The credit rating of the Republic of Tatarstan (hereinafter, the Region) is based on its low debt load with insignificant refinancing risks, as well as a strong budget profile with high operational efficiency and flexibility of budget expenditures. High economic indicators provide additional support to the rating.
The Region is part of the Volga Federal District (VFD) and is home to 4 mln people (around 3% of the country’s population). The Region’s gross regional product (GRP) amounted to RUB 4,580 bln in 2023, which is 11% / 4% higher in nominal / real terms, respectively, than in the previous year. According to the Region’s estimates, its GRP could amount to RUB 5,203.5 bln in 2024.
KEY ASSESSMENT FACTORS
Strong budget profile and high operational efficiency indicators. The Republic ended 2024 with a surplus equivalent to 3% of its tax and non-tax revenues (TNTR), which was almost entirely used to service budget loans obtained from the senior budget.
According to the latest data provided by the Region, the volume of budget revenues for 2025 may be significantly lower than in the previous year. The Region's TNTR are expected to decrease by 19% and the volume of transfers — by 28%. The expenditure side of the budget may decrease by 11% this year, mainly due to a 28% reduction in capital expenditures; current expenditures are planned to increase by 9%. This year’s budget deficit is expected at 11% of TNTR and it will be fully covered with accumulated account balances.
However, taking into account the results of the Region’s budget execution over the past five years, as well as the dynamics of budget execution over the four months of this year, ACRA is of the opinion that such a significant reduction in TNTR will not occur. If other budget parameters remain unchanged, the deficit may be below the expected level.
The averaged1 ratio of the current account balance to current revenues for 2021–2025 will be 43%. In 2025, the current account balance may reach 37% of the Region’s current revenues, which indicates that it is able to finance all current expenditures and a significant share of capital expenditures using current revenues.
The averaged share of capital expenditures in total expenditures (excluding subventions) for 2021–2025 will amount to 51%. The quality assessment of flexibility of budget expenditures is the highest possible. Capital expenditures are mostly funded by the Region at its own expense. The current account balance, after interest income and expenses, is regularly positive, which makes it possible to cover interest expenses with current incomes. The modified free cash flow is quite volatile (in some years, the indicator was significantly negative), which explains the Republic’s periodic need to partially finance capital expenditures with additional funds. The infrastructure of the Republic of Tatarstan is relatively developed compared to other regions of the Volga Federal District and Russia as a whole.
The averaged share of TNTR in the Region’s revenues (excluding subventions) will equal 85% for the same period.
The ratio of the modified budget deficit (MBD) to current revenues averaged over 2021–2025 will be -0.1%. This indicates that the Region covers almost all of its capital expenditures using budget revenues. ACRA notes that the MBD is expected to remain positive by the end of 2025, which indicates the absence of the need to use additional financing for capital purposes this year.
The quality assessment of budget profile corresponds to the first category. There are no cases of violation of budget legislation; the amount of lost tax revenues due to the use of tax benefits is insignificant for the Region’s budget. In 2023, the volume of budget revenues lost due to the provision of benefits amounted to slightly less than 3% of TNTR, and it is estimated at the same level for 2024. The Republic transfers tax revenues, including a portion of taxes on total income (as part of the simplified taxation system), to lower-level budgets. The Region applies a conservative budget planning approach and the actual deficit is frequently much lower than the target indicators, which is often due to the volatility of corporate income tax revenues.
1 Hereinafter, averages are calculated according to the Methodology for Assigning Credit Ratings to Regions and Municipal Entities of the Russian Federation.
Low debt load and non-commercial nature of debt. In 2024, the Region’s debt amounted to RUB 112.1 bln. The lion’s share of the debt portfolio (81%) was budget loans, while the remaining part was guarantees, including guarantees issued in 2023 and 2024 in favor of JSC TatDorTransNeft (founder is the Republic of Tatarstan) to cover funds to build roads in the Region, and a guarantee issued in 2005 in favor of KAMAZ PTC (ACRA rating AA-(RU), outlook Stable) for its obligations to the federal budget. As of January 1, 2025, the Region had a balanced debt repayment schedule and had to repay just over 2% of its debt in 2025.
