Fitch rates Kharkov

Fitch Ratings said it assigned the City of Kharkov long-term foreign and local currency B+ ratings and with stable outlook and short-term B rating.

The ratings reflect the city's growing economy, 20% in 2004, which boosts tax and non-tax revenue, and take into account the increasing share of capital expenditure, modest borrowing plans and an absence of accumulated debt, Fitch said.

However, they also factor in the city's dependence on the central government for setting tax rates and the large volume of transfers as well as expenditure rigidity resulting from the large proportion of designated social spending, the agency noted.

Fitch added that the city has not had any debt since 2000.

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