Andorra's Economy Surges 3.9% in 2025, Generating €88M Surplus and Lowest Debt Since 2010

Andorra's economy expanded by 3.9% in real GDP terms during 2025, well above mid-2024 projections of roughly 2% and outstripping Spain's 2.8%, France's 0.8%, and the EU's 1.5% average. Ministers Conxita Marsol and Ramon Lladós pointed to diversification as the key driver, with professional and financial services advancing 6.5%, public services climbing 4.8%, and construction moderating to 7.3% after exceeding 10% the prior year. Tourism and retail held steady, while industry dipped 2.7% due to lower tobacco output. Nominal GDP reached 3,983.2 million euros, up 6.6%, pushing real GDP per capita 1.6% higher to around 35,016 euros and nominal per capita 4.3% to 44,726 euros amid 2.3% population growth.

This performance delivered an 88.3 million euro budget surplus, overturning an initial 35 million euro deficit forecast without raising taxes. Revenue streams broadened significantly: IGI collections rose 13% to 186 million euros, corporate tax surged 56% to 167 million from 107 million in 2024, and IRPF increased 28% to 87 million from 68 million. Consumption taxes fell 18% to 92 million following 2024 highs. Lladós highlighted prudent forecasting, near-complete investment execution, and purchasing power measures such as minimum wage hikes exceeding inflation. Public debt dropped to 29.4% of GDP—the lowest since 2010, beating the 30% target a year early—versus Spain's 100.8% and France's 115.6%.

The Finance and Budget Commission has now finalized amendments to the "golden rule" in the public finance sustainability law, rejecting all four proposals from Concòrdia for stricter limits, including a 25% debt cap by 2036 and 10% thereafter, deficit-free budgets except in exceptional cases, operational spending capped at 80% of total outlays, and doubling the compensation fund contribution from 0.5% to 1% of GDP. Majority parties Demòcrates, Ciutadans Compromesos, and PS approved the original framework—35% debt limit until 2035, 30% from 2036 to 2045, and 25% from 2046 onward—supported by Andorra Endavant. Concòrdia lodged no plenary reservations, leaving the text ready for General Council approval on April 30. Lladós intends additional reforms to direct surpluses toward social investments alongside debt reduction.

Part of the surplus will expand affordable rental housing to 600-650 units by 2027, targeting nearly finished buildings ready in three to four months and co-housing for those over 65, possibly through hotel conversions with shared amenities to meet aging population needs. Existing units serve diverse groups: Canillo's repurposed Hotel Pellicer offers 23 apartments at 400-800 euros based on income and size for seniors and disabled families; Andorra la Vella's former Hotel Artic houses young professionals, such as a 24-year-old paying 600 euros after a four-month wait. Upcoming projects include 70 units in Ribasol, 27 in Andorra la Vella, 23 in Canillo, four in Sant Julià de Lòria, and 20 in Encamp, approaching 500 by the legislature's close.

Parish-level outcomes mirrored national trends. La Massana recorded a management surplus of 3.8 million euros and a budgetary surplus of 1.9 million euros on a base budget of 24.2 million euros plus 6.1 million in adjustments. It spent 21.6 million euros (71% execution) and collected 23.5 million (77%). Property transfer taxes nearly doubled to 3.5 million euros from 1.9 million, fueled by an 86% jump in new and resale home transactions. Direct taxes totaled 4.8 million euros. Personnel expenses rose to 5.3 million with seven new hires, bringing staff to 123 through interim regularizations, 2.7% inflation adjustments, and training investments up 219%. Total debt stood at 21.5 million euros, largely guarantees such as those for SETAP 365 (EMAP), under half the 200% limit of recent average revenues. Officials Eva Sansa and Agustí Garcia credited conservative estimates. Sansa described the property boom as "satisfactory" evidence of parish attractiveness, linked to completing prior projects—not just new builds—and announced targeted tax increases on second homes, high water consumption (top tier), and apartment-based shops, while sparing average residents and adjusting underperforming services for cost efficiency.

The Andorran Health Service (SAAS) posted 70.5 million euros in own revenues, a 10% rise from 2024's 64.3 million and 2.9% over budget, driven by 15.3% more outpatient visits, 6.5% higher emergencies, 15% ambulatory growth, 2.5% increased hospitalizations, and 48.9 million billed to CASS (up from 45 million). Expenses hit 110.5 million, below the 116.2 million allocation but 4.3% above 2024, with personnel up 5.2% on expansions and goods/services rising 6.3%. Government transfers fell to 38.1 million from the projected 41.5 million.

Lladós flagged Middle East tensions as potential threats to energy and markets but ruled out budget revisions, emphasizing diversification. The 2025 IRPF campaign, running April 1 to September 30, targets a record 93 million euros—54 million already withheld plus 39 million from filings—up from 80 million last year, despite enhanced deductions: up to 5,000 euros for primary homes or 50% on affordable rentals (from prior limits), 1,000 euros per dependent (from 750), 300 euros for higher education, and 50% on mortgages (from 25%). Around 29,000 filings are anticipated, 85% online, with improvements to the digital platform. Lladós cautioned against broad wage mandates beyond minimums, which could strain firms despite corporate tax gains; median wages rose nearly 4% to 2,150 euros, averages to 2,400 euros. He rejected raising the IRPF exemption threshold, arguing targeted deductions better aid families. Department head Carles Ferreira stressed the measures prioritize housing access and family support over revenue maximization.