S&P's Irkutsk ratings unaffected

Standard & Poor's said the outcome of the referendum concerning the merger of the Russian Irkutsk Oblast (B+/stable) and the Ust-Ordynskky Buryatsky Autonomous Okrug, planned for April 16, will have no immediate effect on the credit rating on the Irkutsk Oblast.

The proposed merger aims to speed up the social and economic development of the new merged entity and to improve the living standards of its population. The populations of both the okrug and the oblast will be eligible to vote in the referendum.

S&P said the okrug has almost no debt, but is heavily dependent on federal subsidies. Ust-Ordynskky Buryatsky's total budget was only 4% of the oblast's consolidated budget, and 85.7% of the budget was federal government transfers.

Under a recent presidential decree, the federal government has pledged to provide additional financial support to oblast and okrug to address the needs of the new merged entity until at least 2009. S&P said it is, therefore, unlikely that the merger will have an unfavorable effect on the credit rating on the oblast and its financial standing in the next few years.

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