Site icon Fiscal Nepal

Nepal’s sovereign credit rating process put on hold

KATHMANDU: The process of country’s sovereign rating assessment, which started almost a year before, has been put on hold amid the the COVID-19 pandemic affecting various human development and economic indicators.

Sources at the Ministry of Finance (MoF) said that the sovereign rating process has been put on hold as the economy is facing various impact due to the pandemic. “As the pandemic has affected the entire economy, it is not the right time to carryout the sovereign rating assessment. The credit rating process will resume once things are normal,” informed a source at MoF.

The sovereign rating is carried out based on different economic indicators, including governance, growth, inflation, investment, trade position, business policies, among others.

On December last year, the government had picked Fitch Ratings, the American rating agency, for the sovereign credit rating of Nepal paving the way for the global rating agency to assess the creditworthiness of Nepal, a first for the country.

Sovereign credit rating determines trustworthiness of business environment and credit risk of a potential debtor, an individual, company, business, government or any other sovereign entity and such rating is the primary factor that the potential investors look at before investing in any country.

Similarly, sovereign credit rating gives potential investors an insight into the level of risk while investing in a country and takes into account political, social and financial risks.

Exit mobile version