I. RATING REPORT
Slovak Rating Agency hereby upgrades the ratings of the Town of Bardejov as follows:
| Long-term domestic koruna rating | BB+ (stable outlook)
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| Long-term foreign currency rating | BB (stable outlook)
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| Short-term rating | S3
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The Town of Bardejov was assigned the long-term rating of BB+ (stable outlook) in the category of transactions in Slovak koruna. In the category of transactions in foreign currencies the Town of Bardejov was assigned the rating of BB (stable outlook). The short-term rating of the Town of Bardejov is S3, which is the best possible short-term rating for entities with a long-term rating of BB+.
Justification:
- In September 2004 the town completed the elaboration of its key strategic document - Programme of economic and social development of the Town of Bardejov, which was drawn up with the expert assistance of Berman Group and Academia Istropolitana Nova. Adoption of the strategic document defined the future development of the town in three key areas - tourism and spas, business and investments, and the quality of life and human resources.
- Compared with the previous period the financial situation of the town has improved. Favourable development with regard to the town's own income saw fluent due settlement of liabilities with no overdue liabilities registered, which the agency regards as positive. To the end of 2004 the tax revenue of the town comprised SKK 105,827,000, which represented 103.7% fulfilment of the budget. Revenue from property tax was fulfilled to 103.3%, which translates as an absolute volume of SKK 19,740,000. To the end of 2004 the town generated a surplus of SKK 6,431,000.
- A possible negative impact on the town could come in the shape of the new system of financing local self-government launched in 2005, in particular in relation to the shift in the term for handing in property tax returns. This will mean later collection of revenues from this tax to the town's budget, which in turn could affect the level of solvency of the town.
- The agency regards the arrangement of inspection activities by the Town Hall during the absence of the chief inspector of the town as positive. The plan of inspection activities in 2004 was secured by the established Inspection Committee.
- Regarding the management of municipal companies and organisations, the agency sees the introduction of a new system of providing contributions for their activities by the town based on actual attained results as a positive step.
- The agency regards as negative the fact that the town is providing surety for loans provided to municipal companies and organisations without any prior analysis of the impacts on the town and the economic suitability and return of projects financed with the surety of the town.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 1 Februar 2005