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Collapse of the Credit System of Ukraine in the Mirror of International
Comparisons – by Tetiana Bogdan

Ukraine has one of the worst rates of bank loans to the economy among high-
and middle-income countries. Bank loans to the private sector in Ukraine barely
exceed 30% of GDP, and in the USA, they reach 51.6%, in Germany – 75.5%.
As of the end of October 2020, the annual increase in lending to Ukraine’s
economy by banks (taking into account the effect of the exchange rate) is only
The level of development of the credit system of Ukraine is extremely low.
According to the Institute of International Finance (IIF), the total debt of all sectors
of the economy in Ukraine as of October 1, 2020 amounted to only 97% of GDP,
compared to global debt of 358% and 248% in emerging market economies.
These indicators of total debt include the debts of 4 sectors of the economy to
domestic and external creditors – banks, portfolio investors, official creditors, and
If we compare the relative indicators of the debt burden in the economy of
Ukraine with the average ones for different groups of countries and global
indicators, we make the following conclusions (see table):
 accumulated debts of non-financial corporations in Ukraine (20.1% of
GDP) are five times behind the average level in emerging market economies
(104.1%) and advanced countries (102.3% of GDP);
 the relative debt of the financial sector in Ukraine (9.9% of GDP) is four
times lower than in emerging market economies (40%) and 12 times lower than in
advanced countries (120.3% of GDP) ;
 the debt of the household sector in Ukraine (5.3% of GDP) lags behind the
indicator of advanced countries and global indicators (65.3% of GDP).

 and only the level of public debt in Ukraine (61.8% of GDP) is almost in
line with the average for emerging market economies, but twice behind advanced
countries (131.4% of GDP).

Accumulated Debt by Sectors and Countries (their groups).

Source: Institute for International finance. Global Debt Monitor, November 18, 2020
If we compare the debt of certain sectors of the economy in Ukraine with the
debt of the same sectors in Poland, the USA and China, the fact of the depressed
state of Ukraine’s credit system and the potential for expanding credit sources of
private sector financing is again evident.
In Ukraine the accumulated debt of non-financial corporations is 20.1% of
GDP, and in Poland it is 44.8%, in the USA – 88.2%, in China – 166.3% of GDP.
Household debt in Ukraine barely exceeds 5% of GDP, and in Poland this figure is
35%, in the United States it is 81.2%, in China – 59.8% of GDP (see Fig.).
These comparisons of Ukraine with other countries and trends in the
dynamics of bank lending in 2015-2020 indicate the need for radical measures
aimed at raising bank lending and restoring financial intermediation in Ukraine.

Doctor of Economics, Director of Research of the Growford Institute Tetiana