Africa-Press – Cape verde. The Prime Minister, Ulisses Correia e Silva, said today, in Parliament, that the State absorbed, directly and indirectly, 80% of the external shock caused by inflation, aggravated by the devaluation of the euro against the dollar that occurred in 2022.
José Ulisses Correia e Silva was speaking within the scope of the debate on Inflation and Household Income, in which he referred that the financial, fiscal and regulatory measures implemented to mitigate the effects of imported inflation, allowed only 20% of the shock to reach consumers.
“Due to the measures taken by the Government, only 20% of this shock was transmitted to consumers. The State absorbed, directly and indirectly, 80% of the shock”, stressed the official, who recalls that, since 2017, Cape Verde has been exposed to climatic, economic and social shocks with a strong impact on household income.
Economic contraction with pandemic
On the other hand, he stressed that the covid-19 pandemic caused a high economic contraction, and that the Government, through measures to protect employment and companies, tackled the scope of the Social Inclusion Income through the Emergency Social Inclusion Income and Social Solidarity Income, aimed at operators in the informal sector and in the REMPE regime.
“We have implemented financial, fiscal and regulatory measures to mitigate the effects of imported inflation, which has strongly affected the prices of fuel and electricity and cereals,” he underlined, indicating that inflation caused, in Cape Verde, a worsening of the cost of energy products by PTE 2.1 billion.
If the measures were not implemented, defends Correia e Silva, the prices of butane gas, gasoline, diesel and electricity would have had increases much higher than those registered.
Contribution of agriculture to GDP decreased
Severe droughts, according to the official, caused a drop in agricultural production, translated into the weight of agriculture in the Gross Domestic Product (GDP), which went from 8.6% in 2016 to 4.9% in 2021.
In this context, he recalls that the Government has implemented programs to mitigate the effects of drought and bad agricultural years for the benefit of farmers, animal breeders and families in rural areas.
“Brutal” Increases
Basic food products, he recalled, were also strongly affected by imported inflation, particularly corn, wheat and cooking oils.
“If the measures had not been taken, the prices of corn and wheat flour in 2022 would have increased by 19% and 28% respectively”, he indicated, recalling that recently the Government agreed with MOAVE a reduction of 14.4% of the final price of wheat flour for bakeries.
In a “difficult” context of combined crises caused by severe droughts, the pandemic and the war in Ukraine, Ulisses Correia e Silva says that the Government has taken measures with impacts on workers’ wages and pensions, such as, for example, food for the minimum wage, now set at 14,000 escudos.
With an inflation forecast for 2023 at 3.7%, he says that the context is still uncertain, but that the Government will continue to monitor the evolution of international markets and take additional protective measures.
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