IMF Board Completes First Review Under Extended Credit Facility for Cabo Verde
January 17, 2023
- The IMF Executive Committee completed the first review under the 36-month Extended Credit Facility with Cabo Verde, giving the country access to SDR 11.26 million (approx. and US$15.19 million).
- The strength and scope of the economic recovery of Cabo Verde continued in 2022. The economy has now recorded five consecutive quarters of positive growth, supported by the recovery of the tourism sector. This helped improve the financial situation and put the debt-to-GDP ratio on a downward path. International reserves are adequate, and the financial sector remains stable.
- It is important to continue efforts to preserve fiscal and credit stability and accelerate economic reforms while helping the vulnerable and supporting economic recovery.
The Board of Directors of the International Monetary Fund (IMF) completed the first evaluation of the performance of Cabo Verde under the
36-month Extended Credit Facility (ECF) which was approved on June 15, 2022. After the review, the authorities can draw the equivalent of SDR 11.26 million (47.50 percent of the quota or US$ 15.19 million), and get the amount of money spent. yes
SDR 22.52 million (95 percent of the quota or US$ 30.18 million). The Board’s decision was made on a time-based basis.
The economic recovery is well under way, thanks to the rapid recovery of the tourism sector. Real GDP growth is currently estimated at 10.5 percent in 2022 and is projected to moderate to 4.4 percent in 2023. Inflation remains high (8.5 percent in year on year at the end of October 2022), with rising food and energy prices in the world increasing pressure. on the price of food and fuel in Cabo Verde. In response, the administration increased support to the vulnerable by targeting aid to basic food and electricity, which is expected to continue through the first half of 2023. It is projected to fall in 2023 but remains above its five-year history. average.
The growth of the economy also contributed to the reduction of the debt to GDP and the decision of the administration to preserve the expected income over 2022 to contribute to the expansion of the financial base with the reduction of debt. The debt burden is estimated to have fallen to 128.1 percent of GDP by the end of 2022. The fiscal plan 2023 will provide a slight improvement in the fiscal balance first quarter. compared to the program and includes careful measures to protect against loss of income. In the long run, financial consolidation will help by maintaining a consistent income and expenditure pattern; the current account balance is expected to turn into surplus in 2026.
Program performance was strong. All June 2022 Performance Indicators (PCs) and Target Indicators (ITs) were achieved. Standard Scores (SBs) were also satisfied for the end of June 2022 and the end of September 2022. All the results of September 2022 were accomplished.
The economic outlook is good but there are implications, including softening economic expectations in key tourism markets, continued inflation. economy and its impact on the most vulnerable, resurgence of COVID-19 and lockdowns, and financial conditions from SOEs. Climate-related crises continue to have both short-term and long-term effects.
The authorities are focusing on saving money and debt, providing support to vulnerable people, and supporting economic recovery. In the long term, fiscal consolidation will be supported by revenue generation especially in the digitization of services, and changes to reduce the fiscal impact of SOEs. . Fiscal and monetary policy is still focused on protecting the currency and safeguarding the stability of the financial sector. In addition, the administration hopes to accelerate the implementation of climate change and climate change.
IMF Communications Department
BASIS: Nico Mombrial
Telephone: +1 202 623-7100email: MEDIA@IMF.org