## IMF Executive Board Concludes the Third Review of the Extended Credit Facility Arrangement and Approves US$31.45 Million under the Resilience and Sustainability Facility for Cabo Verde

_IMF News, December 12, 2023_

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**Canonical URL:** [IMF Executive Board Concludes the Third Review of the Extended Credit Facility Arrangement and Approves US$31.45 Million under the Resilience and Sustainability Facility for Cabo Verde](https://www.imf.org/en/news/articles/2023/12/12/pr23436-cabo-verde-third-review-ecf-and-rsf)

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## Bibliographic details
- Published: December 12, 2023

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### IMF decisions and financing approved
- The Executive Board completed the Third Review of Cabo Verde’s performance under the 36-month Extended Credit Facility (ECF) arrangement approved on June 15, 2022.
- Completion of the review allows the authorities to draw the equivalent of SDR 4.5 million (about US$6 million).
- The Board approved an 18-month arrangement under the Resilience and Sustainability Facility (RSF) in the amount of 100 percent of quota (SDR 23.69 million, approximately US$31.45 million).
- In completing the third review, the Executive Board approved the authorities’ request for modification of the end-December 2023 and end-June 2024 performance criteria.

### Macroeconomic performance and outlook
- 2022 real GDP growth: 17.1 percent (rebound driven by tourism).
- 2023 projected real GDP growth: 4.5 percent (as export growth normalizes).
- Inflation projected at 3 percent by end 2023 as fuel and food prices decline.
- The current account deficit is expected to widen in 2023 as exports of goods and services, tourism and remittances grow more slowly than imports.
- The 2024 budget is aligned with the ECF-supported program.
- The Banco de Cabo Verde (BCV) tightened monetary policy further to narrow the interest rate differential with the European Central Bank (ECB) to protect the peg.

### RSF objectives and supported reform areas
- The RSF will support the government’s effort to implement macro-critical climate reforms and catalyze private finance for climate adaptation and transition.
- The program will support reform measures in five areas:
  - (i) strengthening climate change policy governance;
  - (ii) improving physical and fiscal resilience;
  - (iii) strengthening mitigation and resilience through promoting energy efficiency and transition to renewables;
  - (iv) promoting adaptation by ensuring ecological and economic sustainability of water resources and planning for long-run climate impacts;
  - (v) strengthening financial sector resilience to climate change.

### Risks and vulnerabilities
- Downside risks:
  - Weakened demand in major tourism markets.
  - External price shocks.
  - Fiscal risks from failure to advance State-Owned Enterprise (SOE) reforms or reduced fiscal consolidation efforts.
  - Medium-term risk from climate change (recent years of drought).
- Debt vulnerability:
  - The country’s high risk of overall debt distress is a source of vulnerability; concessional financing to limit debt servicing cost is important.
- Upside scenario:
  - Stronger tourism growth could lead to higher overall economic activity.

### Policy advice and IMF assessment (statement by Mr. Bo Li, Deputy Managing Director and Acting Chair)
- Program performance and ownership has been strong: all performance criteria were met, and all program-supported structural reforms were met.
- Fiscal policy: anchor fiscal consolidation to put debt on a downward path while protecting the vulnerable and investing in key priority projects for future growth.
- Medium-term fiscal objectives depend on:
  - Progress in domestic revenue mobilization.
  - Streamlining tax exemptions.
  - Increasing effectiveness of public investment projects.
  - Improving debt management.
- SOE reforms: steady progress remains critical for reducing fiscal risks and improving services.
- Monetary policy: appropriately focused on safeguarding the peg.
- Financial sector: stable from a medium-term perspective; banks’ profitability positive and NPLs maintained the downward trend since 2016; authorities advised to continue working with banks to facilitate resolution of NPLs.
- Institutional reforms recommended:
  - Improve autonomy, governance and accountability framework of the central bank.
  - Strengthen the AML/CFT framework and its effectiveness.
- Structural reforms encouraged:
  - Continue ambitious structural reform agenda to adapt to climate change, reduce the cost of doing business and accelerate public enterprise reforms.
  - Pursue RSF reform measures and leverage synergies with other official financing to catalyze further public and private financing for climate mitigation and adaptation.

