Pierre-André Chiappori, Government Councillor and Minister for Finance and the Economy of the Principality of Monaco, spoke on 22 October at a lunchtime conference organised by the AMAF. He addressed the challenges posed by the end of the offshore extension programme, relations with the European Union and the FATF action plan. At the same time, he highlighted development opportunities for Monaco in a context of international instability.
In his speech, Pierre-André Chiappori presented an overview of the Principality's economic situation, highlighting the country's recent highly satisfactory economic performance. Over the last eight years, Monaco has recorded growth rates higher than those of the euro zone. However, he stressed that these impressive figures were partly the result of exceptional circumstances, and that it was prudent to expect a slowdown in the years ahead. ‘The level of growth we have seen in recent years cannot be reproduced in the near future’, he said, reminding his audience that his role is to remain vigilant and to anticipate the actions to be taken in the event of a crisis. Monaco's current budgetary situation is ‘very healthy’. The country has a significant budget surplus and a substantial reserve fund, the liquid part of which corresponds to approximately one year's budget. This puts the Principality in an enviable position, especially when compared with other European countries. ‘We have no debt, and our reserve fund is a guarantee of stability in an ever-changing world ’, he said. However, he drew the attention of those present to the imminent end of the offshore extension programme, which has generated significant revenue for Monaco. ‘With the end of this programme, we will lose a source of revenue of 200 million euros per year, which represents around 10% of the State budget’.
The Minister also highlighted how signs of a global economic slowdown could affect Monaco. Although the Principality has solid fundamentals, the turnover generated by companies operating in the real estate sector, and that of their subcontractors, could be impacted in the short term. Pierre-André Chiappori reassured his audience that ‘this is part of the normal fluctuations in a market economy’, but stressed the need to adopt a cautious approach and anticipate the future.
Another major point in his speech concerned the likelihood of international interest rates falling in the near future, a trend that could have limited effects on the Monegasque economy. ‘Unlike other economies, the fall in rates would probably have only a minor impact on Monaco, particularly in the property sector where demand is less influenced by interest rates ,’ he said. Nonetheless, the cut could weigh on bank profits, and consequently on the tax revenues generated by banks, which accounted for more than half of the ISB in 2023.
The Minister also addressed recent regulatory developments in the Moneyval context, a crucial issue for Monaco's attractiveness. Compliance requirements, particularly with regard to the fight against money laundering, have been stepped up at all levels. Compliance is the order of the day and should not be a brake on business development. ‘The excessive caution shown by banks, while understandable, has a significant economic cost, particularly for companies looking to set up in Monaco", he said. He stressed the importance of opening new accounts. ‘ This issue is regularly discussed within the government and with the National Council". He called for close collaboration with the banking sector to find solutions that would preserve both security and economic activity.
With regard to relations with the European Union, Pierre-André Chiappori was keen to dispel fears. Monaco has not abandoned negotiations with the EU, but has paused. ‘We are continuing to discuss important issues with our European counterparts on a daily basis,’ he said. Negotiations had been made more complex by the United Kingdom's exit from the EU, an event that curbed the Union's desire to conclude agreements with small states. In the end, Pierre-André Chiappori was confident that the discussions would continue.
Finally, the challenges of complying with international standards in the fight against money laundering and tax fraud were discussed. The Principality has made significant progress by adopting several major legislative reforms and strengthening its supervisory institutions. "We still have a long way to go, but we have already made considerable progress. Our objective is to be off the grey list by June 2026", declared the Minister, recalling the actions already taken: the new anti-money laundering laws, the reorganisation of the Control Authority, with the creation of AMSF in place of SICCFIN. He emphasised the favourable timing and the importance of maintaining these efforts over the long term: ‘The world of solid and demanding regulations is here to stay, and we will have to constantly adapt to regulatory changes’.
Finally, Pierre-André Chiappori highlighted the opportunities offered by international tax reforms, particularly those underway in the UK. With changes to the tax regime for non-domiciled residents, our country could become an attractive destination for some of them. ‘Monaco has undeniable assets, and if we manage to attract even 5% of the investors concerned, this would represent a considerable contribution to our economy,’ he explained. ‘However, to capture these new opportunities, it is imperative to facilitate administrative procedures and access to banking services.’
In conclusion, Pierre-André Chiappori reiterated how, despite the challenges ahead, Monaco is well positioned to maintain its financial stability and take advantage of international developments. He invited the various economic players to work closely with the Government to promote the Principality's economic growth in an ever-changing global environment.
