Fitch Ratings has published the rating for Andorra which remains at BBB and improving the perspective, going from stable to positive. This is the fourth evaluation of the Principality’s sovereign debt and in its last analysis, the rating agency stresses the improvement of the public finances’ situation, as well as the automatic exchange of tax information agreement and the adoption of European accounting regulations (IFRS).

The Government greatly appreciates the change of perspective and understands it puts us in a good position to achieve a better rating in future evaluations. The international rating agency decided to improve the Andorran perspective because of the financial system’s response to the BPA crisis. In addition, progress made to align regulations and tax information exchange with international practices and adopting European accounting standards were also appreciated (IFRS).

Regarding the public finance situation, the agency forecast a positive closure of the Government’s accounts in 2016 and a low budget deficit forecast in 2017, as well as the planned budget surplus and the CASS reserve funds. The agency estimates the debt level to be around 40% of the Andorran gross domestic product (GDP). In this regard, Fitch predicts that in the coming years this ratio will decrease gradually.

The better positive perspective, as stated by the agency, indicates there are no expected events that may cause a drop in the rating of the country. But this rate is subject to a potential worsening of the economic growth outlook or a deterioration in the banks solvency. One of the threats, as identified by Fitch, is not having a lender of last resort, that would reduce the risks of the banking sector.