Andorra Warned Of Credit Rating Downgrade Risk
05 October, 2015
Maintaining a negative outlook for the territory's credit rating, Standard and Poor's has recommended that Andorra strengthen the financial system and continue fiscal reforms.
Reaffirming the territory's BBB- rating, the agency noted that the economy has been destabilized by the crisis at Banca Privada d'Andorra, which the US identified as a likely money laundering risk, but a plan is in place for legitimate assets to be transferred to a new entity, Banc Vall.
The Andorra Government noted that Standard and Poor's report calls for the territory to continue the reforms implemented over the past four and a half years to reinvent the territory's economy. The ratings agency noted that these efforts had included tax reform, opening the economy up to foreign investment, reforming the social security system to ensure its sustainability, and tightening public spending.
According to Standard & Poor's, the territory still relies too heavily on economic activity and revenues from the financial services and tourism sectors.
Andorra introduced individual income tax from the start of this year and plans to tax and regulate gambling. Andorra introduced a VAT-like general indirect tax (IGI) and a corporation tax in 2009 and also began levying personal income tax on non-residents.
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