I. STATEMENT ON RATING

Slovak rating agency grants following ratings to City Nitra:

Long-term local currency rating	A-      (stable outlook)
Long-term foreign currency rating	BBB- (stable outlook)
Short-term rating	S2

The long-term rating in the category of transactions in Slovak crowns A- (stable outlook) has been granted to City Nitra, which represents the rating level of the Slovak Republic. In the category of transactions in foreign currencies the rating BBB- (stable outlook) has been granted to City Nitra. Short-term rating of City Nitra is S2, which is the best possible short-term rating for the entities attaining long-term rating A-.

Rationale:

• City Nitra is the administration centre of the region of Nitra; it is the cultural, social and sports centre, as well as centre of science and education. City Nitra is the seat of the district of Nitra associating 59 municipalities that ranks the district among the middle-sized districts within the Slovak Republic. With the population of 87 285 inhabitants as of May 26, 2001 Nitra belongs to the middle-sized cities in Slovakia. Business portfolio of City Nitra is very good diversified. The industry in the city is focussed on food, textile, chemical, machine, and electrical, furniture-making and building industries. International as well as domestic fairs are organised by the city annually. Industrial corporations are represented by companies with Slovak as well as foreign capital. The unemployment rate in district of Nitra achieved the level of 15,24 % as of September 30, 2002, which is less than the unemployment rate in the region of Nitra (20,32 %) and less than the national unemployment rate (16,61 %). In Nitra, the unemployment rate reached the level of 14,79 %, which is also less than the national unemployment rate.
  
  
• City Nitra has well developed system of internal regulations and general statutes governing the primary functions of the city and the disposal with its property. Public accessing of the mentioned regulations through the own web-page is a significant step in building of transparency. Internal management system is flexible enough at the town council; the city has clearly defined management structures and responsibilities of particular management levels. Supporting tool in the management is the information system enabling the automation of work and control systems. We highly appreciate the fact the city having developed the internal regulation concerning the financial control, which supports the control mechanisms of the city.
  
  
• As for the asset management and financial area, the city has a clear defined concept. Even though the decision-making on disposal with the property is one of the competences of the municipal corporation, the Lord Mayor has the competence in the area of lease of property (conclusion of lease contracts). We see positively the fact that the attitude of the expert's commission, resp. the results of the public tender, are the necessary condition for the conclusion of contracts for the Lord Mayor. In the area of drawing of new credits, based on analysis of the so-called safe limit of credit indebtedness that could not be exceeded within the election period, the municipal corporation approved a credit line at the beginning of its election period. Municipal corporation approved the strategic plan for investment activities as well and adjusted the financing of particular investment activities to the credit drawing. We appreciate the fact that the document was not withdrawn by the municipal corporation deputies, but it was respected and adhered.
  
  
• Development of budgeted revenues of the city has shows ascending trend and the structure of budgeted revenues is markedly diversified. The city shows stable surplus in the local management representing both financial reserve for contingent expenses and source supporting development of the city. The volume of available funds guaranteeing the instantaneous liquidity of the city shows descending trend of development whereby the financial stability of the city will raise. Absolute volume of available funds of the city reached the amount of SKK 130 757 thousand as of ultimo of 2001, short-term liabilities and debt service of the city were in the total volume of SKK 49 021 thousand as of ultimo of 2001, which means that the mentioned short-term liabilities of the city has been covered 2,7 times by the volume of available funds. We highly appreciate the development of the debt-service-to-revenues indicator showing descending development trend achieving the value of 7,54 % as of ultimo of 2001. According to new budget regulations, the debt-service-to-current-revenues ratio should represent the value of 9,1 % in 2002, which is in accordance with the criteria of new budget regulations entering into force in 2005.
  
  
• Stable development of the financial situation of the city is documented by the high quality financial management, invigorated control mechanisms and clear concept in all areas of the city management. Created financial reserves make preconditions for a successful coping with unpredictable situations, e.g. associated with the reform of public administration. At the same time, they make preconditions for the realisation of further development programs within the city leading to the enhancement of the city life.
  
  
• The city supports cultural, sports as well as social events in large extent. We appreciate also marketing activities of the city realised via the web-page, as well as in form of cooperation with municipalities of partnership, which is documented by lot of foreign and domestic high-level visitors of the city. Plenty of investment activities realised by the wide spectrum of investors contributed to enhancement of the city life.

Please don't hesitate to address your questions to autner@slovakrating.sk, or call +421 2 5464 5151.

Slovak Rating Agency
Bratislava, 26 November 2002