Cape Verde: IMF maintains positive evaluation

26 December 2007

Washington, United States, 26 Dec – The International Monetary Fund said on Friday that investments being made in Cape Verde are having a direct impact to reduce unemployment and poverty.

IMF deputy-administrative director Murilo Portugal said in a statement that “growth in the archipelago is being sustained by a significant rise in foreign direct investment, particularly in the tourism sector.”

The IMF report notes there has been a moderate increase in Cape Verde’s inflation in the past six months, but says this was due to a poor agricultural year that has resulted in temporary food price hikes.

Fiscal consolidation and accumulation of currency reserves have exceeded expectations, adds the IMF, but regulation of Cape Verde’s financial sector needs to be tightened.

Despite progress in management of state sector finances, there are still problems in communication of figures that affects better awareness of the level of domestic debt, although the IMF says it has decided to maintain its positive evaluation for Cape Verde.

However, the IMF points to reform of Cape Verde’s energy sector as being crucial to spur economic growth, reduce poverty and limit fiscal risks.

The IMF’s review of Cape Verde is the third under the world financial body’s Political Support Instrument (PSI) for the islands, aimed to improve the country’s sustainability of development and growth through an appropriate macroeconomic policy. (macauhub)