Andorra seeks to join International Monetary Fund

Tiny principality would bring IMF members to a total of 190
Kent Wang/Flickr

The tiny principality of Andorra, a sovereign state squeezed between France and Spain, has requested membership of the International Monetary Fund.

If the request is granted, the state of around 77,000 people would become the fund’s one hundred and nintieth member country.

Kristalina Georgieva, the IMF managing director, passed Andorra’s request to the executive board on January 9. The application will be considered “in due course”.

The executive board will make its report to the IMF board of governors, specifying the quota Andorra would be expected to fulfil and other “terms and conditions” of membership, the fund says. If the governing board adopts a “membership resolution”, Andorra would be expected to take the legal steps necessary for it to sign the IMF’s articles of agreement.

Besides paying the quota, member countries are expected not to impose exchange controls and to avoid “discriminatory currency practices” or multiple exchange rates.

All IMF members gain a seat on the board of governors, occupied either by ministers of finance or central bank governors – in Andorra’s case, the minister of finance would likely have to take the seat, as it does not have a central bank. The board of governors issues directives to the IMF’s 24-strong executive board.

Andorra’s monetary arrangements are relatively unusual. It is not a member of the European Union but it uses the euro and has a licence to issue euro coins.

The state’s sizeable financial sector is overseen by the Andorran Financial Authority. The economy is attractive to financial firms for its very low tax rates – a point that has caused friction with the EU in the past.

Similarly, low tax rates contribute to Andorra’s popularity as a tourism destination, which makes up the bulk of its GDP. Tourism, retail sales and financial services combined comprise around three-quarters of GDP.

Andorra would not be the smallest country to join the IMF. Nauru, with a population of less than 14,000, was the most recent country to be granted membership, in 2016. Tuvalu, which joined in 2010, is even smaller – its population is around 11,000.

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