Finally, on October 16, 2020, the Principality of Andorra as a country became the 190th member of the International Monetary Fund (IMF), after the signing by the Ambassador of Andorra in the United States of the Constitutive Agreement in an event held in that country. After ratifying the document and also signing the statutes on behalf of Andorra, the Ambassador, Excma. Ms. Elisenda Vives Balmaña, and the Managing Director of the IMF, Kristalina Georgieva, met at the IMF headquarters.
Thus culminates a process that It has taken almost a year officially as expected, since at the beginning of January of this year the Minister of Finance of the Government of Andorra Eric Jover announced the start of the procedure for membership by letter to the international financial institution.
A long-awaited addition
The former head of Government of Andorra, Antoni Martí, who was the one who carried out the Major reforms in the country after the BPA crisis, He already showed the intention of studying whether the country should join the International Monetary Fund (IMF) so that it acts as a provider of last resort, as well as classifying the tax offense within the penal code to standardize the legislation. In fact, other financial rating agencies and different European institutions already made this recommendation after the reforms undertaken by the country, which also already had a relationship with the IMF.
During this time period also Institutions were created to supervise the Andorran financial system, as the Andorran Financial Authority (AFA), a specific Commission to ensure the vigilance and prevention of risks, and the Andorran National Institute of Finance (INAF) was endowed with greater resources seeking greater professionalization.
The process began a few years later, on January 9, 2020, during which positions were approached and the different requirements were established, such as the incorporation quota, the objectives to be followed or the statistical analyzes and studies that the Andorran government must provide to the organization. The obstacles were not exactly few, even within Parliament itself.
Acceleration due to the pandemic
After the covid-19 pandemic the government accelerated the accession process, and the integration fee was finally approved by the Council of Ministers at 101.6 million euros, equivalent to 82.5 million of the so-called Special Drawing Rights (SDR) of the IMF, also called Special Drawing Rights (SDR) that they are the unit of account for the reserve assets of the fund. The government maintained that the benefits for Andorra of joining the international institution far exceed the financial costs of the operation.
His thesis, roughly speaking, is that the benefits can outweigh the costs (which they also compensate) by up to 437%, since the agency not only functions as an emergency provider but also offers reputation, recognition, technical assistance and training. It also seemed so to the other groups in the ruling coalition, since Parliament finally approved the accession resolution after the Government also approved it.
However, he highlighted the insistence of the leader and in general of the representatives of the Andorran Social Democratic Party (PSA) that the costs and risks were higher of those admitted by the government, such as the loss of sovereignty and certain structural policies. Thus they appealed the emergency processing in its claims for prudence, responsibility, patience and conscientious analysis.
The truth is that it was of no use to them, after modifying and improving the legislative text in commission with the other parties, which did support this operation to reduce risks such as loss of sovereignty and legal security, the Adhesion Law was definitively approved in a session of the Consell and sent to the IMF, achieving the purpose of being members in the October assembly of the organism.
Furthermore, due to this fact Andorra will be able to integrate directly to the Benelux constituency (Belgium, the Netherlands and Luxembourg) in the executive committee of the institution avoiding waiting two years to benefit from the advantages, and increasing the voice of small countries in this body.
Andorra as an exception
The Principality was one of the only 5 countries that are not members of the IMF along with Monaco and Liechtenstein, on the one hand, and Cuba and North Korea on the other. A) Yes, it was an exception country since on the one hand the values, freedoms, lifestyle, culture and concerns of Andorra are in the antipodes of countries like Cuba or North Korea, which are not part of the organization because they are obviously extremely authoritarian and totalitarian regimes.
On the other hand, Liechtenstein and Monaco, unlike Andorra, have agreements with Switzerland and France in such a way that the central banks of these countries are the guarantors of their monetary and financial systems, in such a way that entry to the IMF is not a matter for them. indispensable.
Consequences and benefits of membership
So, after the final ceremony of the event, The IMF welcomed Andorra and showed its commitment to working together with the Andorran authorities in meeting short- and long-term challenges, especially those common to other European countries. Also to ensure development and prosperity in the post-pandemic scenario, in cooperation with the rest of the international community.
As we have anticipated before, final benefits that the country will obtain with this milestone are:
- Technical assistance in economic and legal matters of various kinds, such as budgetary policy. The IMF acts by advising and proposing measures to avoid economic crises.
- Access to agency funds and financing on its part, which will improve the solvency and liquidity ratings of the rating agencies and allow the country to finance itself at a lower cost and overcome imbalances in the balance of payments.
- Greater transparency and stability due to financial and statistical supervision that will increase the quality of the country's reported data and improve macroeconomic analysis, as well as the fight against money laundering.
As a direct consequence, Negotiations on bilateral agreements such as Double Taxation Agreements progressed at a faster pace thanks to membership in the group led by Belgium and the Netherlands.The Double Taxation Convention with the Netherlands, which was then under negotiation, It came into effect on November 29, 2024The CDI with Belgium has the text signed but is still pending formal signature.
Membership in the IMF has strengthened Andorra's multilateral cooperation mechanisms and its approach to both the European Union and the European Investment Bank, which in 2025 granted a loan of ~€60M for energy infrastructure.
The IMF endorses the Andorran economy: consultations 2022-2026
The IMF conducts Article IV consultations with Andorra annually since its accession. They are all published on the IMF websiteBelow are the key points of each cycle.
2022: The IMF visited Andorra in April 2022. It highlighted the country's economic recovery, with real GDP growth of 8.91% in 2021, one of the lowest unemployment rates in Europe, and relatively low inflation compared to its neighbors thanks to long-term energy contracts. The IMF projected growth of 4.51% for 2022, which was achieved. You can read more about the electricity prices in Andorra.
2024-2025: The 2025 mission statement (February 2025) reports that real growth in 2024 was 2,1%Growth exceeded expectations, driven by financial services, construction, and tourism. Inflation stood at 2.61% at the end of 2024. The current account surplus reached 15.1% of GDPThe IMF projects convergence towards the long-term potential of 1.5% annual.
2026 (most recent): The mission statement of March 2026 confirms that growth in 2025 was 2,9%...surprisingly on the upside for the second year in a row. Inflation fell to 2.41% in the third quarter, and the current account surplus remained at... 16% of GDP and public debt fell below 30% of GDPThe IMF projects 2.31% GDP growth for 2026. The main risk identified is the labor shortage stemming from the housing problem.
CASS pension reform — an outstanding issue: The IMF has recommended a comprehensive reform of the pension system in every consultation since 2021. The retirement reserve fund (RRF) has grown to... €1.8 billion (~501% of GDP)However, projections point to structural deficits starting in the mid-2030s if no action is taken. Parliament approved partial measures in 2026, but the IMF believes a broader reform is needed.
In conclusion
In conclusion, Joining the IMF has proven to be the right move.Five years later, Andorra has implemented most of the organization's recommendations: reserves are approaching the target of 121% of GDP, public debt is below 301%, S&P and Fitch ratings have risen to A-, and the network of double taxation agreements has expanded from 13 to 22 treaties in force. The only outstanding structural issue is the comprehensive reform of the CASS pension system.
Andorra now has top-level technical advisors and undergoes an independent annual review of its economy. The macroeconomic results for 2023-2025 support the decision made in 2020. With this has completed another great step in its transformation and modernization as a country.
