Cabo Verde’s economy benefits from the performance of the Euro Zone in 2017

25 July 2018

The performance of the Cape Verdean economy benefited from the external environment in 2017, similarly to the previous two years, with the country’s main economic partner, the Euro Zone, posting the highest economic growth since 2007, the Central Bank of Cabo Verde said.

The bank added in the Financial Stability Report, published on Monday that national economic activity continued to recover in 2017, noting the growth of 3.9%, the highest since 2011, according to estimates from the National Statistics Institute.

“This improvement in the context and conditions is likely to favour the financial situation of the non-financial sector, which has a positive effect on reducing the credit risk of companies and individuals.”

The Cape Verdean banking sector showed signs of improvement in some areas, such as a 5.7% increase in deposits, a 6.1% increase in credit, at a faster rate than in 2016, and the level of solvency, with a corresponding ratio of 17.3%, an increase of 1.8 percentage points year-on-year.

The document goes on to say that, considering the country’s level of development, the specificity of the domestic market and the characteristics of the financial system, and banking in particular, Cabo Verde still has a number of vulnerabilities that may affect the profitability of institutions and lead to risks to financial stability.

These risks include high levels of non-performing loans, the high levels of indebtedness of non-financial corporations, public companies and individuals, the concentration of credit in a limited number of counterparties and the considerable size of assets received. (macauhub)