Praia, Feb. 27, 2026 (Lusa) - The International Monetary Fund (IMF) has warned of the risks that declining fertility and emigration in Cabo Verde pose to the sustainability of the country's defined benefit social security pensions, making a series of recommendations.
"Cabo Verde's population decline over the past decade and a half — driven by falling fertility and emigration — poses a significant challenge to the sustainability of the defined benefit pension scheme" of the National Social Security Institute (INPS), according to an IMF report on the country.
The risks are exacerbated by low rates of return on most INPS assets, the expansion of benefits and rapid growth in expenditure, the fund notes.
The IMF considers that "the solvency of the INPS defined benefit social security system is more precarious than previously assessed", as the institute's latest data are based on overly optimistic population growth projections.
The population of the archipelago fell to around 483,000 inhabitants, announced the National Statistics Institute (INE) in August 2021, down 1.6% from the 2010 census.
Social security figures should be updated "with realistic population projections that incorporate not only the final results of the 2021 Census, but also the latest data on emigration," which indicate a growing attraction to foreign countries.
The IMF recommends that the INPS implement "cost control", avoiding "the introduction of new benefits" beyond its mandated scope and, on the other hand, that it "gradually" transfer its low-yield bank deposit assets to better-yielding instruments abroad.
"This change should be made gradually, in close coordination with the Bank of Cabo Verde (BCV) to avoid a liquidity crisis" and as part of a broader plan, accompanied by "external financial advisers", such as those who have started to advise the central bank on reserve management, in partnership with the World Bank.
If these measures prove insufficient, "a parametric reform should be considered that gradually increases the retirement age, in line with the increase in life expectancy," it added.
The annual growth rate of INPS expenditure of 12% between 2023 and 2024 means that, "if left unchecked, it will double in nominal terms in less than six years," the fund also pointed out, recommending cost control.
In any scenario, the IMF argues that the government should avoid "increasing contribution rates for employers or employees": on the one hand, the current contribution rate "is already high (24.5% in total)", and on the other, "increasing it would undermine job creation and the regularisation" of the economy.
In another annex to the report, the IMF considers that "Cabo Verde's social protection system is solid and continues to evolve, but achieving the goal of eliminating extreme poverty by 2026 [as promised by the government] requires overcoming fragmentation, improving adequacy and increasing resilience to shocks."
The document suggests greater integration of the register of vulnerable families (Cadastro Social Único) with various public services (health, education, finance, employment, among others), ensuring sustainable financing mechanisms and expanding productive inclusion reforms.
"Although challenges remain, the country's strategies and strong partnerships suggest a path to a more inclusive, equitable, and resilient future," it concludes.
In 2024, approximately 67% of the Cape Verdean population benefited from some form of social protection, and total social spending in Cabo Verde currently represents about 13% of GDP, according to data in the document.
The IMF's analysis includes a report published today, following a mission to the country three months ago, reiterating the overall positive assessment of Cabo Verde's performance released at the time - despite the risks of external exposure (heavy dependence on foreign tourism), loss-making state-owned enterprises and the 2026 election cycle.
"Losses persist in state-owned enterprises, especially the airline (TACV), putting pressure on finances, increasing non-productive loans and diverting resources from other areas (e.g., inter-island connectivity). In this context, the timely publication of audited financial statements of state-owned enterprises is essential," it recommended.
For this year, the fund forecasts 5.1% growth (real GDP), 2% inflation, a budget surplus (primary balance) of 1.3% of GDP, public debt falling to 97% of GDP and seven months of import coverage for Cabo Verde.
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