Fitch Ratings confirms long-term ratings for Komi Republic

International rating agency Fitch Ratings confirmed the long-term rating of the Komi Republic in foreign and local currency on the B+ level or, in other words, stable. The Ministry of Economic Development also said that the short-term rating in foreign currency was also confirmed on the B level.

Specialists confirmed that the Komi Republic is one of the richest regions in Russia. The gross regional product per person in Komi is 40% higher than the average level in Russia. Fitch Ratings, however, warns against the republic's high dependency on the coal industry, which is currently experiencing difficulty. Another factor against the republic's economy is the current redistribution of taxes in favor of the Russian Federation and the impending redistribution of political authority in the republic between the regions and the cities. Yet at the same time these factors also alleviate the debt burden of Komi and development of the mining and oil industries.

Analysts say, however, that the recent privatization of the Vorkutaugol company, under control of the Severstal company, could positively effect perspectives in the coil industry. Fitch Ratings says that the summary of the first half of 2003 of economic activity in the republic is an overall positive indicator for future development of industry in Komi.

In June 2002 Fitch Ratings raised the long-term rating of Komi in foreign and domestic currency from a level of CCC to B+ or stable. At the same time, the short-term liabilities of the republic expressed in terms of foreign currency was raised to the B level.