Statement by an IMF Staff Mission at the Conclusion of a Visit to Cape Verde

Press Release No. 08/56
March 18, 2008

An International Monetary Fund (IMF) mission, led by Mr. Lamin Leigh, visited Praia from March 5-19, 2008. The purpose of the visit was to conduct the 2008 Article IV Consultation and to discuss the fourth review of economic developments under the Policy Support Instrument (PSI). The Cape Verde government's macroeconomic and structural program under the country's three-year PSI was approved by the IMF Executive Board in July 2006 and the third review of the PSI was completed in December 2007.

At the conclusion of the visit, the mission issued the following statement:

"The mission held extensive and productive discussions with government officials, representatives of civil society, donors, and the business community. Cape Verde's strong macroeconomic performance in recent years pays tribute to its homegrown economic reform program. Building on this, the 2008 Article IV discussions focused on how best Cape Verde can consolidate the gains made over the years on macroeconomic stability and pursue structural reforms that would enhance medium-term growth prospects, reduce poverty, and increase the economy's resilience to shocks.

"The performance of the Cape Verde economy was satisfactory during the second half of 2007 thanks to the continued implementation of prudent economic policies. GDP growth was strong, and inflation was generally moderate although it was slightly above the historical average because of poor rainfall, which temporarily drove up domestically produced food prices. Consistent with PSI program goals, public debt is coming down as a share of GDP thanks to strong revenue performance, improvements in tax administration and continued expenditure restraint. International reserves are building up rapidly. Thus, the exchange rate peg continues to be supported by domestic policies and serves Cape Verde well as an anchor for financial stability. Steady progress is also being made in the implementation of structural reforms.

"The IMF will continue its close policy dialogue with the Cape Verde government and the mission would like to thank the authorities for their excellent cooperation."



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