The credit rating of the Tambov Region (hereinafter, the Region) has been upgraded based on the consistent growth of the share of tax and non-tax revenues (TNTR) in the Region’s revenues (excluding subventions), as well as a decline of the risks of refinancing debt liabilities due to the harmonization of the Region’s debt repayment schedule as a result of the restructuring of budget loans this year.
The Region’s credit rating reflects a moderately low debt load, a positive current account balance, and moderate flexibility of budget expenditures. The moderately low level of budget liquidity and regional economic development indicators that lag behind the national average have a restraining effect on the credit rating.
The Region is located in the Central Federal District (CFD) and is home to just under 1% of Russia’s population. It accounts for about 0.3% of the country’s total gross regional product (GRP). According to the Region, its GRP may have amounted to RUB 562.5 bln in 2024, which is a 7.6% increase compared to the year before in nominal terms and a 1.1% increase in real terms.
KEY ASSESSMENT FACTORS
Moderately high share of internal revenues and a moderate need to attract borrowed funds for capital purposes. The averaged1 ratio of the Region’s current account balance to current revenues will be 5% for 2022–2026. At the same time, the current account balance remains positive, which indicates that the current revenues of the Region’s budget are sufficient to finance current expenditures in full.
The averaged ratio of capital expenditures to total budget expenditures (excluding subventions) for 2022–2026 is expected to be 14%. At the same time, the quality assessment of the liquidity of budget expenditures corresponds to the fourth category. More than half of capital expenditures is financed annually using capital transfers, and therefore capital expenditures cannot be fully viewed as a source for reducing the spending part of the budget. In ACRA’s opinion, the engineering, transport and social infrastructure located in the Region may require increased capital investment, as it is comparatively less developed than in other regions of the CFD.
The averaged share of TNTR in the Region’s revenues (excluding subventions) for the above period will remain above 60% in the Agency’s opinion, which corresponds to a moderately high level of internal revenues.
The ratio of the modified budget deficit (MBD) to current revenues averaged over 2022–2026 is projected at -2%. According to ACRA’s calculations, the MBD for 2025 will be negative, which indicates the budget’s moderate need for borrowed funds or to spend accumulated liquidity to finance expected capital expenditures this year.
According to the current version of the budget law, by the end of this year TNTR may increase by 5% year-on-year, including corporate income tax revenues that are expected to continue declining and may be 7% lower than last year. However, taking into account the intermediate execution of the Region’s budget as of July 1, 2025, ACRA assumes that revenues from this type of tax will not decline this year. A decline in proceeds from the other key types of taxes for the budget will also probably not happen this year. At the same time, the Region plans to increase budget expenditures by 7% — it is planned to increase capital expenditures by 18% and current expenditures by 5%. According to the Agency’s expectations, current expenditures may increase by a larger extent. As a result, by the end of the year, according to ACRA’s calculations, the deficit may be slightly higher than envisaged by the current version of the Region’s budget law. It is planned to finance the deficit by spending the balances of funds available in accounts in full.
The quality assessment of the Region’s budget profile corresponds to the first category. There is no information on cases of violation of budget legislation over the past five years. The amount of budget funds lost from the provision of tax breaks is insignificant at about 3% of TNTR. The laws of the Region provide for uniform and differentiated standards for tax deductions in favor of lower budgets (personal income tax, simplified tax system, excise taxes on fuel). Budget planning is conservative, which is periodically the cause of noticeable deviations of actual tax revenues from planned indicators.
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 declining refinancing risks. The Region’s debt declined by 12% in 2024. Budget loans accounted for approximately 90% of the debt structure as of the beginning of the current year, with the remainder being formed by the Region’s government bonds.
As of July 1, 2025, the volume of debt was unchanged, but the repayment schedule had changed considerably. In April, restructuring of budget loans was carried out in accordance with Decree of the Government of the Russian Federation No. 79. The updated schedule assumes that this year the Region will have to pay off 17% of existing debt and then no more than 6% annually.
Against the background of the planned expenditure of accumulated liquidity in the forecast period, the Region intends to attract short-term debt in the form of bank loans to finance its obligations. As short-term commercial debt grows, refinancing risks may increase somewhat, but the debt load will remain at a moderately low level.
The quality assessment of the Region’s debt profile corresponds to the second category. The weighted average debt repayment period now well exceeds four years following the restructuring of budget loans. The debt structure is dominated by budget loans. The current account balance is consistently positive. Overdue payables were absent as of January 1, 2024 and January 1, 2025. Public sector companies do not have significant financial debt or overdue payables and do not require support from the Region. The debt load of municipalities is assessed as moderate with Tambov accounting for most of the debt, including all of the commercial debt. The size of this city’s debt, which is represented by bank loans, is equivalent to just over 20% of its TNTR.
