Nepal Retains ‘BB–’ Sovereign Credit Rating

Nepal has once again received a ‘BB–’ sovereign credit rating from international credit rating agency Fitch Ratings. The country had obtained the same rating last year as well.

According to the Ministry of Finance, Nepal managed to retain last year’s rating despite challenges stemming from social and political issues, monsoon-related natural disasters, and the global economic slowdown. The ministry said in its press release that the rating indicates Nepal’s economic indicators are gradually improving and moving in a stable and positive direction.

The ministry claimed that the government strengthened international confidence in Nepal by maintaining fiscal discipline, improving revenue management, prioritizing expenditure, ensuring timely elections despite risks of election-focused spending, and continuing strategic projects without obstruction.

Credit ratings are considered a key indicator of a country’s financial standing and creditworthiness. Investors, including foreign investors, rely on these ratings to assess the actual level of investment risk.

Fitch assigns sovereign ratings on a scale from ‘AAA’ to ‘C’. Countries rated ‘AAA’, ‘AA+’, ‘AA’, ‘A+’, ‘A’, ‘A–’, ‘BBB+’, ‘BBB’, and ‘BBB–’ are regarded as low-risk investment destinations. Meanwhile, ‘BB+’, ‘BB’, and ‘BB–’ fall under the category of speculative-grade ratings, indicating investments with higher risk.