Cape Verde must find new sources of funding, IMF warns

26 January 2007

Washington, United States, 26 Jan – Cape Verde must find new forms of foreign funding and strengthen its financial management capacities in order to prepare for the country’s change of status to a developing nation, expected next year, the International Monetary Fund (IMF) has warned.

In a statement issued Wednesday evening, the IMF said that Cape Verde’s new status attributed by the United Nations (UN) could make it “increasingly difficult” to find preferential financing.

Thus, “new options for outside financing may have to be developed,” said the deputy director of the IMF, Murilo Portugal, after the first review of the Policy Support Instrument (PSI) for the Cape Verdean archipelago.

The current economic growth of the archipelago is considered “financially robust,” by the IMF, which said that it was being boosted by “significant increases in Tourism and Foreign Direct Investment.”

“Cape Verde’s economic performance remains strong, supported by prudent macroeconomic policies and by structural reforms that are being implemented,” said Portugal.

Inflation, “should remain low in the medium term,” and “fiscal and monetary policies are in line to substantially reduce domestic debt and drive foreign reserves,” he added.

Cape Verde in 2008 is due to become part of the group of developing countries, leaving behind its UN status of Less Developed Country (LDC).

The archipelago will be the first Portuguese-speaking African nation to improve its status, which is a reflection of the country’s socio-economic development. (macauhub)