IMF Executive Board Concludes 2026 Article IV Consultation with Andorra
IMF News, May 4, 2026
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- Published: May 4, 2026
Key assessment and recent performance
- The Andorran economy continued to outperform expectations, with growth in 2025 estimated at 3.9 percent, driven by strong activity in financial services, real estate, and construction.
- Inflation eased to 2.4 percent in 2025 but is on an upward trend.
- Labor market is operating at near full employment.
- The current account surplus was estimated at 15.9 percent of GDP in 2025.
- Staff note that the baseline assumes oil and gas prices broadly consistent with closing future prices as of mid-March 2026 and incorporates impacts on main trading partners.
Near-term outlook and projections
- Growth:
- Projected to slow to 2.1 percent in 2026.
- Projected to steadily converge to long-run potential of 1.5 percent by 2030.
- Historical/projected real GDP (annual change, percent): 2022: 9.6; 2023: 2.6; 2024: 3.8; 2025: 3.9; 2026: 2.1; 2027: 1.8; 2028: 1.7; 2029: 1.6; 2030: 1.5.
- Inflation:
- Projected at around 3 percent in 2026.
- Projected to converge to the euro area inflation target of 2 percent by the end of 2027.
- Historical/projected inflation (period average, percent): 2022: 6.2; 2023: 5.6; 2024: 3.1; 2025: 2.4; 2026: 3.0; 2027: 2.3.
- External sector:
- Current account (percent of GDP, selected): 2023: 11.6; 2024: 15.9; 2025: 16.0; 2026: 16.1; 2027: 16.2; 2028: 16.0; 2029: 16.1.
- Gross international reserves (millions of euros): 2022: 338.4; 2023: 338.7; 2024: 402.1; 2025: 397.2.
Risks and vulnerabilities
- Short-term risks tilted to the downside, mainly from external factors:
- Weaker growth among trading partners due to a prolonged war in the Middle East or new trade tensions could reduce foreign demand and push inflation higher via import prices.
- Recent temporary road closures highlight vulnerability to cross-border infrastructure disruptions.
- Medium-term risks absent policy action:
- Population aging will increase public expenditures on pensions and healthcare, placing growing pressure on public finances.
- Labor shortages could worsen if housing affordability is not improved.
- Climate change risks: rising temperatures and more frequent extreme weather events may disrupt tourism and infrastructure, emphasizing the need for diversification.
- Upside risk:
- Approval of the EU Association Agreement could support economic diversification and enhance resilience to shocks.
Executive Board views and policy priorities
- Directors agreed with the thrust of the staff appraisal and welcomed continued economic resilience and prudent fiscal management that rebuilt solid buffers.
- Near-term stance:
- The looser fiscal stance in 2026 is considered broadly appropriate against slowing growth, but Directors stressed readiness to tighten if price pressures persist.
- Medium- to long-term priorities:
- Maintain prudent fiscal policy in a euroized economy.
- Use available fiscal space for well‑targeted, growth‑enhancing public investment.
- Urgent pension and healthcare reforms to address population aging and safeguard long‑term fiscal sustainability.
- Advance structural reforms to lift potential growth, enhance productivity, and diversify the economy.
- Continue progress on the National Plan for Innovation and Diversification and strengthen public‑private collaboration.
- Financial sector:
- Directors welcomed the assessment that the financial sector remains strong, noting banks’ solid profitability, capitalization, and liquidity.
- They looked forward to the upcoming Financial Sector Assessment Program to assess vulnerabilities and reinforce resilience.
- Commended efforts to make AML/CFT supervision increasingly risk‑based.
- Data and statistics:
- Directors welcomed improvements in data compilation, timeliness, and dissemination, including external sector statistics and tourists flow data, and encouraged efforts to close remaining data gaps.
Fiscal and financial indicators (selected exact figures)
- General government (percent of GDP, series aligned 2022–2027 where applicable):
- Revenue: 39.7; 38.0; 39.9; 40.7; 40.1; 40.2.
- Expenditure: 34.9; 35.9; 37.1; 37.2; 37.8; 38.3; 38.5.
- Interest (percent of GDP): 0.7; 0.6; 0.5; 0.8.
- Primary balance (percent of GDP): 3.3; 4.0.
- Net lending/borrowing (overall balance, percent of GDP): 4.8; 1.9.
- Public debt (percent of GDP, 2022–2031): 38.9; 35.4; 32.9; 30.3; 28.0; 26.9; 26.3; 25.7; 25.1; 24.5.
- Central government (selected series): 21.7; 19.8; 21.4; 22.6; 21.3; 21.5; 18.7; 19.1; 20.2; 21.0; 21.6.
- Banking sector (selected):
- Regulatory capital to risk-weighted assets: 20.3; 20.5.
- Credit to nonfinancial private sector, level (percent of GDP): 116.4; 101.3; 95.5; 90.5.
- Corporates (percent of GDP): 61.8; 55.1; 51.8; 48.8.
- Households (percent of GDP): 54.6; 46.2; 43.7; 41.7.
- Data for 2025 is as of Q3 and are preliminary, unaudited, and subject to revisions.
Social and memorandum indicators (selected exact figures)
- Population (2025): 89,058.
- Population at risk of poverty (percent, 2024): 16.4.
- Per capita income (2025, euros): 44,726.
- Human Development Index Rank (2023): 32 (out of 193).
- Gini Index (2024): 38.4.
- Life expectancy at birth (2024): 84.1.
- Exchange rate (€/USD, period average, 2022–2027): 0.95; 0.92; 0.89; 0.86; 0.85.
- Nominal GDP (millions of euros, 2022–2031): 3,210; 3,501; 3,736; 3,983; 4,181; 4,351; 4,514; 4,678; 4,843; 5,014.
Source: IMF Executive Board press release, "IMF Executive Board Concludes 2026 Article IV Consultation with Andorra" (Press Release No. 26/134), May 4, 2026.