S&P Upgrades Andorra's Outlook to Positive, Keeps A-/A-2 Ratings

**S&P Global Ratings upgrades Andorra's outlook to positive while maintaining A-/A-2 sovereign ratings**

S&P Global Ratings has revised its outlook on Andorra from stable to positive, confirming the Principat's long- and short-term sovereign credit ratings at A-/A-2.

The agency attributes the upgrade to strong public finances, upcoming access for Andorran banks to the European Central Bank's EUREP facility, and progress toward an Association Agreement with the European Union.

Andorra closed 2025 with a budget surplus of 3.5% of GDP, driven by economic growth of 3.9%—more than three times the eurozone average. S&P forecasts surpluses averaging around 1.8% of GDP from 2026 to 2029. Public debt remains low, bolstered by liquid assets equivalent to 63% of GDP and international reserves of about €400 million, providing a substantial buffer against shocks.

A key factor is the ECB's permanent expansion of the EUREP repurchase mechanism to Andorran banks starting in the third quarter of 2026. This liquidity tool, with a ceiling of up to €50 billion—equivalent to 12.5 times Andorra's GDP—will enhance financial stability and reduce exposure to external pressures, particularly for the banking sector.

Advances in EU ties also contribute positively. The Association Agreement, expected to grant access to the single market and support economic diversification, awaits approval—potentially delayed by debates over its legally mixed nature—followed by a national referendum. Recent progress includes the March 2026 border management agreement with Spain and France, eliminating systematic checks for Andorran citizens and residents.

S&P notes the upgrade could lead to a higher rating if ECB liquidity access solidifies, EU integration advances, and statistical data improves. Conversely, weakening public finances could prompt a return to a stable outlook.