Principality of Andorra: Selected Issues

This Selected Issues paper focuses on fiscal implications of aging in Andorra. Andorra is undergoing a rapid demographic transformation as its population ages. Aging is expected to put significant pressure on the country’s fiscal position, particularly through rising spending on pensions and healthcare. This research has focused on the direct impact of aging on pension and healthcare systems. Comprehensive pension and healthcare reforms are needed to avoid straining public finances. In addition, a comprehensive analysis and preparation including a proactive immigration policy will be vital to prepare the economy for an aging population. The paper discusses recent population and demographic trends in Andorra. It analyzes the impact of these trends on the pension system in Andorra. The paper estimates the impact of aging on healthcare expenditures. The authorities must plan for these changes and adjust accordingly. Despite the challenges, Andorra is in a strong position to undertake necessary pension and healthcare reforms that will help maintain its macroeconomic stability in the face of population aging.