The agency 'Fitch Ratings' has stated that Nepal's sovereign credit rating has been upgraded to 'higher' as the elections were held peacefully on time, along with economic stability. During the second year of the rating, the Fitch team that came to Nepal for an on-site assessment last November had expressed doubts that the elections would be held on time, i.e. on 21 Falgun. 

During the on-site assessment, the Fitch team had questioned the basis for the elections to be held on time. The team had expected that political instability would lead to policy instability and a deterioration in the investment climate. However, the team was reassured despite its doubts after Nepali officials did not drop their claim that the elections would be held on time. Fitch was reassured that Nepal had successfully managed crises such as the post-earthquake reconstruction and the COVID pandemic, which had been praised by the international community.

Fitch also argues that since the political transition will end after the formation of a single-party government, Nepal’s ability to rapidly expand large infrastructure and hydropower-based investments will improve. After the elections, Fitch Ratings said on Wednesday that political stability would now lead to economic reforms and an improvement in the investment climate. 'Political uncertainty has reduced after the Rashtriya Swayamsevak Sangh (RSS) won a clear majority in parliament. Now there is an opportunity for policy reforms, good governance and implementation of economic reforms,” Fitch said. “After the end of political instability, the risk of having to negotiate for a long time to form a government and the risk of frequent government changes have been reduced. If solid progress is seen in good governance and economic reforms, the investment environment will improve in the long term, which will increase investor confidence.” 

Fitch also expects the economy to move on the right path, saying that political stability will be maintained, good governance, transparency, corruption prevention and employment opportunities will be created, said Mahesh Bhattarai, Joint Secretary at the Ministry of Finance. “At that time, Nepal ensured that elections would be held on time when there was a risk that elections would not be held in Nepal. Fitch has viewed the elections held in Nepal positively. This has sent a positive message to the international community,’ he said, ‘and has also set the basis for improving Nepal’s rating in the coming days.’

Fitch also argues that Nepal’s ability to rapidly expand large infrastructure and hydropower-based investments will improve as the political transition will end after the formation of a single-party government.

‘The NCP has set a target of increasing the average real gross domestic product (GDP) growth rate to around 7 percent in the next five years and increasing per capita income above US$3,000, which we have called ambitious,’ Fitch said in a statement. ‘The new government’s policy agenda will determine how much economic growth can increase.’ Fitch has projected an economic growth rate of 4.5 percent in Nepal for the next fiscal year (ending July 15, 2027).

Fitch expects the new government to emphasize policies to increase production, reduce foreign employment, create formal jobs, and increase private sector-led investment in infrastructure, agriculture, services, digital, and innovation-oriented industries. ‘Last Mangsir (November 2025), Fitch gave Nepal a ‘BB minus’ credit rating. 

Nepal’s credit level could improve if political change leads to sustained economic growth, significant increases in per capita income, improvements in good governance, and a private and foreign investment-friendly environment,’ Fitch said, ‘but in the long term, good governance, policy reforms, and policy implementation remain the main challenges.’ 

Fitch pointed out that the main challenge is the implementation of reform policies as the effectiveness and regulatory quality of the Nepalese government are weak compared to countries at the same level. However, Fitch concluded that structural weaknesses—particularly low per capita income, good governance index, high vulnerability to external shocks, and natural disasters—still remain a challenge.

Nepal has received a ‘BB minus’ rating in the sovereign credit rating this year as well. This is the same as last year. It was first given a ‘BB minus’ rating on 7 Mangsir 2081. Nepal received the same ‘rating’ for the second year in November.

Fitch, an international agency known worldwide for sovereign credit assessment, is rating Nepal. The Nepalese government had already selected this company for two years of assessment and technical assistance in the third year. The company has been rated for the second year under the same.

Although Nepal received the same ‘rating’ as last year, Fitch pointed out that reforms are necessary as government finances are very weak. It is said that reforms in the economic structure are necessary due to low revenue collection and capital expenditure, and increasing political instability. Fitch has stated that although Nepal’s credit is stable, there are sufficient economic risk indicators that cannot be ignored.