KATHMANDU, Nov 15: Nepal has retained its BB- sovereign credit rating with a stable outlook for the third consecutive year, despite facing significant economic and humanitarian challenges stemming from natural disasters in recent months.
According to a report released last week by international credit rating agency Fitch Ratings, Nepal's long-term foreign and local currency issuer default ratings remain unchanged at BB-, while its short-term rating has been maintained at B. The country's ceiling rating also remains at BB-.
The latest assessment, prepared by analysts George Xu and Benedict Craven of Fitch's Hong Kong office, indicates that Nepal's overall credit profile has remained stable despite external shocks.
Analysts consider the BB- rating relatively favorable for a least-developed country such as Nepal, reflecting the country's macroeconomic resilience and manageable debt position.
Nepal retains stable sovereign rating of BB- despite recent unr...
Nepal first received the BB- rating on November 21, 2024. The rating was reaffirmed in the subsequent review on November 18, 2025, and has now been maintained again in the latest review published in November 2026.
Credit rating agencies generally assess countries using a combination of quantitative and qualitative indicators. In Nepal's case, structural and institutional factors played an important role in supporting the current rating.
One of the key strengths highlighted in the report is the country's stable external sector. Supported by consistently high remittance inflows, Nepal maintains foreign exchange reserves sufficient to cover imports of goods and services for approximately 20 to 22 months, providing a substantial buffer against external shocks.
The report also notes that Nepal's debt burden remains manageable. Total public debt stands at around 43-44 percent of gross domestic product (GDP), with external debt accounting for roughly half of the total. This debt structure is considered sustainable and does not pose significant risks to macroeconomic stability.
In addition, Nepal's external debt largely consists of concessional financing from multilateral institutions such as the World Bank and the Asian Development Bank (ADB), as well as loans from bilateral development partners. The country's exposure to high-cost commercial external borrowing remains limited.
The report further points to Nepal's relatively low level of foreign direct investment (FDI), which, while reflecting limited capital inflows, also reduces the risk of large-scale capital flight during periods of economic stress.
Fitch also credited Nepal's monetary and financial sector policies for helping maintain rating stability. Although concerns had emerged over the potential impact of slower economic activity and social unrest on the banking sector, the report notes that the average non-performing loan (NPL) ratio remained at around 5-6 percent as of the first quarter of the current fiscal year, suggesting that financial sector risks remain contained.
Furthermore, low interest rates and adequate liquidity within the banking system are expected to support economic activity and business recovery in the coming months, according to the report.
