{
  "title": "IMF Executive Board Completes First Review Under the Policy Coordination Instrument for Cabo Verde",
  "publication": "IMF News, March 30, 2020",
  "sourceUrl": "https://www.imf.org/en/news/articles/2020/03/30/pr20121-cabo-verde-imf-exec-board-completes-1st-review-under-the-policy-coordination-instrument",
  "canonical": "https://www.imf.org/en/news/articles/2020/03/30/pr20121-cabo-verde-imf-exec-board-completes-1st-review-under-the-policy-coordination-instrument",
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  "summary": "The Policy Coordination Instrument (PCI) aims to support the authorities’ Strategic Plan for Sustainable Development (PEDS).",
  "publishDate": "2020-03-30",
  "sections": [
    {
      "heading": "Program purpose and objectives",
      "content": "- The Policy Coordination Instrument (PCI) aims to support the authorities’ Strategic Plan for Sustainable Development (PEDS).\n- Main objectives under the PCI-supported program:\n  - restoring fiscal and debt sustainability;\n  - restructuring State-Owned Enterprises (SOEs);\n  - enhancing the monetary policy framework and continuing to build reserves;\n  - fostering financial system stability;\n  - advancing growth-enhancing structural reforms."
    },
    {
      "heading": "Program performance and recent fiscal/macro outcomes",
      "content": "- Performance under the PCI-supported program has been strong:\n  - All reform targets were met, with some measures put in place ahead of schedule.\n  - All end-September 2019 quantitative targets were met, except for the floor on tax revenue, missed by a narrow margin due to lower-than-projected taxes on international trade.\n- Macroeconomic outcomes in 2019:\n  - Economic growth was robust, reaching over 6 percent year-on-year at end-September 2019, and estimated at 5.5 percent for the year.\n  - Inflation averaged 1.1 percent in 2019.\n  - Current account deficit narrowed from 7.9 percent of GDP in 2017 to an estimated 3 percent of GDP in 2019.\n  - Overall fiscal deficit declined from 2.8 percent of GDP in 2018 to an estimated 1.9 percent of GDP in 2019.\n  - Public debt-to-GDP ratio declined from 125.9 percent in 2017 to an estimated 123 percent at end-2019.\n  - Authorities maintained an adequate level of international reserves."
    },
    {
      "heading": "COVID-19 impact and near-term policy needs",
      "content": "- The impact of coronavirus pandemic disease (Covid-19) on the global economy and on tourism flows will adversely affect Cabo Verde’s economy in 2020.\n- Expected channels of impact: global economic downturn, travel restrictions, adverse effects on tourism flows, foreign direct investment and remittances.\n- Policy implications:\n  - A policy response is needed to address the economic and social impact of COVID-19.\n  - Coordinated support from Cabo Verde’s development partners will be needed to support the authorities’ efforts."
    },
    {
      "heading": "Outlook and risks",
      "content": "- Medium-term outlook: positive, though risks are tilted to the downside.\n- Growth projections:\n  - Growth is expected to rebound in 2021 and return to the pre-COVID-19 medium-term trajectory of about 5 percent as the global economy recovers and structural reforms continue.\n- Key risk drivers: global economic recovery pace, tourism sector rebound, continuation of structural reforms to improve the business environment and build resilience to shocks."
    },
    {
      "heading": "Key statistics and projections (Table 1 excerpts)",
      "content": "- Real GDP:\n  - 2017: 3.7\n  - 2018: 5.1\n  - 2019 (Prel.): 5.0\n  - 2019 (Prog.): 5.5\n- Consumer price index (annual average):\n  - 2017: 0.8\n  - 2018: 1.3\n  - 2019: 1.2\n  - 2019 (Prel.): 1.1\n- Exports of goods and services (annual percent change):\n  - 2017: 9.5\n  - 2018: 15.0\n  - 2019: 8.9\n  - 2020: 11.3\n  - 2021: 10.0\n- Of which: tourism (annual percent change):\n  - 2017: 13.0\n  - 2018: 8.8\n  - 2019: 8.1\n  - 2020: 12.2\n  - 2021: 8.4\n- Imports of goods and services (annual percent change):\n  - 2017: 16.7\n  - 2018: 8.7\n  - 2019: 6.4\n  - 2020: 9.1\n  - 2021: 7.5\n- Broad money (M2) (annual change):\n  - 2017: 6.5\n  - 2018: 7.0\n  - 2019: 6.3\n  - 2020: 6.2\n  - 2021: 5.9\n- Domestic savings (percent of GDP):\n  - 2017: 30.2\n  - 2018: 31.0\n  - 2019: 32.7\n  - 2020: 32.8\n  - 2021: 31.3\n- National investment (percent of GDP):\n  - 2017: 38.1\n  - 2018: 36.3\n  - 2019: 36.9\n  - 2020: 35.7\n  - 2021: 35.2\n- External current account (including official transfers) — savings-investment balance (percent of GDP):\n  - 2017: -7.9\n  - 2018: -5.3\n  - 2019: -4.2\n  - 2020: -3.0\n  - 2021: -4.1\n- Gross international reserves (months of prospective imports of goods and services):\n  - 2019 (Prel.): 5.3\n- Government finance (percent of GDP):\n  - Revenue:\n    - 2017: 28.6\n    - 2018: 28.2\n    - 2019: 31.7\n    - 2020: 30.4\n    - 2021: 32.5\n  - Expenditure:\n    - 2017: 31.6\n    - 2018: 33.9\n    - 2019: 34.2\n    - 2020: 29.9\n    - 2021: 29.6\n  - Overall balance (incl. grants):\n    - 2017: -2.2\n    - 2018: -1.9\n    - 2019: -1.5\n    - 2020: -1.7\n    - 2021: -1.0\n- Total nominal government debt (percent of GDP):\n  - 2017: 125.9\n  - 2018: 124.0\n  - 2019: 121.4\n  - 2020: 123.0\n  - 2021: 116.8\n  - 2022: 118.1\n  - 2023: 111.1\n  - 2024: 104.5\n  - 2025: 98.1\n  - 2026: 91.9\n- External government debt (percent of GDP):\n  - 2017: 93.8\n  - 2018: 91.0\n  - 2019: 89.3\n  - 2020: 90.6\n  - 2021: 86.3\n  - 2022: 87.2\n  - 2023: 82.8\n  - 2024: 78.3\n  - 2025: 73.9\n  - 2026: 69.4\n- Present value of PPG external debt (percent of GDP; risk threshold: 55%):\n  - 2017: …\n  - 2018: 60.6\n  - 2019: 64.0\n  - 2020: 62.9\n  - 2021: 62.4\n  - 2022: 62.1\n  - 2023: 59.5\n  - 2024: 56.7\n  - 2025: 53.8\n  - 2026: 50.9\n- Present value of PPG external debt (percent of exports; risk threshold: 240%):\n  - 2017: 123.8\n  - 2018: 128.2\n  - 2019: 123.6\n  - 2020: 118.8\n  - 2021: 110.7\n  - 2022: 102.6\n  - 2023: 94.9\n  - 2024: 87.4\n- Present value of total debt (percent of GDP; benchmark: 70%):\n  - 2017: 96.0\n  - 2018: 95.8\n  - 2019: 92.7\n  - 2020: 87.7\n  - 2021: 82.7\n  - 2022: 77.9\n  - 2023: 73.3\n- Memorandum items:\n  - Nominal GDP (billions of Cabo Verde escudos):\n    - 2017: 173.1\n    - 2018: 184.7\n    - 2019: 197.8\n    - 2020: 197.4\n    - 2021: 211.1\n    - 2022: 210.3\n    - 2023: 224.3\n    - 2024: 239.8\n    - 2025: 256.4\n    - 2026: 274.3\n  - Gross international reserves (€ millions, end of period):\n    - 2017: 525.4\n    - 2018: 533.7\n    - 2019: 596.6\n    - 2020: 606.6\n    - 2021: 645.8\n    - 2022: 651.7\n    - 2023: 700.1\n    - 2024: 750.7\n    - 2025: 805.8\n    - 2026: 864.4\n- Exchange rate note:\n  - The Cabo Verdean exchange rate has been pegged to the Euro since 1999, at a rate of 110.265 CVE/€.\n\nPress Release No. 20/121 — March 30, 2020; IMF Communications Department.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- IMF COVID-19 Hub\n- Policy Tracker\n- Financial Assistance\n- Questions & Answers\n- Cabo Verde and the IMF\n- Press Releases\n- PRESS CENTER\n- Policy Coordination Instrument\n- Press Release No.19/278\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2020/03/30/pr20121-cabo-verde-imf-exec-board-completes-1st-review-under-the-policy-coordination-instrument"
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    "Published: March 30, 2020",
    "The Policy Coordination Instrument (PCI) aims to support the authorities’ Strategic Plan for Sustainable Development (PEDS).",
    "Main objectives under the PCI-supported program:",
    "Performance under the PCI-supported program has been strong:",
    "Macroeconomic outcomes in 2019:",
    "The impact of coronavirus pandemic disease (Covid-19) on the global economy and on tourism flows will adversely affect Cabo Verde’s economy in 2020.",
    "Expected channels of impact: global economic downturn, travel restrictions, adverse effects on tourism flows, foreign direct investment and remittances.",
    "Policy implications:",
    "Medium-term outlook: positive, though risks are tilted to the downside.",
    "Growth projections:",
    "Key risk drivers: global economic recovery pace, tourism sector rebound, continuation of structural reforms to improve the business environment and build resilience to shocks.",
    "Real GDP:",
    "Consumer price index (annual average):",
    "Exports of goods and services (annual percent change):",
    "Of which: tourism (annual percent change):",
    "Imports of goods and services (annual percent change):",
    "Broad money (M2) (annual change):",
    "Domestic savings (percent of GDP):",
    "National investment (percent of GDP):",
    "External current account (including official transfers) — savings-investment balance (percent of GDP):",
    "Gross international reserves (months of prospective imports of goods and services):",
    "Government finance (percent of GDP):",
    "Total nominal government debt (percent of GDP):",
    "External government debt (percent of GDP):",
    "Present value of PPG external debt (percent of GDP; risk threshold: 55%):",
    "Present value of PPG external debt (percent of exports; risk threshold: 240%):",
    "Present value of total debt (percent of GDP; benchmark: 70%):",
    "Memorandum items:",
    "Exchange rate note:",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[IMF COVID-19 Hub](https://www.imf.org/en/Topics/imf-and-covid19)",
    "[Policy Tracker](https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19)",
    "[Financial Assistance](https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker)",
    "[Questions & Answers](https://www.imf.org/en/About/FAQ/imf-response-to-covid-19)",
    "[Cabo Verde and the IMF](http://www.imf.org/external/country/CPV/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Policy Coordination Instrument](https://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument)",
    "[Press Release No.19/278](http://dm-edms.imf.org/cyberdocs/viewdocument.asp?doc=6824528&lib=dmsdr1s)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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