Cabo Verde has high level of state debt

14 November 2014

The Budget Support Group (GAO) has criticised the increase in state debt in Cabo Verde (Cape Verde), which will mean that economic recovery will not occur in the archipelago this year, the representative of the GAO, Luis Maia, said in Praia.

Maia also said that Cabo Verde’s state debt “although high, is sustainable,” and GAO members expect it to remain at 107.3 percent of GDP at the end of the year.

The GAO, which will provide support to the 2015 Cabo Verde State Budget through soft loans in the total f 38 million euros, comprises the African Development Bank, World Bank, European Union, Portugal, Spain and Luxembourg.

The group advised the government of Cabo Verde to find models that are less dependent on public funding and more focused on making use of new financial instruments in order to offset the decline in private sector loans, since the soft loans are coming to an end and are a challenge for Cabo Verde due to its transition to a Middle Income Country.

Cited by Portuguese news agency Lusa, Maia warned that this would lead Cabo Verde receiving fewer donations, and having to resort to capital markets in order to avoid a drop in private sector credit.

Cabo Verde’s Finance Minister, Cristina Duarte, said later that the country had managed to prove to the Budget Support Group that it was complying with its budget consolidation agreement.

Duarte said the Budget Support Group acknowledged the work of the Government to keep state debt sustainable, despite the level ​​it has already reached.

“We have projected debt for 2014 amounting to 107.3 percent of GDP, rising to 112 percent in 2015,” the minister said. (macauhub/CV)