The Region’s debt load is moderately low. The Region’s debt load has been decreasing since 2019: the debt-to-current income ratio for January 1, 2020 to January 1, 2025 decreased from 47% to 27%. According to ACRA’s expectations, the indicator may remain at just below 30% by the end of 2025. At the same time, the Agency assumes that in the forecast period the debt load may begin to grow as bank loans are attracted against the backdrop of an expected decrease in the level of budget liquidity, in connection with which a threshold value adjustment was applied to the current year’s indicator.
The Region’s public debt service expenditures are not burdensome for its budget — the ratio of interest expenditures to averaged total budget expenditures, excluding subventions, will amount to less than 1% for 2022–2026. The ratio of the Region’s debt to GRP does not exceed 5% annually.
Account balances will allow the Region to fully cover the expected budget deficit. During 2024, the volume of available liquidity declined by 18% and as of January 1, 2025 covered around 20% of public debt. The current version of the budget law envisages complete expenditure of accumulated liquidity to finance the planned deficit at the end of this year and pay off the portion of the debt due for repayment in 2025.
The liquidity ratio may amount to around 57% as of the end of 2025, which corresponds to a moderately low level. Budget liquidity may continue to decline in the forecast period.
The quality assessment of the Region’s budget liquidity corresponds to the second category. The Region has experience in placing bonds in the debt market. According to the Region, no purchases of credit lines were made in 2024 or for the period of 2025 that had expired at the time the information was provided. ACRA notes a decrease in refinancing risks due to the restructuring of part of the budget loans. In 2025, an agreement was concluded between the Federal Treasury Office for the Tambov Region and the Ministry of Finance of the Tambov Region on the provision of a budget loan to replenish the balance of funds, but funds under this agreement had not been obtained as of July 1, 2025.
Moderate regional economic development indicators are a result of the dominance of the agricultural industry. The agricultural industry generally forms over a quarter of the Region’s GRP, while in 2023 the share of this sector declined and amounted to around 24% (35% a year earlier). In addition, a significant part of the Region’s GRP is formed by manufacturing industries (16% of GRP in 2023), of which around half of the volume of shipped goods of own production in 2024 was accounted for by the food industry. Other notable industries are wholesale and retail trade and repair, public sector enterprises, real estate services, transportation and storage services, and the construction industry. The Region’s tax revenues are diversified. The largest share is made up of revenues from the manufacturing industry — the averaged share of this industry accounted to around 26% of the total volume of tax revenues in 2021–2024.
The ratio of averaged wage to averaged regional subsistence minimum exceeded 3 in 2021–2024. The Region’s economy is characterized by relatively low GRP per capita: the ratio of averaged regional GRP per capita to averaged national GRP per capita for 2021–2023 amounted to 51% and is not expected to grow in the forecast period.
KEY ASSUMPTIONS
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Execution of the Region’s budget with a slightly larger deficit than stipulated by the current version of the budget law due to more intensive growth of expenditures;
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Attracting commercial debt in the forecast period;
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Spending all liquidity to finance the deficit at the end of this year.
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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Increase in the current account balance due to growth of budget revenues;
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Growth of the share of capital expenditures in total budget expenditures (excluding subventions);
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The Region’s debt load stably declining below 30%;
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Growth of accumulated budget liquidity.
A negative rating action may be prompted by:
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Increased need for borrowing to finance capital expenditures;
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Substantial increase in the debt load (to over 55% of current revenues), along with an increase in the share of short-term debt
ISSUE RATINGS
Tambov Region, 35004 (ISIN RU000A0ZYJ18), maturity date: December 5, 2025, issue volume: RUB 3.0 bln — A-(RU).
Rationale. In ACRA’s opinion, the Tambov Region’s bond issue is a senior unsecured debt instrument, the credit rating of which corresponds to the credit rating of the Tambov Region.
REGULATORY DISCLOSURE
The credit ratings of the Tambov Region and the bond issue (ISIN RU000A0ZYJ18) of the Tambov Region have been assigned 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 Tambov Region and the bond issue (ISIN RU000A0ZYJ18) of the Tambov Region were published by ACRA for the first time on July 3, 2017 and December 13, 2017, respectively. The credit rating of the Tambov Region and its outlook and the credit rating of the bond issue (ISIN RU000A0ZYJ18) of the Tambov 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 Tambov 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 Tambov 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 Tambov Region. No conflicts of interest were discovered in the course of credit rating assignment.
Rating components: the standalone creditworthiness assessment is equal to the credit rating and corresponds to a-.
