IMF advises Cabo Verde to reduce public debt

22 September 2016

The government of Cabo Verde (Cape Verde) should promote fiscal consolidation, reduce public debt and make the economy grow, said on Wednesday in Praia the head of the mission of the International Monetary Fund (IMF) that visited the archipelago.

Ulrich Jacoby noted as negative factors for the economic development of Cabo Verde the occurrence of five years of weak economic growth, the archipelago’s dependence on the euro and the economic crisis affecting the Eurozone.

Despite the positive outlook, the IMF team pointed out that “growing debt and weak economic growth associated with the appreciation of the dollar have increased the debt risk” of Cabo Verde, according to the Expresso das Ilhas newspaper.

However, Finance Minister Olavo Correia, said the Cape Verdean public debt, the highest in sub-Saharan Africa, with 126% of gross domestic product, is “exclusively subsidised” and therefore “presents no risk.”

Some ongoing reforms in Cabo Verde were analysed by the IMF staff, particularly those related to the private business sector, which nevertheless drew attention to the worrying signs “regarding Transportes Aéreos de Cabo Verde and Imobiliária, Fundiária e Habitat (IFH), companies that are sucking up resources that could be used in another way.”

The minister agreed with the assessment made ​​by the IMF staff of TACV and IFH, admitting that they both represent a high fiscal risk, but noted that the government is preparing the privatisation of shipyard company Cabnave, power company Electra and airport manager ASA and to hand over ports to private managers. (macauhub/CV)