Washington, July 10, 2025 (Lusa) - The International Monetary Fund (IMF) has approved an increase and extension of financing for assistance programmes to Cabo Verde for 15 months, disbursing US$6 million immediately and praising the country's compliance with its targets.
"The IMF Executive Board has concluded the sixth review under the Extended Credit Facility (ECF) arrangement and approved a 15-month extension and a 30% increase in the quota under the ECF arrangement," according to a statement released on Wednesday night.
The IMF management also announced that it had approved a 15-month extension of the financing agreement under the Resilience and Sustainability Facility (RSF), aimed at supporting climate investments, and rescheduling of the availability dates under this programme.
With the approval of the sixth review of the ECF, which began in June 2022, Cabo Verde will immediately receive more than US$16 million, around €13.6 million, and will also see the total amount of this financing increased by 30% to around €60 million.
The financial adjustment programme "aims to strengthen public finances, ensure debt sustainability, minimise the fiscal risks of public enterprises, modernise monetary policy and increase the economic growth potential" of Cabo Verde, while the programme under the RSF "aims to support the government's climate reforms and catalyse private climate finance".
In the document reporting these changes to the IMF's involvement in Cabo Verde, the Fund states that "all quantitative and continuous performance criteria, as well as the structural benchmarks set out in the ECF for end-December 2024 have been met", but adds that "the indicative target for social spending at the end of December 2024 has not been met, albeit by a small margin", in a context where "the implementation of reform measures under the Resilience and Sustainability Facility has been slower than expected, reflecting the complexity and interlinkages of the reforms and capacity constraints" in the country.
Nevertheless, the Fund commends the Portuguese-speaking African archipelago's ability to recover from the recession caused by the pandemic and to withstand external shocks driven by the global economic environment.
"The programme's performance under the ECF has been strong; all performance criteria have been met; all structural reforms supported by the programme have also been implemented," commented the Fund's deputy executive director, Bo Li, quoted in the statement, which forecasts solid growth of 5.2% for this year.
"Cabo Verde's medium-term economic outlook remains favourable; growth is expected to gradually converge to 4.8% by 2028, with inflation remaining around 2%, in line with inflation in the euro area," says the IMF, forecasting "a continued reduction in the public debt-to-GDP ratio to 104.9% by the end of 2025, below pre-pandemic levels".
Even so, the Fund warns that these forecasts face "risks stemming from global uncertainty, uncertainties in global trade structures and external financing challenges, while increased climate and infrastructure spending, as well as slowing tourism growth, could further contribute to imbalances" in the country's economy.
Delays in public enterprise reforms could affect fiscal stability, the Fund also warns, in a scenario where high public debt "is a source of vulnerability," so concessional financing (below market rates) to limit debt servicing costs remains important.
They conclude that "the authorities should continue to implement their ambitious structural reform agenda", attracting more private climate investment, and that "more resources need to be invested in planning and management".
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