Kathmandu, January 2

The government has awarded Fitch Ratings, a United States-based international credit rating agency, to study and confirm Nepal’s sovereign credit rating.

Of the three rating agencies that had expressed interest to conduct the country’s sovereign credit rating, the Ministry of Finance (MoF) has assigned the task to Fitch Ratings, informed Uttar Kumar Khatri, spokesperson for the Finance Ministry.

Along with Fitch Ratings, Moody’s and Standard & Poor’s were the two other credit rating agencies that had expressed interest to gauge Nepal’s credit worthiness.

As per Khatri, Fitch Ratings is carrying out works related to the sovereign rating in coordination with the Department for International Development (DFID), United Kingdom.

“Fitch has already started collecting necessary statistics and documents to calculate and determine the country’s rating. We have asked the agency to complete the credit rating process by the end of the ongoing fiscal year,” informed Khatri.

Sovereign credit rating determines the trustworthiness of the business environment and credit risk of a potential debtor, an individual, company, business, government or any other sovereign entity.

Such 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.

Risk ranking of a country is the primary factor that the potential investors look at before investing in any country.

With anticipation that the level of risk in doing business in Nepal has reduced in recent years, the government expects the country’s credit rating to be crucial in bringing foreign investment.

Stephen Schwartz, head of Sovereign Ratings Asia Pacific of Fitch Ratings, had informed The Himalayan Times in an interview last year that Nepal is comparing relatively well with its peers on macroeconomic indicators like growth and inflation, but lags behind in structural indicators, meaning low level of per capita income, and in governance indicators.

Fitch Ratings conducts the credit rating of a country based on its macroeconomic, structural and governance indicators.