World Bank grants Cape Verde US$10 million loan

9 June 2006

Washington, USA, 09 June – The World Bank has granted Cape Verde a loan of US$10 million to support the new phase of the country’s Growth and Poverty Reduction Strategy Paper (GPRSP), officials said.

The approval, announced by the executive board of the World Bank, comes just a few days after the launch of the archipelago’s program of transition to the status of Medium Development Country (MDC), expected in 2008, and the creation of a support group for teh transition phase.

According to a statement from the World Bank the funding now offered, through the International Development Association (IDA), “will further narrow the gap between the cost of implementing key elements of the GPRSP and resources available from Government’s own domestic revenues and other donor support.”

“The credit will support the policies and reforms set forth in the Government’s GPRSP in order to achieve sustained improvements in the well-being of the population,” and aims to, develop an improved form of external assistance that reduces distortions and transaction costs associated with project-based aid,” the World Bank statement said.

As well as this, it added, the credit provides, “predictable support to the budget cycle helping to consolidate resource transfer and harmonize donor support.”

The credit is provided with a commitment fee of 0.35 percent, a service charge of 0.75 percent over a 40 year period of maturity which includes a 10-year grace period.

In the area of good governance, the new strategy “will ensure budget support to priority sectors, helping the Government to manage contingent liabilities and improve budget planning,” as well as “codify procurement, strengthen the decentralization process and strengthen municipalities, modernize public sector management and facilitate access to justice for underprivileged citizens,” the Bank said.

The working group to support transition, which was set up last week, includes cape Verde’s main partners: Portugal, the USA, Spain, Franca, the Netherlands, Austria and the People’s Republic of China, as well as the World Bank, the African Development Bank, the European Union and the country’s United Nations system.

At the time the World Bank and the African Development Bank committed themselves to providing cape Verde with credit after the country’s transition to a Medium Development Country.

Growth of Cape Verde’s economy is expected to slowdown to between 5.0 and 5.5 percent, against 6.4 percent in 2005, in a year affected by inflation and the state budget deficit, according to the latest report from the Bank of Cape Verde. (macauhub)