Cabo Verde’s public debt as a percentage of gross domestic product (GDP) declined in 2018 for the second consecutive year but “still remains high,” the members of the Budget Support Group, whose first mission in 2019 took place 17-21 June, wrote in a statement.
“After a rapid increase in previous years, public debt declined from 127.8% of GDP in 2016 to 122.8% of GDP in 2018,” a result that was driven mainly by accelerating growth, favourable exchange rate changes and fiscal restraint. G
AO members said that Cabo Verde will have to increase revenues and curb expenditure growth while preserving spending in critical social sectors to further reduce debt and high indebtedness risk. Members of the GAO (African Development Bank, European Union, Luxembourg, Portugal and the World Bank) finance the State Budget through donations and loans to support government priorities in national development policy.
The statement added that the pace of economic activity accelerated in 2018, with real GDP growth expected to be 5.5%, and the economy is expected to grow in the range of 5% to 6% by 2019, based on ongoing structural reforms. Ongoing consolidation efforts to reduce fiscal imbalances are having positive effects, with fiscal revenues increasing by 4.5 percentage points since 2014, reaching 22.1% of GDP in 2018 and total expenditure remained contained, increasing only 0, 3 percentage points between 2014 and 2018.
“The increase in tax revenues and the containment of public expenditure also led to a reduction of the budget deficit from 7.6% of GDP in 2014 to 2.7% in 2018, with overall financing needs, including loans to public enterprises and recapitalisation, also decreasing by about three-fold in the period under review,” it said.