Africa-Press – Cape verde. The International Monetary Fund (IMF) announced this Thursday the approval of the third evaluation of the assistance plan for Cape Verde, allowing the disbursement of a tranche of approximately 6.3 million dollars (5.92 million euros).
IMF approves disbursement and new financing line for Cape Verde
The transfer under the Extended Credit Line (ECF) signed in June 2022 should be considered by the executive board “in the coming weeks”, said Justin Tyson, team leader, at a press conference in Praia.
The ECF program, over 36 months, foresees a total of 60 million dollars (55 million euros).
“Despite the challenging global scenario, Cape Verde’s economy recovered robustly in 2021 and 2022, it is expected to grow 4.5% in 2023 and short-term projections are favorable”, he added, improving the latest by 0.1 percentage points projections, despite several uncertainties in the global panorama.
On the vulnerability side, the IMF stated that, despite the “decreasing trend, the ratio of public debt to Gross Domestic Product (GDP) is still at pre-pandemic levels”.
In the latest projections, the fund predicts that the ratio will fall from 127.3% in 2022 to 113.1% this year and to 109.7% in 2024.
“In the medium term, efforts to increase domestic revenue and improve the efficiency of public investment will be important”, added the IMF team leader, noting that, for now, “the budgetary targets under the program have been achieved and the authorities are on track to exceed the targets set for the end of 2023 in terms of tax revenues and primary balance”.
Regarding possible risks to Cape Verde’s economy, the IMF states, as in previous assessments, that these could arise from weaker demand in large tourist markets and external price shocks.
There are also budgetary risks if reforms in state-owned companies and budgetary consolidation do not materialize.
The IMF also points to the effects of climate change as “a serious risk in the medium term”, “as evidenced by the drought of recent years”, said Justin Tyson.
To invest in this area, Cape Verde today received the “green light” to access the IMF’s Resilience and Sustainability Fund (RSF), which should add 31.69 million dollars (29.81 million euros) to support concession granted by the institution to the country. The Week with Lusa
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