I. STATEMENT ON RATING
The Slovak Rating Agency upgraded the rating of the Town of Nové Zámky as follows:
| Long-term koruna rating | BB- (stable outlook)
|
| Long-term foreign currency rating | B- (stable outlook)
|
| Short-term rating | S3
|
The Town of Nové Zámky was assigned the long-term rating for the category of transactions in Slovak crowns of BB- (stable outlook). In the category of transactions in foreign currencies the Town of Nové Zámky was assigned the rating of B- (stable outlook). The short-term rating of the Town is S3, which is the best possible short-term rating for entities with a long-term rating of BB-.
Justification:
- Where strategic planning of the Town is concerned, electoral continuity is not secured. The new management of the Town is starting with preparation of the strategic development plan of the Town despite the fact that such a document was already elaborated in the preceding period of office in co-operation with Canadian partners, although the Town does not have any documentation to the project available. Elaboration of this document anticipates with financial assistance from the EU pre-accession funds.
- The financial situation of the Town is more stable than the previous period. The agency sees as positive the tempo at which changes to the budget management of the Town are being introduced. The new management of the Town introduced a broad range of austerity measures, both in terms of operations and investments.
- A qualitative change was seen compared with the previous period especially in relation to the financial management system, which the agency deems positive. This fact was not only reflected in a reduced volume of short-term payables, but also in an improved structure in terms of time planning. While to the end of 2002 the Town recorded payables up to 60 days in arrears worth SKK 14.5 million, at the close of 2003 this figure had fallen to just SKK 286,000, whereby it records no payables in excess of 60 days in arrears. A positive change came also with regard to settlement of payables to bank creditors. To the end of 2003 the Town had cleared also an overdraft, which it had failed to settle to the end of 2002 due to a lack of finances, thus violating the new budgetary rules.
- The economic results of the Town went from a deficit in 2002 to a surplus in 2003. To the end of 2003 the Town had generated a real surplus of SKK 2,466,000. Year-on-year for the period 2002-2003 the Town managed to reduce the level of debt - debt over current income came to 50.93%. Even though the Town already complies with the new budgetary rules (valid from 2005), the agency still regards the status of loans of the Town as high, especially in relation to real cash flow.
- The Town rationalised also the activities of its commercial companies. In companies where the Town ensures protection of its interests also without sole ownership, the Town is taking steps toward the partial sale of these stakes. The Town plans to allocate the proceeds from the sale of these assets to securing realisation of its investment objectives and for co-financing projects that will be financed from EU funds.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 24 February 2004