I. STATEMENT ON RATING
Slovak rating agency assigns Sečovce town the following rating:
| Long-term koruna rating | BB- (stable outlook)
|
| Long-term foreign currency rating | B- (stable outlook)
|
| Short-term rating | S3
|
Sečovce town was assigned the long term rating of BB- (stable outlook) in the category of Slovak koruna transactions. In the category of foreign currency transactions Sečovce town was assigned the rating B- (stable outlook). The short term rating assigned for Sečovce town is S3, which is the best possible short term rating for subjects achieving a long-term rating of BB-.
Reasoning:
- Sečovce town is from the political - administrative aspect incorporated into the Trebišov district, encompassing 83 municipalities As at 26.05.01 Sečovce had 7,819 inhabitants, raking it amongst the small towns in Slovakia. Sečovce has an advantageous strategic location on the Košice - Michalovce route and a sufficient number of industrial enterprises providing jobs are located in the town's territory. The rate of unemployment in the town moves around the level of 10% (excluding inhabitants of the Romany population).
- The town's finances over the years 1999-2002 were in moderate surplus. The incomes side of the town's budget is sufficiently diversified; a significant portion of the towns incomes comprising grants and transfers as an advantageous, non-returnable financing source. The share of grants and transfers received in total income for the year 2001 was 22%; at the end of 2002 the town's capital receipts comprised almost completely (91%) capital grants and transfers not representing decentralisation subsidies. The town already currently complies with debt indicators according to the new budgetary rules - indebtedness to current income at the end of 2002 represented 14.92%, debt servicing to current income at the end of 2002 was 5.23%.
- The Slovak rating agency views negatively the existence of liabilities more than 60 days after their due date. At the end of the 3rd quarter of 2003 the town had liabilities more than 60 days after their due date totalling SKK 1.75 million , which represents 3.73% of the town's current income as at 30.09.03. Delay with payment of liabilities is a consequence of the town's lack of funds. The agency therefore recommends that in future commercial relations the due date of supply invoices is harmonised with the town's level of solvency.
- The Slovak rating agency also has reservations concerning the town's budget. The agency considers as non-standard the fact that each year the town enters the new budgetary year with a stopgap arrangement. The town currently does not comply with the provisions of the Act on financial control, which the agency perceives as a negative feature. Therefore it recommends the drafting of a directive on financial control pursuant to the applicable legislation.
- The agency views as a positive feature the fulfilment of aims concerning the setting-up of an automated information system in the municipal office and a town website. Making basic information available on the town, its bodies, their work and information on the manner of managing the town's property and public finances represents a significant step towards building transparency.
- The agency views positively also the town's efforts to incorporate members of the Romany community into the life of the town. The town through building a business incubator project is endeavouring to create jobs also for the Romany minority. This project will be financed from PHARE funds.
Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.
Slovak Rating Agency
Bratislava, 25 November 2003