Kathmandu: Fitch Ratings has cautioned that Nepal’s recent wave of political and social unrest poses significant risks to the country’s economic stability and financial health. While calm has gradually returned to the streets, the global credit rating agency noted that the turmoil has already weakened short-term growth prospects and shaken investor confidence.
The agency stressed that disruptions caused by protests and clashes have directly impacted business activity, trade, and consumer spending. With reduced mobility and uncertainty clouding investment decisions, sectors such as retail, services, and tourism have suffered notable setbacks. Fitch emphasized that the deterioration of confidence could prolong the slowdown even if immediate order is restored.
At the fiscal level, Nepal faces mounting pressure. The unrest has the potential to cut into government revenues while simultaneously raising expenditures on security and relief measures. Fitch warned that this imbalance could strain the country’s fiscal position, widen deficits, and weigh heavily on public debt. A weakening of these “credit metrics,” the firm explained, would not only undermine Nepal’s sovereign rating but also drive up borrowing costs in global markets.
Although the situation has stabilized in recent days, Fitch underscored that the long-term impact depends on how effectively Nepal’s leadership restores political stability and reassures investors. The agency highlighted that sustained unrest could deter much-needed foreign investment, while any deterioration in economic conditions would further challenge the government’s ability to maintain fiscal discipline.
For ordinary citizens, the consequences may soon become visible in the form of slower job creation, reduced business opportunities, and possible strains on household incomes. Economists also warn that prolonged instability could dent remittance flows and external support, two crucial lifelines for Nepal’s economy.
Fitch’s statement serves as a warning signal to both policymakers and markets. As Nepal works to consolidate peace and stability, the government will need to carefully balance political priorities with urgent economic measures to avoid a downward spiral in growth and financial credibility.