This new rating puts Andorra’s confidence in its economy at levels prior to the BPA crisis and represents a recognition of the decisions taken to achieve the recovery of the Andorran economy. Thus, this rating is the best since Fitch began to value the country’s sovereign debt in 2015.
In its seventh assessment of the Principality’s sovereign debt, Fitch highlights the reduction in public sector debt during 2017 and points out that the recovery of the Andorran economy has accelerated.
On the one hand, Fitch welcomes the fact that public debt fell below 40% in 2017, and for the first time since 2011, and the government recorded a surplus of 9 million euros. Moreover, it considers that the stabilisation of financial sector activity and the growth trends in other sectors can translate into real GDP growth in the coming years.
In addition, the improved rating also considers the balance between the country’s economic capacity, sound public finances and political stability, the small size of the economy, and underlines there has been an improvement in financial flexibility. The steps taken to align the country in the regulatory environment, especially in the financial sector, with the adaptation to international and European standards, such as the adoption of international norms on transparency and exchange of tax information, are also positively assessed.
However, the agency continues to point out the weight of the financial system on the economy and the lack of a lender of last resort that restricts options in crisis situations and increases the risks of the banking sector.
Texte: Govern d’Andorra
