Ukraine is facing critical phase of economic crisis ever since 2004, resulting in devaluation of its currency. The depletion of foreign currency reserves have resulted in great difficulty to repay back debts thereby leading to defaults. Capital flight leads to huge losses to Ukraine events such as increase in taxes on capital or capital holders or the government of the country defaulting on its debt that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic strength. At present Ukraine has a debt of $118.7billion, but it has got only $13.2 billion foreign currency reserves. The country’s debt of $13 billion matured in 2015 and debt of $16 billion this year. With current account deficit, depreciation of currency, reduction in exports and political instability in the country the Probability of Default (PD) in repaying debts is very high. The credit rating given by Standard and Poor (S&P) is revised from CCC+ to CCC which is an indicator of low servicing capability of debt i.e., the ability of country’s corporate to repay debts is in question and the credit risk is very high. The USA and Europe are backing to lend further loans due to PD. Macroeconomic sustainability, strong domestic institutions and governance, Global trade and financial integration form the main policy pillars to restore confidence. Decrease in capital inflow poses main problem to repay external debt. This paper shows sector wise analysis on credit risk for the different sectors in Ukraine and the dire consequences they might face in future.Tighter liquidity standards, counter-cyclical fiscal and prudential rules are essential to build-up sufficient policy buffers. IT sector has potential to drive the GDP growth in Ukraine.

Ukraine is facing critical phase of economic crisis ever since 2004, resulting in devaluation of its currency. The depletion of foreign currency reserves have resulted in great difficulty to repay back debts thereby leading to defaults. Capital flight leads to huge losses to Ukraine events such as i...