IMF, Cabo Verde Agree on ECF and RSF Review Completion
Praia, Cabo Verde: An International Monetary Fund (IMF) team led by Mr. Martin Schindler held meetings with the Cabo Verdean authorities during May 5 – 13, 2025, to discuss the sixth review under the Extended Credit Facility (ECF) arrangement, the third review under the Resilience and Sustainability Facility (RSF) arrangement, and economic policies and reforms to be supported under an extension of both arrangements. Access under the existing ECF is 190 percent of quota (SDR 45.03 million, approximately US$ 63.3 million) and access under the RSF is 100 percent of quota (SDR 23.69 million, approximately US$ 31.69 million). The augmentation of 30 percent of quota (SDR 7.11 million) will bring the total ECF arrangement to SDR 52.14 million.
At the conclusion of the mission, Mr. Schindler issued the following statement:
“I am pleased to announce that the IMF team and the Cabo Verdean authorities reached staff-level agreements on the policies needed to complete the sixth review under the ECF-supported program and the third review of the RSF arrangement as well as on economic policies and reforms that could be supported by an extension. Upon approval by the IMF’s Executive Board, completion of the sixth ECF review will allow disbursement of SDR 4.51 million (approximately US$ 6.09 million), while the completion of the third RSF review will allow disbursement of up to SDR 7.896 million (approximately US$ 10.66 million), depending on reform progress under the RSF.
“Cabo Verde’s economy continues to perform well, underpinned by tourism, robust export performance and private consumption growth. Increasing the execution of the government’s capital budget would enhance potential growth. Economic growth in 2024 was strong at 7.3 percent, with 1.0 percent inflation and a current account surplus. The 2024 fiscal balance exceeded program targets, driven by lower primary expenditures and strong tax revenue growth. The public debt-to-GDP ratio continues to decline.
“All end-December 2024 structural benchmarks (SB) and quantitative performance criteria (PCs) were met. The implementation of reform measures (RMs) under the RSF has been progressing, but some reforms will take more time than expected.
“Cabo Verde’s economic outlook remains solid. GDP growth in 2025 is projected at 5.2 percent, while inflation is expected to converge to about 2 percent in 2025 and over the medium-term, broadly in line with euro area inflation. The current account balance is projected to gradually return to a deficit of 1.3 percent of GDP in 2025, and then stabilize at around -3.5 percent over the medium term.
“Fiscal performance is forecast to be strong in 2025. Cabo Verde aims to maintain a fiscal path aligned with debt reduction goals, targeting a higher primary balance than foreseen under the previous review. Tax revenue is expected to increase reflecting ongoing tax reforms.
“The mission welcomed the BCV’s Monetary Policy Committee (MPC) decision to raise the deposit rate by 30 basis points to 2.25 percent to fully close the gap with the ECB. Continued data-driven adjustments in monetary policy may be needed to protect the exchange rate peg and appropriate reserves buffers. Data for end-March 2025 suggests that the financial system is liquid, profitable, and well capitalized.
“The macroeconomic outlook remains favorable but is subject to substantial downside risks. Cabo Verde is vulnerable to external shocks, including in energy, food prices, and tourism, especially in the context of heightened uncertainties in global trade frameworks. A global growth slowdown and supply chain disruptions would have a negative impact on tourism, inflation, and growth. Climate-related risks, such as rising sea levels and extreme weather events, pose long-term threats to infrastructure and economic stability. Delays in SOE reforms and increasing public debt could undermine fiscal sustainability. On the upside, continued strength in tourist arrivals could lift growth. Legislative and Presidential elections will take place in 2026.
“The IMF team is grateful to the Cabo Verdean authorities and other stakeholders for the productive discussions, hospitality, and candid discussions.”
https://www.imf.org/en/News/Articles/2025/05/13/pr25144-cabo-verde-imf-reaches-sla-on-the-6th-rev-under-the-ecf-and-3rd-rev-under-the-rsf-arr