For the first time, Nepal is giving it's country a credit rating. As per the government's plan, the credibility level of Nepal will be fixed by the end of 2019 or next year.
The Ministry of Finance has said that preparations required for Nepal's credit test, which are considered to be an indispensable condition for attracting foreign investment, are moving fast. Since self-sufficiency is not enough for Nepal's economic prosperity, Nepal has come forward with various plans to attract foreign investment.
The government had in the last financial year made a policy arrangement for banks and financial institutions to borrow from foreign banks. Likewise, investment calls were made in various projects at the investment conference held last April, but in both attempts, the amount could not be entered as Nepal expected.
It is for the first time that Nepal is also conducting a credential test after realizing that the lending institutions and investors have sought integrated information on issues such as investment risk level, political stability, employment situation, investment environment, tax assurance. The government also mentioned in the budget for the fiscal year 2075/076 that the credit test would be done.
In the last year, the government has constituted a test committee under the coordination of the Revenue Secretary of the Ministry of Finance for the necessary preparation and planning for the Nepal Credit Test. The committee comprises Deputy Governor of Nepal Rastra Bank Chintamani Siwakoti, Director General of the Central Statistics Department, Suman Raj Aryal, chairman of the Securities Board. A high-level test committee was constituted comprising member secretary of the Department of Financial Sector Management and Institute Coordination Division, Harisharan Sharma, member of the Revat Bahadur Karki and the Finance Ministry.
As soon as the committee was formed, necessary preparations for it were started. The committee is doing homework for this work, including discussion with the concerned body, sources, and availability of data needed for the test, financial management, rating agency management.
According to the committee, financial and technical assistance will be provided by the British International Assistance Mission (DEFID) for Nepal credit test. Accordingly, Diffid is said to have chosen a reliable international rating agency and even financial support.
The committee has discussed various stages with various concerned bodies and is now discussing the matter with the concerned agency, including necessary preparations, this week.
Select a reputable agency
Credit testing is not done by the country itself, but it has to be entrusted by an investor trust agency around the world. Nepal is also preparing to test a reputable agency itself. According to committee member and Deputy Governor of Nepal Rastra Bank Chintamani Siwakoti, the reputed agency of the world will test the credibility of Nepal.
"The trust that the investors of the world invest in will be tested by the trust of Nepal," he added, adding, "This test will give a realistic picture of Nepal's economic-political situation in selling foreign bonds to foreigners, attracting investors in entrepreneurial investment."
Three ranking agencies in the world are widely regarded as reliable and reliable. Stander & Poor's (S&P) Moody's and Fitch Group account for 95% of the global market for credit rating. S&P and Moody's have headquarters in the United States while Fitch Group has headquarters in New York and London.
Nepal has decided to rate one of these three. Apart from these, companies like Dominion Bond, Scoop, JCR, Dangong, China Senjin are also prevalent. The rating agencies conduct institutional, economic, external and financial and monetary studies. It provides grading on a double scale basis.
The S&P determines the level of flexibility and efficiency on the one hand at the nine levels and the institutional and economic conditions on the other side at 11 levels and determines the true credibility of the nation on that basis. In this age of investment and globalization, credential testing seems to be universal. However, 52 UN member states have not yet conducted such a test. South Asian nations Afghanistan, Bhutan, Myanmar, and Nepal have not yet rated this rating. The neighboring countries in the S&P rankings are in the 'A' group and India 'B' group is on the stable list. Then the nations are also categorized into positive and negative groups.
Member of the Committee and Chairman of Nepal Securities Board Dr. According to Revat Bahadur Karki, there have been delays in the past, but now preparations are underway for its preparation. "The orientation training of our bodies officials concerned for the universal rating is yet to be done," he said, adding that "this can be done in about six months from now."
(Source: Gorkhapatra)