### Selected economic indicators (highlights from Cabo Verde: Selected Economic Indicators, 2020-28)
- Real GDP (annual percent change):
  - 2020: -20.8
  - 2021: 5.6
  - 2022: 17.7 (Act.)
  - 2023: 17.1 (Proj. in table) / 4.5 (text projection for 2023) — note both figures appear in source.
  - 2024: 4.4 (table)
  - 2025: 4.5
  - 2026: 4.7
  - 2027: 4.6
  - 2028: (no value listed in the displayed series)
- Consumer price index (end of period):
  - 2020: -0.9
  - 2021: 5.4
  - 2022: 7.6
  - 2023: 3.0
- Exports of goods and services (annual percent change):
  - 2020: -58.7
  - 2021: -7.5
  - 2022: 120.6
  - 2023: 3.7
  - 2024: 3.2
  - 2025: 8.7
  - 2026: 9.5
  - 2027: 9.4
  - 2028: 8.1
- Tourism (component of exports, annual percent change):
  - 2020: -69.1
  - 2021: -16.4
  - 2022: 225.4
  - 2023: 6.5
  - 2024: 10.1
  - 2025: 8.8
- Imports of goods and services (annual percent change):
  - 2020: -23.2
  - 2021: 0.8
  - 2022: 33.7
  - 2023: 7.8
  - 2024: 10.2
- Broad money (M2) (change in percent of broad money, 12 months earlier):
  - 2022: 8.3
  - 2023: 7.2
  - 2024: 5.3
- Domestic savings (percent of GDP):
  - 2020: 28.3
  - 2021: 41.7
  - 2022: 34.7
  - 2023: 18.7
  - 2024: 21.4
- National investment (percent of GDP):
  - 2020: 24.1
  - 2021: 40.5
  - 2022: 45.3
  - 2023: 38.4
  - 2024: 24.3
- Savings-investment balance (percent of GDP) (selected years):
  - 2020: -15.3
  - 2021: -12.2
  - 2022: -3.6
  - 2023: -3.7
  - 2024: -5.6
- External current account (excluding official transfers) (percent of GDP):
  - 2020: -18.0
  - 2021: -14.7
  - 2022: -4.9
  - 2023: -6.2
  - 2024: -6.9
- Gross international reserves (months of prospective imports of goods and services):
  - 2020: 5.9
  - 2021: 5.7
  - 2022: 6.1
  - 2023: 6.2
  - 2024: 5.5
- Government revenue (percent of GDP):
  - 2020: 25.2
  - 2021: 23.9
  - 2022: 21.6
  - 2023: 22.4
  - 2024: 24.6
  - 2025: 25.5
- Expenditure (percent of GDP):
  - 2020: 34.5
  - 2021: 31.6
  - 2022: 25.7
  - 2023: 26.7
  - 2024: 29.0
- Primary balance (percent of GDP):
  - 2020: -1.9
  - 2021: -2.0
  - 2022: 1.0
- Overall balance (incl. grants) (percent of GDP):
  - 2020: -9.3
  - 2021: -7.7
  - 2022: -4.3
  - 2023: -3.4
  - 2024: -2.1
- Total nominal government debt (percent of GDP):
  - 2020: 142.6
  - 2021: 152.0
  - 2022: 121.2
  - 2023: 127.1
  - 2024: 112.6
  - 2025: 119.9
  - 2026: 116.2
  - 2027: 111.2
  - 2028: 105.4
- External government debt (percent of GDP):
  - 2020: 105.1
  - 2021: 108.2
  - 2022: 84.0
  - 2023: 88.0
  - 2024: 79.8
- External debt service (percent of exports of goods and services):
  - 2020: 14.8
  - 2021: 11.5
  - 2022: 15.2
  - 2023: 12.3
- Present value of PPG external debt (percent of GDP) (risk threshold: 55%):
  - 2020: 70.3
  - 2021: 57.2
  - 2022: 53.5
  - 2023: 50.9
  - 2024: 54.2
  - 2025: 53.3
  - 2026: 52.0
  - 2027: 49.5
  - 2028: 47.4
- Present value of PPG external debt (percent of exports) (risk threshold: 240%):
  - 2020: 335.9
  - 2021: 197.4
  - 2022: 159.1
  - 2023: 163.8
  - 2024: 156.6
- Present value of total debt (percent of GDP) (benchmark: 70%):
  - 2020: 92.4
  - 2021: 104.3
  - 2022: 91.3
  - 2023: 97.1
  - 2024: 90.8
  - 2025: 87.5
  - 2026: 83.7
  - 2027: 79.9
  - 2028: 75.6
- Memorandum: Nominal GDP (billions of Cabo Verde escudos):
  - 2020: 176.8
  - 2021: 186.2
  - 2022: 244.3
  - 2023: 235.0
  - 2024: 266.6
  - 2025: 257.1
  - 2026: 274.7
  - 2027: 293.4
  - 2028: 313.1
  - 2029: 333.9
  - 2030: 356.0
- Gross international reserves (€ millions, end of period):
  - 2020: 582
  - 2021: 595
  - 2022: 626
  - 2023: 699
  - 2024: 728
  - 2025: 794
  - 2026: 819
  - 2027: 823
  - 2028: 827
  - 2029: 875

*Source: IMF Executive Board conclusions and Cabo Verde: Selected Economic Indicators, 2020-28 (IMF staff estimates and projections).*

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## References

- [Cabo Verde and the IMF](http://www.imf.org/external/country/CPV/index.htm)
- [IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/imf-world-bank-debt-sustainability-framework-for-low-income-countries)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [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/2023/12/12/pr23436-cabo-verde-third-review-ecf-and-rsf_