Fitch Maintains Andorra's 'A-' Rating Amid Strong Finances

Fitch Ratings has maintained Andorra's sovereign credit rating at 'A-' with a stable outlook, citing strengthened financial liquidity and solid public finances despite ongoing structural challenges.

The agency pointed to the European Central Bank's EUREP facility as a key positive factor. This arrangement replaces a temporary bilateral credit line of €35 million with a permanent option of up to €50 million. The Andorran Financial Authority (AFA) can now access repo operations by providing high-quality euro-denominated collateral, serving as an important emergency liquidity mechanism for the financial system.

Public debt, covering both central government and communes, reached 30.3% of GDP in 2025—the third-lowest among 'A'-rated sovereigns—and is expected to decline to about 27% by the end of 2028. Fiscal performance remains strong, with a surplus of 3.5% of GDP recorded last year. Fitch projects an average surplus of 1.9% of GDP from 2026 to 2028, even as public spending continues on housing, health services, transport infrastructure, digital projects, and energy transition.

Economically, Andorra achieved 3.9% GDP growth in 2025, exceeding earlier forecasts, though expansion is set to ease to roughly 2% in 2026. The country's external balances are robust, featuring a net international investment position of 387% of GDP and a current account surplus of 19.6% of GDP at the end of 2025.

Fitch warned, however, of medium-term growth constraints stemming from the economy's small scale, lack of diversification, shortages of housing and labour, and an ageing population.