RATING REPORT

Slovak Rating Agency assigns the Town of Stropkov the following rating

Long-term domestic currency rating	BB- (stable outlook)
Long-term foreign currency rating	BB (stable outlook)
Short-term rating	S3

The Town of Stropkov was assigned the long-term rating of BB- (stable outlook) for the category of transactions in Slovak koruna.Regarding transactions in foreign currencies the Town of Stropkov was assigned the rating of BB (stable outlook). The short-term rating of Stropkov is S3, which is the best possible short-term rating for entities with a long-term rating of BB-.

Justification:

• The Town of Stropkov is a district town located in the northern part of East Slovakia. With a population of 10,815 to the end of 2003 it is one of the smaller towns in Slovakia. The industrial base in the town is mostly represented by TESLA a.s. Stropkov, which is one of the largest employers in the region. The Town of Stropkov and its surroundings are predestined for the development of hiking, rural tourism and tourism in general, thanks to the attractive and unpolluted natural environment.
  
  
• A priority area in the development of the town is to support business with the aim of increasing employment in both the town and the region. The agency regards the activities of the town aimed to attract foreign investors as positive, the outcome of which is the arrival of new foreign investors in May 2005 in the field of auxiliary production for the car industry.
  
  
• The financial management of the town in the period 2001-2004 ended with a surplus, which at the end of 2004 amounted to SKK 6.9 million. The solvency of the town in the past was troubled and the town was overdue with settling its obligations to creditors. The solvency of the town is negatively influenced by failure of taxpayers and other entities in the territory to meet their obligations. With the aim of boosting cash flows, the agency recommends improving the system of enforcing receivables applied to date.
  
  
• The town is still clearing past debts at present. These mainly come as a result of disadvantageous contracts concluded for property management and non-performance of the obligation toward State Environmental Fund. The agency sees the efforts of the town to resolve these problems as positive.
  
  
• The agency positively regards the introduction of an automated information system to the Town Hall and the set up of a town website. Providing access to basic information about the town, its bodies and its operation, and information on the town’s assets and public financing, represents a key step towards building up transparency.