Fitch ups Karelia to BB-

Fitch Ratings said it upgraded Russia's Republic of Karelia's long-term foreign- and local-currency ratings to BB- from B+. The short-term foreign-currency rating is affirmed at B. Fitch also said it upgraded Karelia's national long-term rating to A+(rus) from A(rus).

The outlook is stable.

The upgrade reflects the republic's strengthening budgetary performance, caused by tax revenue growth recovery and control over operating expenditure; decreasing debt burden; and improving debt structure, Fitch said.

However, the ratings also factor in a high degree of budget rigidity while transfers to municipalities and staff expenditure accounted up to 60% of the budget expenditure, the agency said.

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