Fitch ups Komi long-term ratings

Fitch Ratings said it has upgraded the Republic of Komi's long-term foreign and local currency ratings to BB- from B+.

The short-term foreign currency rating has been affirmed at B.

Fitch said it has also upgraded its national long-term rating to A+(rus) from A(rus).

The outlook on all ratings remains stable.

The ratings upgrade reflects Komi's continued improvement of budgetary performance due to stable economic growth in 2005 and Fitch's expectations that this trend, despite overall spending pressures, will continue, the agency noted.

The ratings also take into consideration the limited flexibility of the operating expenditure, as financial support for the municipalities accounted for 68.5% of total spending in 2005. The newly acquired responsibility for cash allowances replacing the system of social benefits, together with the public sector salary increase put additional pressure on the Republic's operating expenditure, the agency added.

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