{
  "title": "IMF Executive Board Completes Third Review Under the Policy Coordination Instrument for Cabo Verde",
  "publication": "IMF News, March 26, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/03/26/pr2189-cabo-verde-imf-execboard-completes-third-review-under-the-policy-coordination-instrument",
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  "summary": "Economic activity is estimated to have contracted by 14 percent in 2020.",
  "publishDate": "2021-03-26",
  "sections": [
    {
      "heading": "Pandemic impact and near-term priorities",
      "content": "- Economic activity is estimated to have contracted by 14 percent in 2020.\n- Addressing the health crisis will remain a priority while policy actions will also aim to support the projected recovery.\n- The authorities’ COVID-19 response plan received financial support from Cabo Verde’s development partners, including the IMF through the Rapid Credit Facility totaling SDR 23.70 million (about US$32.3 million, 100 percent of quota).\n- The economic outlook remains challenging and uncertain; significant downside risks include the evolution of the pandemic and its global ramifications."
    },
    {
      "heading": "Program status and performance under the PCI",
      "content": "- The Policy Coordination Instrument (PCI) for Cabo Verde was approved on July 15, 2019.\n- The Executive Board completed the third and final review under the PCI; the Executive Board’s decision was taken without a formal meeting.\n- Performance under the PCI remained satisfactory throughout the program period despite challenges generated by the COVID-19 pandemic.\n- All quantitative targets for end-September 2020 and non-quantitative continuous targets were met.\n- All, but two reform targets (RT) set under the PCI were observed; most were completed ahead of schedule. There has been important progress on the two remaining RTs, expected to be completed this year."
    },
    {
      "heading": "Fiscal framework and debt sustainability",
      "content": "- Execution of the 2021 budget will seek to strike a balance between accommodating pressing health and development needs and supporting medium-term debt sustainability as Cabo Verde remains at a high risk of debt distress.\n- The fiscal framework underpinning the 2021 budget addresses the lingering effects of the pandemic while setting the stage for the resumption of a declining path for public debt, after the surge caused by the economic impact of the pandemic."
    },
    {
      "heading": "Key projections and macroeconomic indicators (selected)",
      "content": "- Real GDP (annual percent change): 2018: 4.5; 2019: 5.7; 2020: -6.8; 2021: -14.0; 2022: 5.8; 2023: 6.0; 2024: 6.1; 2025: 6.2; 2026: (table continues).\n- GDP deflator (annual percent change): 2018: 1.5; 2019: 0.6; 2020: 1.1; 2021: 0.9; 2022: 1.2; 2023: 1.4; 2024: 1.6; 2025: 1.8; 2026: 1.9.\n- Exports of goods and services (change in percent of broad money, 12 months earlier): 2018: 15.9; 2019: 10.0; 2020: -47.3; 2021: -48.9; 2022: 25.9; 2023: 33.8; 2024: 18.6; 2025: 11.0; 2026: 11.8.\n- Of which: tourism (annual percent change): 2018: 8.6; 2019: -65.7; 2020: -64.3; 2021: 32.5; 2022: 36.4; 2023: 28.1; 2024: 16.5; 2025: 17.4; 2026: 9.3.\n- Imports of goods and services (annual percent change): 2018: 8.7; 2019: 2.0; 2020: -21.5; 2021: -23.7; 2022: 5.1; 2023: 11.2; 2024: 7.6; 2025: 5.5; 2026: 6.4.\n- Broad money (M2) (annual percent change): 2018: 8.4; 2019: -5.2; 2020: 3.1; 2021: 5.6; 2022: 6.9; 2023: 6.5; 2024: 5.9.\n- Domestic savings (percent of GDP): 2018: 31.3; 2019: 37.1; 2020: 28.0; 2021: 22.7; 2022: 33.0; 2023: 27.7; 2024: 35.9; 2025: 37.7; 2026: 38.2.\n- National investment (percent of GDP): 2018: 36.5; 2019: 37.5; 2020: 42.2; 2021: 40.1; 2022: 40.6; 2023: 41.0; 2024: 38.7.\n- External current account (including official transfers) (percent of GDP): 2018: -0.4; 2019: -14.2; 2020: -13.8; 2021: -9.2; 2022: -10.6; 2023: -6.4; 2024: -4.7.\n- Gross international reserves (months of prospective imports of goods and services): 2018: 7.4; 2019: -5.4; 2020: -0.7; 2021: 0.0; (table lists additional entries).\n- Revenue (percent of GDP): 2018: 28.2; 2019: 29.4; 2020: 29.2; 2021: 25.8; 2022: 29.7; 2023: 30.9; 2024: 30.8; 2025: 31.0; 2026: 31.1.