Call for changing Nepal's Soveregn Credit Rating into strategic opportunity

KATHMANDU, DECEMBER 1: Various stakeholders have emphasized the need to transform Nepal's recent Sovereign Credit Rating into a strategic opportunity.

At an interaction program on "Managing the Economy," organized yesterday in Kathmandu to mark the 28th anniversary of the Society of Economic Journalists of Nepal (SEJON), economic stakeholders highlighted the significance of Nepal's 'double B-minus' credit rating. They described it as an encouraging milestone for leveraging economic benefits.

Deputy Prime Minister and Finance Minister Bishnu Prasad Poudel stated that achieving this rank, which places Nepal second in South Asia after India, is a matter of national pride. He emphasized the importance of turning potential into tangible outcomes. "I will take responsibility if the economy has worsened since the formation of this government," he asserted.

National Planning Commission Vice-Chair Prof. Dr. Shivaraj Adhikari remarked that Nepal's sovereign credit rating has sparked positive discussions. He suggested that the focus now needs to shift toward meaningful reforms. "One persistent issue hindering economic progress is the repetitive nature of debates," he observed. "For the past 5-6 years, discussions have remained stagnant, but today’s economic context is markedly different."

He pointed out recent changes, such as declining interest rates, sufficient liquidity, and government efforts to support the private sector, as factors that distinguish the current situation from the past.

Nepal Rastra Bank (NRB) Governor Maha Prasad Adhikari noted that while Nepal's ranking as second in South Asia reflects its overall economic standing, significant challenges remain. He stressed the need for targeted efforts to improve the country’s sovereign credit rating.

Governor Adhikari clarified that no major policy changes were introduced in the first-quarter review of the monetary policy because the broader economic and financial conditions remain largely unchanged. He further stated, "Monetary policy alone cannot drive economic recovery. All state agencies must collaborate to address the current challenges. Over-reliance on monetary policy should be avoided."

Economist Prof. Dr. Achyut Wagle highlighted a worrying decline in revenue generation, with collection rates dropping from 24-25% of GDP to 12-13%. He questioned the factors contributing to this alarming trend and warned of its implications.

"The inability to generate sufficient revenue has necessitated an increase in public debt, pushing the state toward a financial crisis," Wagle cautioned. He projected that public debt could reach 60-65% of GDP in the coming years if financial mismanagement continues.