KATHMANDU, Nov. 13 (Xinhua) -- Nepal has retained its BB- sovereign credit rating from international credit rating agency Fitch Ratings, which cited the country's low public and external debt, strong foreign exchange reserves, and robust remittance inflows.
This is the third consecutive year that Nepal's sovereign credit rating has remained unchanged since the country received its first-ever rating in November 2024.
"The ratings reflect Nepal's low government and external debt, mostly on highly concessional terms, and strong external liquidity, with robust access to multilateral financing," the international credit rating agency said in a rating report released on Thursday. "Nepal also has solid medium-term growth prospects, underpinned by the hydropower sector."
However, Fitch said Nepal's underdeveloped economy, vulnerability to external shocks and natural disasters, and weaker per capita income and governance indicators compared with countries in the BB rating category continued to constrain its credit profile.
Fitch said that although Nepal's economic growth is projected to slow in the current fiscal year 2026-27, ending in mid-July 2027, due to the impact of the devastating floods of Aug. 26, the economy is expected to rebound in the following fiscal year.
Fitch projected Nepal's economic growth to slow to 3.4 percent in FY 2026-27, down from 3.9 percent in FY 2025-26, largely due to the floods of this summer.
The agency expects economic growth to rebound to 5.2 percent in FY 2027-28, supported by accelerated reconstruction activities and the restoration of hydropower projects and electricity-grid infrastructure.
However, delays in reconstruction and a prolonged conflict involving Iran could further undermine growth prospects by disrupting energy and fertiliser imports, increasing supply risks and affecting tourism receipts, according to Fitch.
Fitch expects Nepal's medium-term economic growth to remain around 5 percent, supported by continued investment in hydropower and electricity transmission, improved execution of public capital expenditure and expanding service exports. ■
