Cabo Verde’s public debt drops for the first time in 10 years

29 January 2018

Cabo Verde’s (Cape Verde’s) public debt is expected to have fallen to 126.5% of gross domestic product (GDP) in 2017 – the first drop in 10 years – according to the International Monetary Fund (IMF), which recently completed the 2018 consultation mission under Article IV.

The delegation that travelled to Cabo Verde from 15 to 26 January said in a statement issued on Friday in Washington that the Cape Verdean budget deficit in 2017 has fallen to 3.0% of GDP, and that the 3.1% deficit included in the 2018 State Budget is “viable,” “although it requires effort to improve management of fiscal and customs administration and ensure that the disposal of public assets that was delayed in the last year comes to fruition in 2018. ”

“Economic recovery is gaining momentum, reflecting a more favourable external environment and the positive results of ongoing economic reforms. In 2017, the economy is estimated to have grown 4.0%, bolstered by a two-digit increase in tourist arrivals, recovery of credit to the private sector, and greater consumer and business confidence, which are expected to lead to growth accelerating to 4.3% by 2018,” the report said.

The mission led by Max Alier said that in the medium term real GDP growth should stabilise at around 4.0%, “supported by increased investor confidence following the implementation of the government’s proposed reform programme.”

The IMF has recommended that the government increase its efforts to consolidate the budget and accelerate the restructuring of the State Enterprise Sector so that public enterprises no longer need of state aid, in particular, air transport (TACV), housing (IFH) and energy companies (Electra). “This would allow greater growth in lending to the private sector, accelerating medium-term growth, placing debt on a downward trajectory and reducing the risk of external debt pressure,” the IMF said. (macauhub)