The large international rating agencies, Standard
The clearest reaction was that of Standard
In this sense, the agency highlights the commitment of the Andorran Executive to promote structural reforms such as the emergency liquidity mechanism for the financial sector, implemented in accordance with international reserves, and the reform of the pension system, which must allow its sustainability to medium term. Another relevant aspect is that the negotiation of the Association Agreement will lead to a greater degree of alignment of the legal framework for regulation and supervision of the financial system, which will result in a reinforcement of the resilience of the country's financial sector.
Finally, the agency's report highlights the improvement in the production of statistical data that has allowed for more reliable data on Andorra's external position, which reflect a high recurring current account surplus and also highlight the continuity in this improvement in production data, which will improve confidence in the strength of Andorra's external position.
For its part, Fitch Ratings has maintained its assessment of the Andorran economy at A– with a stable outlook, consolidating the rating from July last year. In its report, the agency points out that the analysis is based on prudent fiscal management, reaching a surplus of almost 3% of GDP in 2022 and a forecast surplus of 1.7% for the current year, which would place it well above the average of other countries with a similar rating. This notable growth in the forecast surplus would occur after the country's effort to dedicate significant resources to measures to deal with the increase in the cost of living and to alleviate the loss of purchasing power.
Among the positive factors analyzed, GDP growth in 2022 stands out, 8.8%, much higher than the initial forecast, as well as efficient debt management that has allowed it to be reduced after the peak reached in 2021. This reduction is expected that it be gradual in the following exercises. For this reason, the agency's statement in which it states that it believes that Andorra will not require any external refinancing until at least 2027 is important. The fact of having consolidated financial costs of the debt at a level much lower than that of the other countries with which it can be compared.
The high resilience of the banking sector is another strong point of the report. The agency placed special emphasis on the capital and liquidity ratios that have been achieved -well above those required-, the improvement in the profitability of the entities -which have even reached pre-pandemic levels- and the implementation of reserves international markets and the emergency liquidity mechanism of the financial sector.
The political stability represented by the electoral result was not lost on Fitch Ratings either, which highlighted the party's commitment to continue with the economic and fiscal policies taken to date and to maintain affordable housing, reform of the pensions, economic diversification and the negotiation of the Association Agreement with the European Union.
