Standard&Poor’s, one of the leading international rating agencies, has published the report about economic forecasts of Andorra for 2014. In accordance to the information, provided by the agency, the credit rating of the Principality’s paying capacity is estimated to be A-/A-2. Negative rating is explained by the fact that post-crisis economic growth is at its early stages: financial services and tourism of Andorra are still not stable.
The Government of the country, presented by the Minister for Finances Jordi Сinca, perceived that estimation positively. The minister noted: “The rating of Andorra remains stable contrary to many European countries, where it keeps on falling. And the fact that we have managed to surpass the crisis opens new horizons for the elevation of the rating, and that can’t but inspire us with optimism”. At that, optimism is first of all related to general credit rating and employment market recovery.
It is important that the agency positively estimates the dynamics of foreign investment flow. In accordance to S&P, the acting projects, realized at the expense of foreign investors, make up 1,8% of the county’s GDP.
The analysis of fiscal policy is also presented in the report. As S&P notes, government deficit was decreased by 7%.
The conclusion of the report is dubious. On one side, it is mention that if the government deficit is not decreased and the program of tax reforms is postponed, the rating will go down in the upcoming 6-12 months. On the other side, the agency doesn’t exclude the opportunity to review the rating for the “stable” one in case the country keeps on moving over the way of slow recovery.