Moody's Affirms Andorra's Baa1 Rating with Positive Outlook

Moody's has affirmed Andorra's sovereign credit rating at Baa1 with a positive outlook, highlighting the strength of the country's public finances, sustainable debt levels, and robust institutional framework.

The rating agency pointed to Andorra's low public debt and substantial public financial assets as key buffers against potential risks. It also praised the high per capita income, institutional quality, and recent progress in financial oversight. The report noted strong economic performance, including 3.9% GDP growth in 2025 and higher-than-expected revenues driven by overall economic momentum rather than tax increases on individuals or businesses. These factors have supported public sector surpluses and further reduced debt relative to GDP.

While Moody's anticipates a moderation in growth rates in the coming years, it views the economic fundamentals as solid and the budgetary position as likely to remain favourable. The positive outlook rests largely on prospects from the Association Agreement with the European Union, which could drive economic diversification, enhance resilience to external shocks, and further strengthen institutions. Government officials described approval of the agreement as a potential catalyst for an upgrade in the rating.

Moody's also welcomed upcoming changes to the Eurosystem's repo mechanism for central banks, which should improve euro liquidity access and mitigate banking sector risks, bolstering overall financial stability in Andorra.

The government described the review as evidence of the country's ability to sustain a strong fiscal position amid economic uncertainty.