The credit rating of the Kostroma Region (hereinafter, the Region) is based on the moderate debt load and the smooth debt repayment schedule, as well as the stable budget profile metrics. The rating is constrained by moderate development indicators of the regional economy, some of which do not exceed national averages, and the relative inflexibility of budget expenditures.
The Kostroma Region is located in the Central Federal District. The Region is home to around 0.4% of Russia’s population. The regional economy is small, generating about 0.2% of the total gross regional product (GRP) of Russian regions.
KEY ASSESSMENT FACTORS
Stable budget profile indicators with pronounced dependence on the federal budget. Last year, the regional budget was executed with a deficit of 4.6% (before deducting possible excess amounts), which was mainly financed by accumulated funds of the regional budget. This year, according to the current budget allocations, the deficit will slightly exceed 9%, and borrowed funds will be used to finance it.
In such conditions, the ratio of the modified budget deficit averaged1 over 2022–2026 to the Region’s current revenues will be negative, like in previous years. The share of tax and non-tax revenues (the TNTR) in the revenue structure will amount to 73%. The averaged ratio of the current account balance to current revenues will be 9.3%.
The share of capital expenditures in the Region’s total expenditures is viewed as high; but it is declining from its peak values of 2022–2024. This indicator averaged for 2022–2026 will be 20.2%, but it may decline below 18% in the next period. Around half of capital expenditures are financed using transfers from the federal budget. The opportunities to reduce capital expenditures on the Region’s own are not obvious, and the need for financing infrastructure is generally significant. The current account balance, after interest income and expenses, is regularly positive, and the modified free cash flow differs in modulus and magnitude. In this regard, the quality assessment of the flexibility of the Region’s budget expenditures corresponds to the third category.
The assessment of the Region’s budget profile corresponds to the first category, which is due to insignificance of the amount of tax benefits set forth by regional legislation, transfer of additional tax revenues to lower budget levels, and the moderate accuracy of budget planning. In individual years, the ratio of the Region’s debt to its TNTR has exceeded the maximum values set by budget legislation. However, as the period during which this indicator declined significantly is long, ACRA stopped focusing on this breach.
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.
Moderate debt load. Since 2022, the Region’s debt included long-term budget loans, while the nominal size of debt changed insignificantly (a 10% decline last year). The last year’s ratio of debt to current revenues is 42%. In case additional funds are borrowed to cover budget deficits in line with the current version of the budget law, this indicator may grow to 48% by the year-end but remain within the second category. As of the beginning of this year, after debt restructuring carried out last year, the Region was to repay slightly less than 8% of its debt annually. By May 1, 2026, the share of debt falling due in 2026 grew to 10.8% after a loan was borrowed from the Federal Treasury Department (the FTD).
Interest expenditures are not burdensome: the averaged share of interest expenditures for 2022–2026 will not exceed 1% of total budget expenditures (excluding subventions), given that the terms of the debt are preferential. The ratio of the Region’s debt to GRP fluctuates within 10% annually.
The quality assessment of the Region’s debt profile corresponds to the second category. This is explained by the sufficiently long weighted average debt repayment period, non-diversified debt structure, and the minimal level of overdue payables. The current account balance has been positive annually; indirect budget liabilities are minimal; public sector companies are small and do not need significant support from the regional budget. The total debt load of municipalities is high.
Moderate volume of accumulated liquidity. At the end of 2025, the liquidity ratio was 55%. In 2026 it may decline to 14% due to gradual utilization of liquidity.
The quality assessment of the liquidity profile corresponds to the second category: the average monthly balances on the Region’s accounts do not exceed the average monthly expenditures of its budget; there is a need to attract additional liquidity. In some years, the Region used loans from the FTD, and a short-term credit line has also been granted this year. In ACRA’s opinion, debt refinancing risks and accounts payable of the budget are low.
Moderately developed and highly diversified economy. The largest enterprises in the Region are wood processing, metal, jewelry, and electricity companies. The Region generates surplus energy. According to the Agency’s estimates, the largest share of tax revenues is contributed by manufacturing companies, enterprises responsible for the supply of electricity, gas, steam, and water, retail and wholesale trade, and also repairs, and financial and insurance activities. Industries that are part of the public sector of the economy provide about 20% of tax revenues and account for around 20% of the Region’s GRP.
The Region’s economy is characterized by a low GRP per capita (approximately 50% of the national average).
The ratio of averaged wages to the regional subsistence minimum amounted to 3.48 for 2022–2025. The unemployment rate averaged for the same period was 2.4%.
KEY ASSUMPTIONS
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Sustained high dependence on transfers from the federal budget.
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Debt load remaining at the current level.
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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Significant growth of the share of internal revenues in the budget;
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Significant and sustainable decline in the debt load to 30% of current revenues or lower;
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Prolonged growth of the economic profile metrics.
A negative rating action may be prompted by:
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Debt to current revenues ratio exceeding 60%;
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Higher expenditures amid stagnating 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 Kostroma 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 the credit rating outlook of the Kostroma Region 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 Kostroma Region under the national scale for the Russian Federation was published by ACRA for the first time on October 12, 2017.
The most recent publication date of the credit rating is November 26, 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 is assigned based on data provided by the Kostroma 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 Kostroma Region as of April 1, 2026.
The credit rating is solicited and the Kostroma 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 Kostroma Region during the year preceding the rating action.
No conflicts of interest were discovered in the course of credit rating assignment.
