Fitch rates Karelia bond A(rus)

Fitch Ratings said it has assigned Republic of Karelia's forthcoming 500 million ruble four-year domestic bond a national long-term A(rus) rating.

The republic is rated international issuer default B+ and national long-term A(rus).

Both ratings have stable outlooks.

Fitch said the republic has recorded a significant improvement of both budgetary performance and debt-to-current balance payback ratio in 2004, due to restored operating revenue growth rates - 37% in 2004 - and operating expenditure controls.

However, Fitch said the ratings take into account Karelia's considerable expenditure rigidity.

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