Fitch assigns Nepal ‘BB-’ rating

Fitch Ratings has assigned Nepal a Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘BB-’ with a Stable Outlook, citing low government debt, strong external liquidity, and growth prospects driven by hydropower. However, challenges include weak governance and economic vulnerability to shocks and disasters.

Government debt stands at 44 percent of GDP, below the ‘BB’ median, while foreign reserves exceed $13bn, covering nearly 12 months of external payments. Fitch projects GDP growth to recover to five percent in the medium term, supported by hydropower exports to India, despite political instability and a low GDP per capita of $1,400.

The rating places Nepal two notches below India but makes it the highest-rated among South Asian countries after India.