\n- Tax and nontax revenue (percent of GDP): 2018: 26.8; 2019: 26.2; 2020: 24.5; 2021: 22.8; 2022: 25.6; 2023: 27.5; 2024: 28.8; 2025: 29.6; 2026: 29.8.\n- Expenditure (percent of GDP): 2018: 31.2; 2019: 38.8; 2020: 35.8; 2021: 37.6; 2022: 34.6; 2023: 31.7.\n- Overall balance (incl. grants) (percent of GDP): 2018: -1.8; 2019: -8.9; 2020: -3.6; 2021: -1.7.\n- Total nominal government debt (percent of GDP): 2018: 124.7; 2019: 125.0; 2020: 137.5; 2021: 140.9; 2022: 134.8; 2023: 138.7; 2024: 132.0; 2025: 124.2; 2026: 115.8.\n- External government debt (percent of GDP): 2018: 91.4; 2019: 97.0; 2020: 97.6; 2021: 93.8; 2022: 97.3; 2023: 93.0; 2024: 86.8; 2025: 80.8; 2026: 75.1.\n- Domestic government debt (percent of GDP): 2018: 33.3; 2019: 33.5; 2020: 40.5; 2021: 43.4; 2022: 41.4; 2023: 39.1; 2024: 37.4; 2025: 35.0; 2026: 32.3.\n- Present value of PPG external debt (percent of GDP, risk threshold: 55%): 2018: 60.6; 2019: 60.8; 2020: 69.2; 2021: 74.2; 2022: 65.8; 2023: 70.8; 2024: 67.4; 2025: 63.3; 2026: 59.2.\n- Present value of total debt (percent of GDP, benchmark: 70%): 2018: 96.0; 2019: 94.3; 2020: 107.7; 2021: 113.0; 2022: 106.5; 2023: 111.6; 2024: 106.4; 2025: 100.6; 2026: 94.2."
    },
    {
      "heading": "Structural and policy priorities to support recovery",
      "content": "- Address the health crisis and continue policy and social protection measures to support the most vulnerable.\n- Execute the 2021 budget to balance health and development needs with medium-term debt sustainability.\n- Support recovery through: a firm global economic rebound; resumption and increase of tourism and capital flows to Cabo Verde; execution of large externally-financed infrastructure projects delayed by the pandemic; decisive implementation of structural reforms, notably to restructure State-Owned enterprises and to facilitate access to finance particularly for small and medium-sized enterprises; and policies to support macroeconomic stability.\n\nSource: IMF Press Release No. 21/89, March 26, 2021.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Cabo Verde and the IMF\n- Press Releases\n- PRESS CENTER\n- Press Release No. 19/278\n- Press Release No. 20/184\n- https://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/03/26/pr2189-cabo-verde-imf-execboard-completes-third-review-under-the-policy-coordination-instrument"
    }
  ],
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    "Published: March 26, 2021",
    "Economic activity is estimated to have contracted by 14 percent in 2020.",
    "Addressing the health crisis will remain a priority while policy actions will also aim to support the projected recovery.",
    "The authorities’ COVID-19 response plan received financial support from Cabo Verde’s development partners, including the IMF through the Rapid Credit Facility totaling SDR 23.70 million (about US$32.3 million, 100 percent of quota).",
    "The economic outlook remains challenging and uncertain; significant downside risks include the evolution of the pandemic and its global ramifications.",
    "The Policy Coordination Instrument (PCI) for Cabo Verde was approved on July 15, 2019.",
    "The Executive Board completed the third and final review under the PCI; the Executive Board’s decision was taken without a formal meeting.",
    "Performance under the PCI remained satisfactory throughout the program period despite challenges generated by the COVID-19 pandemic.",
    "All quantitative targets for end-September 2020 and non-quantitative continuous targets were met.",
    "All, but two reform targets (RT) set under the PCI were observed; most were completed ahead of schedule. There has been important progress on the two remaining RTs, expected to be completed this year.",
    "Execution of the 2021 budget will seek to strike a balance between accommodating pressing health and development needs and supporting medium-term debt sustainability as Cabo Verde remains at a high risk of debt distress.",
    "The fiscal framework underpinning the 2021 budget addresses the lingering effects of the pandemic while setting the stage for the resumption of a declining path for public debt, after the surge caused by the economic impact of the pandemic.",