As of May 1, 2025, the Region’s debt was RUB 99.3 bln, which is 11% smaller than the indicator recorded at the start of the year. Since the start of 2025, under a guarantee issued in 2024 for the principal amount of RUB 12.0 bln, the borrower has fulfilled all its obligations to the lender, and some budget loans have been restructured in accordance with Decree of the Government of the Russian Federation No. 79. In addition, since the beginning of the year, the volume of a guarantee provided to KAMAZ PTC declined by about RUB 0.6 bln due to currency revaluation.
The Region has to repay less than 2% of its debt by the year-end.
By the end of 2024, the Region’s debt-to-current income ratio was about 22%. At the end of 2025, ACRA does not forecast significant changes in the indicator. Interest expenses are not burdensome for the Region: the average interest expenses for 2021–2025 will be significantly lower than 1% of total budget expenditures (less subventions), the ratio of the Region’s debt to the GRP projected for the current year is approximately 2%.
The quality assessment of the Region’s debt profile corresponds to the second category. According to the repayment schedule as of January 1, 2025, the weighted average maturity of the debt exceeded four years. The debt is mainly represented by budget loans. The current account balance is regularly positive and significant in modulus. The debt burden of municipalities is moderate, with the city of Kazan accounting for the entire debt. As of January 1, 2025, the financial debt of public sector enterprises did not exceed 6% of the Region’s TNTR, and their overdue accounts payable amounted to RUB 1.4 bln. TatDorTransInvest JSC accounts for the largest amount of debt guaranteed by the Republic. The Region’s debt policy helps minimizing the refinancing risks through the use of long-term budget loans.
Sufficient amount of accumulated liquidity. As of January 1, 2025, the volume of balances on the Republic’s accounts remained virtually unchanged compared to the volume at the beginning of last year and covered almost 70% of the Region’s public debt. The less significant budget deficit expected by ACRA by the end of 2025 will allow the Republic to retain most of its available liquidity.
The Region’s liquidity ratio will considerably exceed 140% at the end of 2025.
The quality of budget liquidity corresponds to the first category. Over the past 12 months, average account balances have exceeded monthly budget expenditures by more than two times. The Republic does not need to resort to additional financial instruments as account balances are significant. The Region did not attract short-term loans from the Federal Treasury Department to replenish its funds in the past period of the current year. The Region does not use credit lines as an instrument of its own liquidity. The risks of refinancing debt obligations are assessed as insignificant given the non-commercial nature of the debt.
The Region’s economy is developed and moderately focused on the extraction of commodities. According to ACRA’s calculations, the oil and gas industry generated the maximum share (20%) of tax revenues in 2021–2024 (averaged over this period). The wholesale and retail trade sector generated around 12% of tax revenues, and the manufacturing sector formed another 24% (including more than 7% contributed by chemical production).
The Region’s per capita GRP averaged over 2020–2023 is 107% of the national average. According to the Region’s GRP expectations for 2024, averaged GRP per capita in 2021–2024 will remain almost the same. The monthly wage to subsistence minimum ratio averaged over 2021–2024 far exceeds 4x. The unemployment rate averaged for the same period and calculated according to the ILO’s methodology is low at 2.0%. The unemployment rate was 1.8% in 2024.
KEY ASSUMPTIONS
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The 2025 budget execution more optimistic than the current budget law in respect of TNTR.
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No need for commercial debt.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Stable outlook assumes that the credit rating will highly likely stay unchanged within the 12 to 18-month horizon.
A negative rating action may be prompted by:
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The need to provide extraordinary support to state sector companies and financial organizations;
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Substantial changes in inter-budget relations in Russia;
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Persisting growth of the budget’s need for debt financing;
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Stable growth of the Region’s debt above 30% of current revenues.
ISSUE RATINGS
There are no outstanding issues.
regulatory disclosure
The credit rating has been assigned to the Republic of Tatarstan 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 credit rating of the Republic of Tatarstan was published by ACRA for the first time on November 17, 2017. The credit rating and its outlook 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 rating was assigned based on data provided by the Government of the Republic of Tatarstan, 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 rating is solicited and the Government of the Republic of Tatarstan 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 Government of the Republic of Tatarstan. No conflicts of interest were discovered in the course of credit rating assignment.
