Main factors affecting the rating

The rating reflects the operating results of the Opolskie Voivodeship, its high ability to finance investments from its own resources, the exemplary liquidity position of the budget and a low level of debt service in relation to operational funds. The rating also takes into account the level of indebtedness of municipal companies.

The debt policy is implemented in a safe manner and guarantees its timely repayment in subsequent periods. The debt planned by the entity should not significantly affect its ability to settle long-term liabilities.

The current income of the unit in 2013-2018 increased from PLN 368.45 million in 2013 to PLN 347.11 million in 2018, which implies a negative cumulative annual growth rate (CAGR) of -1.19%. The local government tax revenues ranged from 25.30% to 38.93% of current revenue.

The average debt cost of the Opolskie Voivodeship is 3.29%, while the average debt repayment period – the time interval in which the entity would repay its liabilities assuming that it would allocate its entire operating surplus for this purpose in 2018 amounted to 1.98 years. However, if we expand the analysis and take the average surplus from 2013-2018, then the value of this indicator will only slightly exceed the value of 2 years.


The main factors of the rating change

The Opolskie Voivodeship has a stable budget base. The level of operating surplus has remained relatively high throughout the analyzed period. An analysis of local government budgets in the last 11 years suggests that approx. 20% of the revenue item generates approx. 85% of the budget (similarly in the expenditure of 20% of the largest items, it generates 70% of all expenditures). Despite such a narrowing down of the source of these revenues, they are based in a significant scope (on average 75% in 2013-2018) on the voivodship’s own revenues.

Despite the completion of investment projects in the last 5 years exceeding PLN 794 million, the level of debt is lower than at the beginning of this period by as much as PLN 96.3 million. In subsequent periods, the voivodship’s debt is not planned.

Factors determining the upgrade of the rating: according to the methodology adopted by INC Rating, Polish local government units cannot receive a rating higher than the rating of Poland, assigned as the country’s average rating issued by the rating agencies Moody’s, S&P and Fitch.

Factors determining the lowering of the rating: an over-plan increase in the level of debt, with the operating margin lower than 8% and the trend in the relation of income and operating expenses, caused by an increase in expenditure on wages.



Krzysztof Waśko
Lead Analyst
+48 61/851 38 83

Long-term international credit rating Opolskie, Region of