KATHMANDU: The government has initiated the process of sovereign credit rating after a hiatus of three years, aiming to provide insights into the country's financial stability and repayment capabilities. Sovereign credit rating serves as a crucial determinant for assessing investment risks and is often considered a prerequisite by foreign investors. However, Nepal's inability to secure commercial loans for significant infrastructure projects from international partners due to the lack of credit rating underscores the importance of this assessment.
The decision to resume the sovereign credit rating process was prompted by the government's commitment to attracting foreign investment, as highlighted in the budget for the fiscal year 2018/19. Initially, three major rating agencies - Fitch, Moody's, and S&P Global - expressed interest, leading to an agreement with Fitch Rating Agency. Technical assistance agreements were also established with organizations such as the British International Cooperation Agency and UK Aid, with Standard Chartered Bank appointed as the rating consultant.
Despite the disruptions caused by the COVID-19 pandemic, Finance Minister Barsaman Pun spearheaded the revival of the sovereign credit rating process, responding to recommendations from foreign investors during an international investment conference three years ago. As Nepal gears up for the third Nepal Investment Summit, efforts to expedite the credit rating process have intensified. A capacity development workshop convened by the Ministry of Finance brought together key stakeholders, signaling a renewed commitment to transparency and economic growth.
Minister Pun emphasized the pivotal role of foreign investment in driving economic development, stressing the need for sovereign rating to enhance investor confidence. He outlined ambitious economic goals, including Vision-2100 B.S., which aims to elevate Nepal to a developed economy by the year 2100. Secretary of the Ministry of Finance, Dr. Ghimire, echoed these sentiments, emphasizing that sovereign credit rating would not only shed light on Nepal's economic status but also demonstrate the country's commitment to transparency and good governance, thereby fostering a conducive environment for investment.
