## IMF Staff Completes 2019 Article IV Mission to Cabo Verde _IMF News, March 26, 2019_ ## Source details **Canonical URL:** [IMF Staff Completes 2019 Article IV Mission to Cabo Verde](https://www.imf.org/en/news/articles/2019/03/26/pr1997-cabo-verde-imf-staff-completes-2019-article-iv-mission) ## Other formats - [Markdown version](/en/news/articles/2019/03/26/pr1997-cabo-verde-imf-staff-completes-2019-article-iv-mission/index.md) - [Structured JSON version](/en/news/articles/2019/03/26/pr1997-cabo-verde-imf-staff-completes-2019-article-iv-mission/index.json) - [Bundle manifest](/en/news/articles/2019/03/26/pr1997-cabo-verde-imf-staff-completes-2019-article-iv-mission/bundle-manifest.json) ## Bibliographic details - Published: March 26, 2019 --- ### Key findings: growth and outlook - Real gross domestic product (GDP) expanded by 4 percent in 2017, and by an estimated 4.7 percent in 2018. - For 2019 and the medium term, real GDP growth is forecasted in the range of 4.8 to 5 percent. - Enhancing growth prospects to reach 5 percent will require sustained implementation of wide-reaching reforms to address long-standing impediments to growth, improve the business environment and attract foreign direct investment. - The recent privatization of the national airline company (TACV) is described as a welcome development. ### External position and reserves - The current account deficit narrowed to 4.5 percent of GDP in 2018 (6.6 percent of GDP in 2017) owing to strong export performance, increased remittances, and deceleration in imports demand. - An agreement between Cabo Verde and the European Union for fish exports is cited as a welcome development. - Gross international reserves increased and reached 5.1 months of prospective imports at end-December 2018. ### Fiscal developments and public debt - The overall deficit declined from 3 percent of GDP in 2017 to an estimated 2.8 percent of GDP in 2018, mostly because of strong revenue performance and revenue administration measures. - Financing needs rose from 3.4 percent of GDP to 3.9 percent of GDP as budget support to financially-strained State-owned enterprises (SOEs) increased. - For 2019, the budgeted deficit of 3 percent of GDP is stated as achievable through effective implementation of revenue measures contemplated in the budget and expenditure restraint. - The stock of public debt is estimated at 125 percent of GDP at end-December 2018, down from 127 percent in 2017. ### Financial sector and banking supervision - Financial stability indicators improved in 2018, and banks’ profitability increased. - Non-performing loans (NPLs) declined in 2018 but remained high at 12.2 percent of total loans at end-December 2018. - Resolution of legacy loans linked to the 2008 financial crisis is highlighted as an important priority. - The central bank (BCV) is advised to continue strengthening banking sector supervision. ### Monetary policy - The monetary policy stance is described as appropriate given low inflationary pressures and the level of international reserves, but continued caution is recommended. - The BCV should continue monitoring developments in the Euro area closely and stand ready to change the monetary policy stance as needed. - The BCV should continue to maintain a high level of reserves to protect the peg and increase the economy’s resilience to adverse shocks. - Further actions are needed to strengthen the monetary policy transmission mechanism to enhance the efficiency of monetary policy. ### State-owned enterprises (SOEs) and structural reforms - Continued progress in SOE reforms is deemed critical to reduce fiscal risks, support medium-term debt sustainability and economic growth. - Priorities include completing the SOE reform agenda to eliminate the drain on budgetary resources, put public debt on a sustained downward trend, and reduce the risk of debt distress over the medium term. - Other priority structural reforms identified: improving the quality of education, supporting vocational training, increasing financial literacy for micro as well as small-and-medium sized enterprises, and measures to improve financial inclusion. ### Mission, engagements, and next steps - An IMF staff team led by Malangu Kabedi-Mbuyi visited Praia during March 10-25, 2019 for the 2019 Article IV consultation and discussions on medium-term policy initiatives and reforms. - The team met with Prime Minister Ulisses Correia e Silva; Deputy Prime Minister and Minister of Finance Olavo Correia; Minister of Industry, Trade and Energy Alexandre Dias Monteiro; Minister of Agriculture and Environment Gilberto Silva; Central Bank Governor João Serra; the President of the Municipality of the Island of Sal Julio Lopes; other government and SOE senior officials; and representatives of labor unions, non-government organizations, development partners, and the private sector. - Further discussions on identified reforms will take place in Washington D.C. in the coming weeks. - The IMF Executive Board is expected to discuss the 2019 Article IV consultation report in June 2019. _Imf Communications Department — Press Release No. 19/97, March 26, 2019._ --- ## References - [Cabo Verde and the IMF](http://www.imf.org/external/country/CPV/index.htm) - [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2019/03/26/pr1997-cabo-verde-imf-staff-completes-2019-article-iv-mission_