March 27: The government's initiative to complete Nepal's credit rating before the investment summit in April is unlikely to be fulfilled. Nepal's sovereign credit rating has not been done until now. The government is preparing to undertake the country’s sovereign credit rating through the American credit rating company Fitch Rating with a grant assistance from the British government.

Experts say that the sovereign rating helps to depict the real economic and financial situation of Nepal and helps international investors get a clear picture of the investment environment of the country and the prospects of returns. Stakeholders have been urging for sovereign rating saying that the absence of the rating has hugely impacted foreign direct investment (FDI) prospects of Nepal.

The government was hopeful that the positive outcome of the rating can attract investors who attend the upcoming investment summit.

"The rating work has not been started due to the lack of clarity on the scope of work between the British aid agency (Foreign Commonwealth and Development Office), which provides us with grants, and the Standard Chartered Bank, which provides technical support to it," Dhaniram Sharma, spokesperson for the Ministry of Finance, told New Business Age, adding, “Therefore, the country rating is not possible before the investment summit scheduled for late April.”

He said that the Government of Nepal is coordinating to forge an understanding between these two organizations. According to Sharma, Fitch Ratings is going to underake the country rating of Nepal with grant assistance from the British aid agency.

"Fitch Ratings has pledged to prepare its report within three months after starting the work," said Sharma. Since the work has not started yet, the possibility of getting the report before the investment summit is not possible.

The government has announced that the investment summit will be held on April 28-29.

The government had mentioned in the budget announcement five years ago that it will opt for the country’s sovereign credit rating. It took almost a year to find the donor for the rating. The government handed over the responsibility of rating to Fitch Ratings after DFIF pledged to financially support the credit rating of Nepal.

However, the credit rating was halted due to the onset of the coronavirus pandemic the same year as the government was apprehensive that the credit rating outcome would not be as expected due to the impact of the pandemic.

"The government had to take measures to control imports due to problems such as a decrease in foreign exchange reserves and lack of liquidity in in the banking system," said Sharma, "There was no particular benefit to the country by credit rating in such a situation."

Now the economy seems to have revived to some extent. As the government is preparing to hold the investment summit, it is trying to advance the work of country rating again.