Nepal Retains ‘BB-’ Sovereign Credit Rating for 2025, Signaling Economic Stability

Nepal has maintained its sovereign credit rating at BB-minus (BB-) for the year 2025, the same rating as last year. Despite facing recent social and political challenges, seasonal natural disasters, and global economic slowdowns, the consistent rating demonstrates Nepal’s capability to meet long-term obligations and reflects overall economic stability, according to the Ministry of Finance.

The ministry highlighted that disciplined fiscal management, improved revenue administration, prudent expenditure prioritization, commitment to timely elections, and continuation of strategic projects have strengthened international confidence in Nepal. The rating also signals that the country is gradually establishing a stable and positive economic foundation domestically.

According to Ministry spokesperson Tank Prasad Pandey, the BB- rating is expected to help Nepal attract foreign investment, expand cooperation with international development partners, and maintain a stable credit profile for issuing sovereign debt in global financial markets. The rating is particularly significant for long-term investment in sectors such as energy, infrastructure, tourism, agriculture, and the digital economy.

The BB-minus rating, provided by international credit rating agencies such as Fitch Ratings, assesses a country’s ability to meet its debt obligations on time and in full. BB- is considered a non-investment grade (speculative) rating, indicating relatively higher risk compared to investment-grade countries. Nevertheless, the rating signals sufficient liquidity and a balanced debt burden in Nepal’s current financial situation.

With this rating, Nepal gains access to lower-cost international loans, which were previously expensive due to the absence of a sovereign rating. The BB- rating instills confidence in lenders, reduces risk premiums, and is expected to lower borrowing costs. It also provides a stronger incentive for foreign investors, demonstrating Nepal’s external payment capacity.

Nepal’s BB- rating is supported by strong external indicators, including robust remittance inflows and a balanced public debt-to-GDP ratio. However, challenges remain for achieving investment-grade status, including political instability, weak governance, low productive sector investment, and delayed structural reforms.

To elevate its rating to BBB or higher, Nepal must implement broad governance reforms, maintain stable long-term economic policies, enhance capital expenditure efficiency, and create legal and administrative frameworks that further incentivize foreign investment. While the BB- rating marks a positive step, structural weaknesses must be addressed promptly to sustain and strengthen Nepal’s position as an attractive destination for global investment. This reaffirmation of the BB-minus rating underscores Nepal’s growing economic resilience while highlighting areas for strategic improvement to achieve higher international creditworthiness.