The credit rating of the Kirov Region (hereinafter, the Region) reflects the Region’s moderately low debt load with moderate debt refinancing risks, positive operational efficiency of the budget, and moderately high capital expenditures in total expenditures (excluding subventions). The rating is constrained by the budget’s moderate need for additional funding sources and lower available liquidity on the backdrop of the projected budget deficit this year.
The Region is part of the Volga Federal District. It is home to 1.1 mln people. According to the Region’s estimates, its gross regional product (GRP) was RUB 664 bln in 2024.
key assessment factors
Positive operational efficiency of the budget and moderate need for additional funding sources. The averaged1 ratio of the current account balance to current revenues for 2021–2025 will be 8%. The current account balance was positive in 2024, which enabled the Region to partially finance its capital expenditures. The indicator is also expected to be positive in 2025.
The averaged share of capital expenditures in the total expenditures for 2021–2025 will be 17%, while the quality assessment of the flexibility of budget expenditures corresponds to the third category. Capital expenditures are mainly financed using funds from the senior budget practically every year. The current account balance, after taking into account interest income and expenditures, is consistently positive, allowing interest expenditures to be covered by current revenues. The modified free cash flow is rather volatile and in some years has been negative, which explains the Region’s periodic need to partially finance capital expenditures using additional funds.
The averaged share of tax and non-tax revenues (TNTR) in the Region’s revenues (excluding subventions) will equal 62% for the abovementioned period. The ratio of the modified budget deficit (MBD) to current revenues averaged for 2021–2025 is expected to be -2%, which indicates the Region’s moderate need to obtain additional financing. ACRA assumes that the budget’s need to use additional funds will remain in 2025–2026, which is indicated by the negative value of the non-averaged MBD in the specified years.
The quality assessment of the budget profile corresponds to the first category. The Region additionally transfers to lower budgets the proceeds from tax collected in connection with the application of the simplified taxation system, as well as from corporate property tax. The estimated shortfall of tax revenues due to the application of tax benefits was insignificant for the Region’s budget in 2024. The Agency notes significant deviations of some actual budget revenues from planned indicators.
In 2024, the revenues of the Region’s budget increased by 13% compared to 2023. TNTR grew by 17.5% year-on-year. The increase in the indicator was mainly due to an increase in revenues from corporate income (+13%), personal income tax (+25%), and taxes on total income (+28%). Transfers increased by 5% compared to the metric last year. The Region’s budget expenditures grew by 12%, while capital expenditures increased by almost 1.5 times. The budget deficit of 2% of TNTR in 2024 was almost fully covered using balances in the Region’s accounts.
According to the current version of the Region’s budget law, revenues will decline by 2% this year compared to the year before, which is largely due to approved transfers at 10% lower than they were in 2024. The Region’s TNTR will increase by 3% year-on-year due to expected 9% growth of personal income tax revenues. The expenditure side of the Region’s budget will grow by 3%, while capital expenditures will decline by 7%. The end-of-year budget deficit is expected to be 10% of TNTR, and will be financed using account balances and borrowings.
1 Hereinafter, averages are calculated according to the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation.
Moderately low debt load and moderate refinancing risks. The Region’s debt amounted to RUB 25.2 bln in 2024. The debt portfolio was almost entirely made up of budget loans, while the volume of bonds was insignificant. As of the start of this year, the repayment schedule assumed repayment of 20% of debt in 2025 and 18% in 2026. In ACRA’s opinion, the size of debt repayments may turn out to be much lower in the coming years due to a partial write-off of budget loans, the proceeds from which will be used to finance the Region’s infrastructure.
As of March 1, 2025, the Region’s debt had increased by RUB 1.2 bln due to loans obtained from the Federal Treasury Department (FTD). At the same time, the share of debt to be repaid this year increased to 24% compared to the schedule valid as of the start of the year.
The ratio of the Region’s debt to current revenues amounted to 26% in 2024. According to the parameters of the current version of the budget law, this ratio will increase to 29% in 2025. ACRA assumes that the Region’s debt load will continue to grow in 2026 too, and exceed 30%, which indicates a moderately low debt load. For this reason, an upward adjustment for the threshold value was applied to the 2025 indicator.
