The International Monetary Fund's Executive Board completed its Article IV consultation for Andorra and broadly endorsed staff's assessment that the economy remains strong but is moving into a slower growth phase. Real GDP growth is estimated at 3.9 percent in 2025 after a second year of upside surprise, but is projected to slow to 2.1 percent in 2026 and converge to 1.5 percent by 2030. Inflation eased to 2.4 percent in 2025, is projected at around 3 percent in 2026, and is expected to return to 2 percent by the end of 2027. The review also highlighted near full employment and a current account surplus of 15.9 percent of GDP in 2025, alongside downside risks from weaker external demand, higher import prices linked to the war in the Middle East or new trade tensions, and Andorra's vulnerability to cross-border infrastructure disruptions. Directors said the looser fiscal stance in 2026 is broadly appropriate given slowing growth, but stressed that the authorities should stand ready to tighten if price pressures persist. They welcomed sustained fiscal surpluses and a declining public debt ratio, encouraged use of fiscal space for targeted growth-enhancing public investment, and underscored the urgency of pension and healthcare reforms to address aging-related spending pressures. The Board also assessed the financial sector as strong, citing solid bank profitability, capitalization, and liquidity, welcomed increasingly risk-based anti-money laundering and countering the financing of terrorism supervision, and called for structural reforms to raise productivity, improve housing affordability, diversify the economy, and manage transition costs linked to the European Union Association Agreement. The authorities have consented to publication of the staff report, which the IMF said will be released shortly on its Andorra country page. Directors also pointed to the upcoming Financial Sector Assessment Program as the next opportunity to assess vulnerabilities and reinforce financial sector resilience.
International Monetary Fund 2026-05-04
International Monetary Fund completes Andorra Article IV consultation and urges pension and healthcare reforms as growth slows
The IMF Executive Board’s Article IV consultation for Andorra found the economy remains strong but entering slower growth, with real GDP projected to decelerate from 3.9 percent in 2025 to 2.1 percent in 2026 and 1.5 percent by 2030, and inflation expected to return to 2 percent by end-2027. Directors deemed the looser 2026 fiscal stance broadly appropriate but urged readiness to tighten if inflation persists, welcomed fiscal surpluses and declining public debt, and stressed pension and healthcare reforms plus structural measures to boost productivity, housing affordability, diversification, and manage EU Association Agreement transition costs. They assessed the financial sector as strong, highlighted progress in risk-based AML/CFT supervision, and noted the upcoming Financial Sector Assessment Program to review vulnerabilities and resilience.