Fitch Ratings has affirmed Andorra’s rating at BBB+ with a stable outlook. The evaluators have confirmed the improvement from the last evaluation and they have taken into account the acceleration of the Principality in its aligning with international standards of financial regulation and tax transparency.
The Agency has also highlighted that Andorra has been removed from the EU “grey list” of non-cooperative jurisdictions.
In the eighth evaluation of the sovereign debt of the Principality, Fitch has given a positive evaluation regarding the fact that during 2018 the sovereign debt diminished supported by a near-balanced central government position, sustained local government surpluses, and by moderate GDP growth.
They emphasise also that there has been an improvement in fiscal financial flexibility which shows that the bond issuance is replacing bank funding. In this context, the evaluators forecast debt stability over the next two years.
The Agency also gives positive reviews of Andorra’s solid economy through 2018 and the increase in 2.5% of the medium wage while the CPI has only reached 0.7%.
The positive evaluation of the country’s alignment in its legislative framework makes a special reference to the financial regulation. In this sense, the Agency refers to the adoption of the regulations of Basel III capital, in addition to the previous adoption IFRS accounting standards that should help support financial stability. The report also makes reference to the recently approved Andorran Law on solvency, liquidity and the prudential supervision of banking entities and investment companies.
In general, Fitch Ratings states that the economic capacity of the country, the solidity gained in public finances and the political stability, balance with the small economical dimension and the weight of the financial sector. The evaluators expect broad continuity in efforts to align with international standards, and in overall macroeconomic policy, following April’s elections.