I. STATEMENT ON RATING
The Slovak Rating Agency assigns the Town of Skalica the following ratings:
| Long-term koruna rating | BBB- (stable outlook)
|
| Long-term foreign currency rating | BB+ (stable outlook)
|
| Short-term rating | S2
|
The Town of Skalica was assigned the long-term rating for the category of transactions in Slovak crowns of BBB- (stable outlook). In the category of transactions in foreign currencies the Town of Skalica was assigned the rating of BB + (stable outlook). The short-term rating of the Town of Skalica is S2, which is the best possible short-term rating for an entity with a long term rating of BBB-.
Justification:
- In political and administrative terms the Town of Skalica is the centre of the District of Skalica, which constitutes 21 municipalities, making it one of the smaller districts in Slovakia. Even in terms of the number of inhabitants the Town of Skalica is classed as a smaller town with just 14,994 inhabitants at the end of 2002. The Town is one of the ancient Slovak towns with the status of royal town. Considering the Town's rich history and favourable geographical position (the Town lies on the border with the Czech Republic and also close to the Austrian border), it has very good prerequisites for the development of tourism and trade. The District of Skalica is one of the economically strongest districts in Slovakia in terms of average monthly wages and the average unemployment rate. The business environment is diversified, with a strong presence of companies with Slovak and foreign capital operating in mechanical engineering and the polygraphic industry.
- The strategic priorities of Town development are based on the existing development potential of the Town and the possibilities of financing, which the agency regards as positive. The primary strategic goal is to develop tourism in the region. With regard to strategic planning the Town is preparing to elaborate a strategic document on its development. The financing of this project is anticipated from grant schemes, and if a grant is not received the costs of the project will be covered from the resources of the Town.
- The agency regards the economics of the Town in previous periods as stable. To the end of 2003 the Town had created a real surplus of SKK 10,068,000. Reserves are present in the non-performance of monitoring of previously provided returnable financial transfers to business entities, which negatively influenced also the attained surplus in the Town's economic results - at the present time these provided loans are characterised as unenforceable (bad). The indebtedness of the Town is secure, and in the structure of bank loans some financing is subject to favourable premium terms (to the end of 2003 the balance of housing fund ŠFRB accounted for 42% of financing). At the present time the Town adheres to the indicators of the new budgetary rules - to the end of 2003 the debt of the Town over current income was 19.06% and the ratio of the debt service to current income was 5.07%.
- A stable and solid business sphere has been created in the territory of the Town, thanks to which the Town enjoys a high level of shared taxes with a positive impact on the purchasing power of the inhabitants. Boosting the revenues of the Town is a prerequisite for securing its investment priorities and for utilising its development potential. The agency therefore recommends that the Town continue creating positive conditions leading to further establishment of new businesses in the Town's territory.
- Favourable conditions for satisfying the set out strategic objectives include also a good level of co-operation between the Town management and the Town Council. Town councillors have identified with the electoral programme of the Mayor, and their opinions are homogenous, whereby the principle of professionalism is applied when decision-making on key issues on the development of the Town, instead of partial political interests and influences, which the agency regards as highly positive.
- The system of internal management is well established in the case of the Town Council. Internal directives and generally binding regulations of the Town, which govern its basic functioning, have been elaborated, but not all of them have been updated in line with applicable legislation. The agency therefore recommends their regular updating. A support instrument in the area of management will be the building up of a comprehensive information system, which the agency sees as positive.
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