Jordi Gallardo (Andorra La Vella, 1976), president of Liberals d’Andorra, a party that in coalition with Demòcrates governs the country of the Pyrenees, is a long-distance runner and triathlon runner. In 2005 he entered the public sector as Secretary of State. Before, he was a history teacher and worked in his family’s business dedicated to commerce. With a degree in History from the University of Lleida and a Master’s in Business Administration from IESE, he is head of the design and development of the actions necessary to promote the future of this small State with two foreign co-princes (the President of France and the Bishop of the Seu d’Urgell) by a 13th century agreement. It has eight million annual visitors, of which 4.5 million spend the night. And only 80,000 inhabitants. In 2021 the ‘youtuber’ ElRubius raised dust by announcing his move from Andorra. The general VAT rate is 4.5% compared to 21% in Spain and the maximum corporate tax rate is 10%, far from the Spanish 25%. This week he has visited Valencia. He has met with businessmen, entrepreneurs and political leaders, including the Shuttle of Juan Roig. Between act and act he maintains a meeting with ‘assets’, next to the ‘Cap i casal’ of the capital of Túria. Minister of the Presidency and Economy since 2019, he has recently announced that he will resign from being a candidate in the next general elections after leading Liberals d’Andorra since 2011.
What is the Minister of Economy doing in Andorra visiting Mediterranean cities?
I am attracted by the dynamism of its private sector. Andorra is a small country and a pole of attraction for investment in services, especially local tourism, financial, real estate or health activities. It has great appeal for regions such as the Valencian Community or Catalonia. Also for Madrid or Aragon. We have 40,000 hotel beds and we have opted for a production model based on innovation and entrepreneurship.
Andorra abandoned the tax haven model in 2011. “It was outdated,” you said shortly after assuming the reins of the ministry. Today, is it much more than a country with competitive taxation?
Of course. It is not just a country with an attractive tax model. We have abandoned that label. For a decade there has been a process of transformation towards the digital economy. We have an approved tax model with advantageous taxation, compared to other neighboring countries, but that is no longer the main claim for investors. People come here to invest or live because we have legal certainty, an efficient health system and good telematic connections through a single operator, which by the way is public, from the State. 85% of its space is natural territory, only 15% is urbanized. That will not change.
In a recent interview you said that “Andorra will no longer be on the list of tax havens”. Do you do your homework in your tax and banking transparency policies?
With the double taxation agreements that began to be applied a little over a decade ago, we have left the list of tax havens. The fact of leaving the lists of tax havens of the European Union and the OECD, beginning the process of opening up to foreign investment and standardizing a tax system already implemented with the introduction of direct taxation from 2015, I think that helps us to open up to the world and be competitive. That lever, although it is there, is no longer used above all to attract investment. Andorra left the Spanish list of tax havens years ago after signing an information exchange agreement before and a double taxation agreement afterwards. Andorra does its homework after ceasing to be a tax haven.
What solutions do you propose in the face of the galloping inflation that stalks the whole of Europe, the lack of raw materials or the problems in the logistics supply chains? Do you foresee a recession?
After overcoming the restrictions on mobility due to covid applied by our neighboring countries, France and Spain, which account for 45% and 26% of total annual foreign investment (843 million euros in 2021) and represent 18.7% of the Gross Domestic Product (GDP), this year we will be able to reach the levels of tourism prior to the pandemic. Unemployment continues to be structural, with rates below 2.4% of the active population and the CPI could close the year with a rate close to 4.5%. Now we are at 7.3%. To mitigate the impact of prices on residents, especially on the purchasing power of average incomes, we have launched a free public transport service, a super-reduced VAT of 1.5% for basic necessities and personal hygiene products. We have also promoted a bonus for professional diesel for taxi drivers and carriers. We cannot approve a discount on gasoline as Spain has done. We would be subsidizing the fuel consumption of the residents of the towns near Andorra in Spain and France.
Is public debt skyrocketing?
