The evaluation agency sees in a positive way the continuity of the political line with containment of public expenditure. To improve the rating it would need a bank lender, to enter the IMF or the association agreement.

Fitch ratings maintains Andorra's evaluation of BBB+ and considers that the short-term outlook is stable. This conclusion comes after analysing the evolution in recent months with a special impact on political change. The agency has considered that the economic line marked by the Democrats in recent years will have continuity and that allows the note to be maintained. The government is satisfied with the maintenance of the evaluation since it was what it expected, since for the rating to improve, a relevant change is needed. Specifically, there are three factors that would be key to raising the rating: a hypothetical entry into the IMF, reaching an agreement for the bank to have a lender of last resort or approaching the final phase in the association agreement with the European Union. Without any of these advances, according to the sources consulted, it will be very difficult to improve the score.

The fact that progress continues to be made in the negotiation of the association agreement is one of the points that the evaluator highlights when it comes to giving the country a rating. Fitch considers that this pact will open the door to economic opportunities for the principality, in accordance with the access to the Community internal market of more than 500 million people.

Improvements for the future

As for the IMF as a bank lender of last resort it is pointed out as a factor providing stability and security. Fitch stresses that banking is one of the main sectors of the economy and is therefore a strategic sector. With this consideration the agency stresses that the new situation of the banking sector generates some unknowns and that highlights the positive evolution with the restructuring of the business model. In general it is stressed that the IMF or a lender are those that allow a positive outlook for the national economy. The situation of the two issues is very different. With regard to the International Monetary Fund, there are open conversations and negotiations are underway to determine the conditions of entry. This will be the key factor in deciding whether or not to join. As far as the lender of last resort is concerned, the situation is more complicated since it is not well contemplated that this lender should be the European Central Bank. Within the evaluation, the response of the national economy to a winter without good weather conditions is evaluated positively. The ability to continue attracting millions of tourists even in a winter with little rainfall is relieved. This situation is a clear improvement over other years, when bad weather had a much more important effect on the economy.

Reducing debt

The evaluator recommends pursuing debt reduction policies and restraining public spending to ensure stable and sustainable economic developments. The budget balance for the last few years and the forecast for it are positive points for the regulatory agency. The executive is confident that the same line can be maintained in the coming years and is aware that the challenges of raising the score will take time to be achieved and the important thing now is to maintain the rating.