Despite the recent global energy shock, we forecast Andorra will continue posting ample twin budget and external financial surpluses until 2030, supported by above-potential economic growth. Andorra stands to benefit from direct access to the Eurosystem's repurchase agreement (repo) facility for central banks (EUREP). This is a new liquidity facility from the European Central Bank that materially enhances the Andorran Financial Authority's (AFA's) ability to act as a lender of last resort and provide liquidity to the country's large banking system in a stress scenario, making the sovereign more resilient to external shocks. Ratifying the EU Association Agreement could enable the free movement of people, capital, goods, and services between Andorra and the EU single market, providing an additional anchor