    "Real GDP (annual percent change): 2018: 4.5; 2019: 5.7; 2020: -6.8; 2021: -14.0; 2022: 5.8; 2023: 6.0; 2024: 6.1; 2025: 6.2; 2026: (table continues).",
    "GDP deflator (annual percent change): 2018: 1.5; 2019: 0.6; 2020: 1.1; 2021: 0.9; 2022: 1.2; 2023: 1.4; 2024: 1.6; 2025: 1.8; 2026: 1.9.",
    "Exports of goods and services (change in percent of broad money, 12 months earlier): 2018: 15.9; 2019: 10.0; 2020: -47.3; 2021: -48.9; 2022: 25.9; 2023: 33.8; 2024: 18.6; 2025: 11.0; 2026: 11.8.",
    "Of which: tourism (annual percent change): 2018: 8.6; 2019: -65.7; 2020: -64.3; 2021: 32.5; 2022: 36.4; 2023: 28.1; 2024: 16.5; 2025: 17.4; 2026: 9.3.",
    "Imports of goods and services (annual percent change): 2018: 8.7; 2019: 2.0; 2020: -21.5; 2021: -23.7; 2022: 5.1; 2023: 11.2; 2024: 7.6; 2025: 5.5; 2026: 6.4.",
    "Broad money (M2) (annual percent change): 2018: 8.4; 2019: -5.2; 2020: 3.1; 2021: 5.6; 2022: 6.9; 2023: 6.5; 2024: 5.9.",
    "Domestic savings (percent of GDP): 2018: 31.3; 2019: 37.1; 2020: 28.0; 2021: 22.7; 2022: 33.0; 2023: 27.7; 2024: 35.9; 2025: 37.7; 2026: 38.2.",
    "National investment (percent of GDP): 2018: 36.5; 2019: 37.5; 2020: 42.2; 2021: 40.1; 2022: 40.6; 2023: 41.0; 2024: 38.7.",
    "External current account (including official transfers) (percent of GDP): 2018: -0.4; 2019: -14.2; 2020: -13.8; 2021: -9.2; 2022: -10.6; 2023: -6.4; 2024: -4.7.",
    "Gross international reserves (months of prospective imports of goods and services): 2018: 7.4; 2019: -5.4; 2020: -0.7; 2021: 0.0; (table lists additional entries).",
    "Revenue (percent of GDP): 2018: 28.2; 2019: 29.4; 2020: 29.2; 2021: 25.8; 2022: 29.7; 2023: 30.9; 2024: 30.8; 2025: 31.0; 2026: 31.1.",
    "Tax and nontax revenue (percent of GDP): 2018: 26.8; 2019: 26.2; 2020: 24.5; 2021: 22.8; 2022: 25.6; 2023: 27.5; 2024: 28.8; 2025: 29.6; 2026: 29.8.",
    "Expenditure (percent of GDP): 2018: 31.2; 2019: 38.8; 2020: 35.8; 2021: 37.6; 2022: 34.6; 2023: 31.7.",
    "Overall balance (incl. grants) (percent of GDP): 2018: -1.8; 2019: -8.9; 2020: -3.6; 2021: -1.7.",
    "Total nominal government debt (percent of GDP): 2018: 124.7; 2019: 125.0; 2020: 137.5; 2021: 140.9; 2022: 134.8; 2023: 138.7; 2024: 132.0; 2025: 124.2; 2026: 115.8.",
    "External government debt (percent of GDP): 2018: 91.4; 2019: 97.0; 2020: 97.6; 2021: 93.8; 2022: 97.3; 2023: 93.0; 2024: 86.8; 2025: 80.8; 2026: 75.1.",
    "Domestic government debt (percent of GDP): 2018: 33.3; 2019: 33.5; 2020: 40.5; 2021: 43.4; 2022: 41.4; 2023: 39.1; 2024: 37.4; 2025: 35.0; 2026: 32.3.",
    "Present value of PPG external debt (percent of GDP, risk threshold: 55%): 2018: 60.6; 2019: 60.8; 2020: 69.2; 2021: 74.2; 2022: 65.8; 2023: 70.8; 2024: 67.4; 2025: 63.3; 2026: 59.2.",
    "Present value of total debt (percent of GDP, benchmark: 70%): 2018: 96.0; 2019: 94.3; 2020: 107.7; 2021: 113.0; 2022: 106.5; 2023: 111.6; 2024: 106.4; 2025: 100.6; 2026: 94.2.",
    "Address the health crisis and continue policy and social protection measures to support the most vulnerable.",
    "Execute the 2021 budget to balance health and development needs with medium-term debt sustainability.",
    "Support recovery through: a firm global economic rebound; resumption and increase of tourism and capital flows to Cabo Verde; execution of large externally-financed infrastructure projects delayed by the pandemic; decisive implementation of structural reforms, notably to restructure State-Owned enterprises and to facilitate access to finance particularly for small and medium-sized enterprises; and policies to support macroeconomic stability.",
    "[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)",
    "[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/)",
    "[Press Release No. 19/278](https://www.imf.org/en/News/Articles/2019/07/15/pr19278-cabo-verde-imf-executive-board-approves-a-new-policy-coordination-instrument)",
    "[Press Release No. 20/184](https://www.imf.org/en/News/Articles/2020/04/22/pr20184-cabo-verde-imf-exec-board-approves-us-32m-disbursement-to-address-the-covid19-pandemic)",
    "[https://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument](https://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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