KATHMANDU: International credit rating agency Fitch Ratings has said that the clear majority secured by the Rastriya Swatantra Party (RSP) in Nepal’s latest election could reduce short-term political uncertainty and contribute to greater policy stability.
In an analysis released Wednesday, Fitch Director George Xu noted that the election results present an important opportunity to implement governance reforms and advance economic policy changes.
According to the agency, the decisive outcome comes after a period of political turbulence last year marked by frequent changes in government. The clear mandate is expected to lower the risks associated with prolonged coalition politics and political instability.
Fitch said that if the new government is able to deliver tangible progress in governance and economic reforms, investor confidence in Nepal could improve in the coming years.
The RSP’s victory has also been interpreted as a public mandate against what many voters perceived as “status quo politics” dominated by traditional power-sharing among parties such as the Nepali Congress and the CPN-UML.
A single-party majority government could help accelerate reform efforts and support hydropower-driven investment, which is expected to contribute to broader economic growth.
The RSP has set ambitious economic targets for the next five years, aiming to achieve an average annual economic growth rate of 7 percent and raise per capita income to above 3,000 US dollars.
However, Fitch described these targets as ambitious. According to the agency’s own projections, Nepal’s economy is expected to grow by around 4.5 percent in the fiscal year ending July 15, 2027.
The incoming government’s policy agenda includes boosting productivity, creating formal employment opportunities to reduce reliance on foreign labor migration, and expanding private sector-led investment in infrastructure, agriculture, digital sectors, and emerging industries.
Fitch had maintained Nepal’s sovereign credit rating at “BB-” in November 2025. The agency cited the country’s relatively low external debt and strong external liquidity position as key strengths.
At the same time, the report warned that weak implementation capacity, limited government effectiveness, and regulatory challenges remain significant risks.
According to Fitch, improvements in corruption control and the business environment will be critical for attracting both domestic and foreign investment.
The report also noted that successful implementation of programs supported by the International Monetary Fund, along with medium-term growth driven by hydropower development, could strengthen Nepal’s economic outlook.
Nevertheless, Nepal’s economy remains vulnerable to natural disasters and external shocks, the report added.
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