December 11: Fitch Ratings, which has been assigned for sovereign credit rating of Nepal, has decided to postpone the assigned task for the time being.

The international company was preparing to complete the credit rating of Nepal within the first six months of the current fiscal year. However, the process has been postponed because of the impact of coronavirus on the country’s economy.  The rating will be suspended until the economy returns to normalcy.

The Ratings Oversight Committee, formed under the coordination of revenue secretary of Ministry of Finance (MoF) had given the task of Nepal’s credit rating to the US-based company before March after conducting discussions and necessary studies.

Moody’s, Fitch and Standard and Poor’s are the three major global credit rating agencies. Among them, the committee selected Fitch for conducing Nepal’s ratings. But the process has been suspended due to coronavirus, informed Revenue Secretary Ram Sharan Pudasaini.

He further said that the credit rating will resume once the situation  becomes normal.

“This is not the appropriate time for conducting credit rating because of the pandemic. During this situation, Nepal’s major economic indicators will not be satisfactory. Study conducted in such circumstances will not yield good result,” he told New Business Age.

Deputy Governor of Nepal Rastra Bank Chintamani Shivakoti, who is also a member of the committee, informed that Fitch has been conducting some works related to the credit rating but it has to visit Nepal to complete the work. The company is currently unable to come to Nepal for conducting the study.

“Foreign consultants and technicians need to come here for the study. But that is not possible at the moment,” said the deputy governor.

Fitch will have to collect data from the concerned offices upon visiting Nepal. The committee informed that Fitch has been carrying out other works that can be done remotely.

Members of the Ratings Oversight Committee include NRB Deputy Governor Shivakoti, chairman of the Insurance Board, Chairman of the Securities Board of Nepal and chief of the Central Bureau of Statistics. Standard Chartered Bank, Singapore is the consultant company for the credit rating.

The budget of the current fiscal year has mentioned that the credit rating will be completed within the first six months of the fiscal year.

Stakeholders have been urging for sovereign rating saying that the absence of the rating has hugely impacted foreign direct investment (FDI) prospects of Nepal.  Nevertheless, about half a dozen banks and financial institutions have borrowed billions of rupees in loans from foreign financial institutions over the last few years although the country does not have its credit rating. The banks say that the process of obtaining foreign loan would have been much easier if the country had credit rating.

Statistics related to economic activities in the country, ability to repay loans, trade with other countries and other various aspects are assessed while conducting sovereign rating. According to officials at Credit Rating Oversight Committee, the rating will form a basis for easy access to funds in the international market and sales of bonds.

Experts say that the sovereign rating helps to depict the real economic and financial situation of Nepal internationally.