International Monetary Fund (IMF) staff published a concluding statement from its 2026 Article IV mission to the Principality of Andorra, reporting robust recent growth and strong fiscal outcomes alongside vulnerabilities from an outsized banking sector and mounting medium-term pressures from ageing, low productivity and housing affordability. The statement notes that deeper integration via the European Union Association Agreement could diversify growth but would entail transition costs and faces an uncertain ratification timeline. IMF staff estimate real GDP growth at 2.9 percent in 2025, with average inflation easing to 2.4 percent and a current account surplus of about 16 percent of GDP. Strong direct-tax performance is estimated to have delivered a central government surplus of 2.5 percent of GDP in 2025, reducing central government debt to below 30 percent of GDP; growth is projected to slow to 2.3 percent in 2026 and converge to 1.5 percent by 2030, while inflation is projected at 2.3 percent in 2026 and 2 percent by 2027. For 2026, the approved budget targets a deficit of 1 percent of GDP, but staff forecast a small surplus of around 0.3 percent of GDP, and they highlight a two-year plan to raise public sector wages over 2026–27 to close identified pay gaps while recommending vigilance for overheating if inflation remains elevated. On the financial sector, banks are described as performing well and increasingly aligned with EU supervisory standards under the Andorran Financial Authority, but their large size relative to the economy is framed as a systemic risk requiring continued close supervision and buffers commensurate with cross-border activities. IMF staff will prepare a report for consideration by the IMF Executive Board, subject to management approval, and preparations are underway for Andorra’s first Financial Sector Assessment Program in 2026.
International Monetary Fund 2026-03-09
International Monetary Fund issues Andorra Article IV mission statement urging pension and healthcare reform and continued close bank supervision
The International Monetary Fund (IMF) concluded its 2026 Article IV mission to Andorra, highlighting robust growth and fiscal outcomes but noting vulnerabilities from a large banking sector and medium-term pressures like ageing and low productivity. Real GDP growth is estimated at 2.9% for 2025, slowing to 2.3% in 2026. The IMF emphasizes the need for close supervision of the banking sector and preparations for Andorra's first Financial Sector Assessment Program in 2026.