The level of indebtedness has risen from 42% to 47% of GDP during the pandemic due to social spending. We have legislation that only allows us to exceed 45% for two years. That is why we have prepared a Containment Budget for the public sector for 2023. We do not foresee a recession. Of course, we will have to see how the IPC evolves. It’s worrying.
What is the strategy of the Government of Andorra beyond trade, tourism and finance?
The draft Law on Digital Entrepreneurship and Innovation, about to be approved by the Parliament of Andorra, will guide the guidelines of a GDP growth model, where the one based on mature sectors such as commerce (which represents 17% of the total ), real estate (15%), tourism (14%) and financial (12%). The size of the country will no longer be a competitive problem. In addition, the new text will facilitate proximity to citizens and bureaucratic obstacles will be reduced to start cybersecurity activities or ‘crowdfunding’, among others. We can be important in the models of the new economy. For example, in the field of ‘e-Sports’ (electronic sports competitions), we are already the fifth country in the world in the ranking of the sector. Athletes are attracted by the altitude, the training routes, the facilities… Andorra is the best country to live, work and invest in 2022, according to Los Angeles Magazine. With the digitization process of the economy, Andorra has shown that it is possible to live connected and face-to-face is no longer so important in the business world. There are also passive residents, that is, those who seek to retire in a haven of peace.
It has recently become known that the investigation by the Andorran Justice of the former Prime Minister Mariano Rajoy and his former Ministers of Economy and Interior, Cristóbal Montoro and Jorge Fernández Díaz, reflects pressure from the police officers of the time on the Banca Privada d’Andorra (BPA) to obtain data on the alleged financial irregularities of the Pujol clan. How does the Minister of Economy see it?
I am not going to comment on that subject. More topics…
Andorra does not have an airport or train connection, what to do?
There are studies carried out such as those promoted by the Chamber of Commerce to build an airport in Andorra. There are technical security problems to solve because it is very close to the ski resorts. This is a first phase of analysis. What is under way is an international heliport project to connect cities like Barcelona. We believe that it will have a sufficient market beyond bailouts and health services.
Air Nostrum, with which he met during his visit to Valencia, already operates direct flights from Spanish cities with the Andorra-La Seu d’Urgell flight. There will be more?
Beyond the route with Madrid, whose occupancy is already higher than expected, and other public tenders that we plan to publish at the end of the year, we are negotiating with other cities in Spain such as Mallorca and Malaga, where we exchange tourists in summer and winter. And outside of Spain, with Paris and Lisbon. We have had a meeting with Air Nostrum leaders to study possible new routes. We will see.
What is the reason for the spectacular increase in forecasts of foreign investment in Andorra in the tourism sector?
Well, in part because many people have opted for local tourism in the face of high energy costs. Commuting is expensive and long-haul travel this summer will incur higher spending. Andorra is in a good situation for Spanish and French. We have presented a candidacy as a Biosphere Reserve to UNESCO. Investment is focused on services. In this sense, Andorra attracts content creators in the field of social networks. We have not done any campaign for the ‘youtubers’ to come. There are also consultancies. Many are digital natives. In addition, multinationals such as Grifols have opted to invest in the field of biotechnology in Andorra.
The Foreign Investment Law that the Government of Andorra will approve this year, what changes does it introduce?
Fifteen days ago we brought to Parliament the modification of the Foreign Investment Law, which has already completed a ten-year cycle. There will be post-investment controls for countries with which we have double taxation agreements. Any investor who wants to invest will be much faster because there will be no prior control, but later. It will allow us to be more competitive. At the end of the year, the text will be approved.
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The ‘Pandora Papers’ revealed an opaque canal between Venezuela and Andorra built in Panama. The Alcogal law firm created and legalized at least 51 of the 78 companies that served as a vehicle for the laundering of up to 2,000 million dollars originating in the Private Bank of Andorra.
It is not an issue that worries us too much. If news comes out, then we’ll see. They affect people in the individual and private sphere. That does not affect the credibility of a country. ‘Pandora’ is a very long list and it is magnified too much. A label still accompanies us, an image of the country that we are explaining through the homologation process or the fight against money laundering. And all this in a very short period of time. We are more compliant than some EU countries. We have corrected past episodes.