanged this year. The planned deficit will amount to 6% of TNTR and be financed mainly using funds in the Region’s accounts and borrowings.
Moderately low accumulated liquidity. As of the end of 2025, the Region’s accumulated funds had declined by 45% compared to the start of the year. Balances in the Region’s budget accounts were similar to the volume of its monthly expenditures over the past 12 months. This year, accumulated funds will allow the Region to finance most of its expected budget deficit. At the same time, ACRA assumes that the Region may need to raise commercial debt in order to cover the budget deficit in 2026.
The budget liquidity ratio was equal to 160% at the end of 2025, and may amount to 65% at the end of 2026. ACRA has adjusted this indicator, since it is expected to continue falling in 2027 due to use of accumulated funds.
The qualitative assessment of budget liquidity corresponds to the second category. The risks of refinancing debt liabilities are assessed as low due to the noncommercial nature of debt and the comfortable repayment schedule. The size of the budget’s payables was insignificant for the budget as of January 1, 2026. The Region does not currently have any open credit lines. In February 2026, the Region entered into an agreement with the Federal Treasury Department on the provision of short-term budget loans to replenish balances, but no amounts under this agreement have been utilized yet.
Moderate economic development indicators. The ratio of the averaged per capita GRP of the Region for 2021–2024 to the corresponding national average was just over 50%. This ratio for 2022–2025 may have remained at a comparable level in accordance with the current forecast of the Region and ACRA’s expectations.
The ratio of averaged wages to the regional subsistence minimum for the working-age population for 2022–2025 exceeds 3.5, which has a positive effect on the assessment of the economic profile of the Region. The unemployment rate averaged over the same period was 2.2%, while the indicator for 2025 was 1.6%.
The Region has highly developed trade and manufacturing sectors. According to the Agency’s assessments, the highest share of tax revenues from enterprises registered in the Region comes from the manufacturing sector. The averaged share of these tax revenues was 28.9% for 2022–2025 and generated by enterprises engaged in the food industry, metallurgical production, and the production of machinery, equipment, and computers, indicating a high level of diversification of tax revenues. The second largest sector of the economy that makes a significant contribution to the Region’s tax revenues is a set of industries that form the public sector, which provided approximately 19% of tax revenues for the specified period. A significant volume of tax revenues is also generated by the wholesale and retail trade sector, whose share for the specified period amounted to around 14.8%.
KEY ASSUMPTIONS
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Budget executed as per the parameters approved as of April 1, 2026;
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Using most of the accumulated liquidity to finance the projected budget deficit;
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Obtaining borrowed funds to finance the budget deficit.
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 positive rating action may be prompted by:
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Growth of the share of capital expenditures in the Region’s total expenditures (excluding subventions);
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Lower need of the budget to use additional financing;
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Increasing accumulated liquidity by the end of the year.
A negative rating action may be prompted by:
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Further decline in the budget’s operational efficiency;
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Stable decline of the share of TNTR in revenues (excluding subventions);
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Significant growth of the Region’s debt load on the back of new commercial borrowings.
rating components
Standalone creditworthiness assessment (SCA): a.
ISSUE RATINGS
There are no outstanding issues.
REGULATORY DISCLOSURE
The credit rating has been assigned to the Penza Region 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 credit rating outlook of the Penza 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 Penza Region assigned under the national scale for the Russian Federation was published by ACRA for the first time on September 20, 2018.
The rating was last published in November 6, 2025.
The credit rating and its outlook are 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 Penza 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 Penza Region as of April 1, 2026.
The credit rating is solicited and the Penza 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 Penza Region during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