The ratio of interest expenditures averaged for 2021–2025 will not exceed 1% of total budget expenditures (excluding subventions). The ratio of the Region’s debt to projected GRP at the end of the year will be 4%.
The quality assessment of the Region’s debt portfolio corresponds to the second category. According to the repayment schedule as of January 1, 2025, the weighted-average debt repayment period did not exceed four years. Debt is almost entirely represented by budget loans. Operational efficiency of the budget is consistently positive. The debt load of municipalities is very low. The financial debt of public sector enterprises did not exceed RUB 0.8 bln as of October 1, 2024. As of the start of this year, the Region was not participating in any projects as a concessor.
Liquidity will be used to finance the budget deficit. Accumulated liquidity declined by 34% over 2024. Over the past 12 months, the Region’s account balances have been comparable to its monthly budget expenditures. As per the Region’s plans, accumulated funds will be practically entirely used to finance the expected budget deficit in 2025.
The Region’s budget liquidity ratio will be 33% in 2025.
The qualitative assessment of budget liquidity corresponds to the third category. The Region has a single bond issue in the debt market with an insignificant size. New bond placements are not planned this year. There were no purchases of credit lines over the past 12 months. The Region has obtained short-term loans from FTD since the beginning of 2025. Debt liability refinancing risks are assessed as moderate; additional consideration is given to the Region’s plans to reduce the volume of account balances and attract commercial borrowings by the end of the year.
Moderate economic development indicators. According to the Agency’s estimates, the manufacturing sector contributes the largest share of tax revenues among enterprises registered in the Region. This share averaged for 2021–2024 was 36%, and was generated by companies operating in the metallurgy, chemicals, food production and timber industries. The second largest share was contributed by the aggregate of industries that form the Region’s public sector (20%). The wholesale and retail trade sector provided about 15% of tax revenues.
The Region’s economy has a relatively low GRP per capita (GRP averaged for 2020–2023 is 50% of the national average). However, industrial enterprises operating in the Region demonstrate positive dynamics. In 2024, the industrial production index of the Region amounted to 111.7% compared to the past year’s indicator, which is higher than the indicator for the Volga Federal District and the Russian Federation as a whole.
The ratio of averaged wages to the regional subsistence minimum for 2021–2024 exceeded 3.5. The unemployment rate averaged for the above period is 2.9%, while in 2024, the local unemployment rate declined to 2.0%.
KEY ASSUMPTIONS
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Budget execution in accordance with the parameters of the current version of the Region’s budget law;
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Using almost the entire accumulated liquidity to cover the projected budget deficit for 2025;
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Raising commercial debt to cover budget deficits.
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 budget’s operational efficiency;
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Debt load ratio sustainably below 30%;
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Growth of accumulated liquidity by the end of this year.
A negative rating action may be prompted by:
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Lower share of TNTR in the Region’s total revenues (excluding subventions);
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Significant growth of the share of short-term debt coupled with leverage remaining above 30%;
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Growing need of the budget for additional funding sources.
issue ratings
Kirov Region, 35001 (ISIN RU000A0ZZXZ7); maturity date: December 5, 2025, issue volume: RUB 5 bln — A-(RU).
Rationale. In the Agency’s opinion, the bond listed above is a senior unsecured debt instrument, the credit rating of which corresponds to the credit rating of the Kirov Region — A-(RU).
regulatory disclosure
The credit ratings have been assigned to the Kirov Region and the bond issue (ISIN RU000A0ZZXZ7) of the Kirov Region 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 Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation was also applied to assign the credit rating to the above issue.
The credit ratings of the Kirov Region and the bond issue (ISIN RU000A0ZZXZ7) of the Kirov Region were published by ACRA for the first time on December 6, 2021. The credit rating of the Kirov Region and its outlook, as well as the credit rating of the government securities of the Kirov Region, 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 ratings were assigned based on data provided by the Kirov 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 credit ratings are solicited and the Government of the Kirov 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 Government of the Kirov Region. No conflicts of interest were discovered in the course of credit rating assignment.
