Cape Verde expects budget deficit of 5.1 percent in 2006

16 June 2006

Praia, Cape Verde, 16 June – Cape Verde’s state budget for 2006, the parliamentary discussion of which began this week, outlines a budget deficit of 5.1 percent of gross domestic product (GDP), the Minister of Finance said.

The budget deficit programmed in the budget totals around US$58.2 million, said Minister João Serra, and would be 66 percent financed by outside sources and the remainder internally.

The budget has significant help from the World Bank (US$10.4 million), the Netherlands (US$9.4 million) and the European Union (around US$5 million).

The minister also highlighted the difficulties faced when drawing up the budget, namely oil price hikes, the “increase in interest rates and the worsening of financing conditions” and “increasing global imbalances of external current accounts and exchange rates.”

The budget outlines the attribution of subsidies to oil companies and state power company Electra to a total of US$27.4 million and an investment of 11.4 million euros on a job creation program in rural areas.

Total investment is of US$184.8 million, or a third more than in 2005.

The budget also outlines a 17 percent increase in revenues, thanks to a 13 percent increase in tax revenues and a 49 percent increase from other sources.

The basis for the budget is GDP growth of 6.5 percent in 2006, which is higher than the 5.5 percent growth expected by the archipelago’s central bank. (macauhub)