PRAIA,Cabo Verde/IMF Reaches Staff-Level Agreement with Cabo Verde on the Eighth Review Under The Extended Credit Facility (ECF) Arrangement, And Fourth Review Under The Resilience And Sustainability Facility (RSF) Arrangement

IMF Reaches Staff-Level Agreement with Cabo Verde on the Eighth Review Under The Extended Credit Facility (ECF) Arrangement, And Fourth Review Under The Resilience And Sustainability Facility (RSF) Arrangement

FOR IMMEDIATE RELEASE

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision

IMF staff and the Cabo Verdean authorities have reached a staff-level agreement on the policies needed to complete the eighth ECF review and fourth RSF review.
Cabo Verde’s economy delivered strong growth in 2025, with record-high tourism, surpluses in the current account and primary fiscal balances, and gross international reserves reaching an all-time high. Program performance was strong, with all end-December 2025 quantitative performance criteria met and structural reforms advancing.
Risks to the outlook are tilted to the downside, chiefly from spillovers of the war in the Middle East through higher energy and food prices and potential softening of external demand. The accumulated fiscal and reserve buffers are providing meaningful near-term protection, but a prolonged shock would require decisive policy adjustment.

Praia, Cabo Verde – May 8, 2026: An International Monetary Fund (IMF) team led by Mr. Martin Schindler visited Cabo Verde during April 27 – May 8, 2026, to assess progress under the ECF- and RSF-supported programs. Access is 220 percent of quota (SDR 52.14 million, approximately
US$71.64 million) under the ECF and 100 percent of quota (SDR 23.69 million, approximately
US$32.55 million) under the RSF.

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 have held productive policy discussions and reached staff-level agreements on the eighth review under the Extended Credit Facility (ECF) arrangement and the fourth review under the Resilience and Sustainability Facility (RSF) arrangement. Upon approval by the IMF’s Executive Board, completion of the eighth ECF review will allow disbursement of SDR 2.37 million (approximately US$3.26 million), while the completion of the fourth RSF review will allow disbursement of up to SDR 5.276 million (approximately US$ 7.25 million), depending on reform progress under the RSF.

“Cabo Verde’s economy performed strongly in 2025, with real GDP growth of 6.3 percent, driven by record-high tourist arrivals, resilient private consumption, and higher public investment. At 2.3 percent, annual average inflation mirrored euro area trends and was consistent with the exchange rate peg. The primary fiscal balance reached 3.1 percent of GDP, comfortably exceeding the program target, reflecting spending discipline and buoyant revenues, including some one-off factors. The current account recorded a surplus of 3.7 percent of GDP, and gross international reserves reached an all-time high of EUR 1,070 million at end-2025, equivalent to 7.6 months of prospective imports.

“Under the ECF, performance against the end-December 2025 criteria was strong. All quantitative performance criteria (QPCs) and continuous performance criteria (PCs) were met. Structural benchmarks were broadly on track, except for delays in the publication of all state-owned enterprises’ (SOEs) audited statements; immediate policy measures have been agreed to maintain reform momentum. Under the RSF, reform measures have been progressing, including expansion of the unique social registry, development of a climate architecture for banks, and progress towards cost-reflective tariff frameworks for the electricity and water sectors, although more slowly than envisaged, reflecting capacity constraints and complexity of reforms.

“Cabo Verde’s near-term outlook remains stable, though risks are tilted to the downside. Real GDP growth is now projected at around 4.7 percent, reflecting baseline effects of the stronger-than-expected growth performance in 2025 and continued strong momentum of tourism, in part reflecting diversion effects to Cabo Verde as a safe destination. The outlook assumes that the increase in oil prices is temporary. Cabo Verde is significantly exposed to higher energy and food import prices, as well as to declines in tourism inflows and remittances should external demand deteriorate. While the fiscal and external buffers accumulated under the program position the country well to absorb the immediate spillovers from the war in the Middle East, a more prolonged or severe shock would require decisive and durable policy adjustments to ensure that the fiscal costs of any support measures remain contained, that the most vulnerable population is protected, and that the primary fiscal surplus remains sufficient to anchor the downward public debt trajectory. Moreover, preserving a positive interest rate differential with the euro area is needed to support the exchange rate peg.

“The authorities’ recent fiscal measures to cushion the impact of oil price volatility on domestic energy prices are appropriate. Such measures, however, should remain temporary, ensuring that accumulated fiscal space is deployed cautiously to smooth the pass-through rather than to entrench structural subsidies. As global oil markets stabilize, the automatic price adjustment mechanism should be resumed to close the differential between international import prices and domestically regulated energy prices. The fiscal costs of any support measures should be transparently communicated and gradually offset by allowing market price discovery to operate.

“The 2027 State Budget should adopt a cautious stance consistent with the debt reduction path under the ECF arrangement. A high execution rate of public investment in 2026 will be key for catalyzing greater levels of private investment that can alleviate supply-side constraints to growth.

“Remaining squarely focused on advancing structural reforms is essential to strengthening growth and resilience to climate shocks. The reforms under the ECF-supported program aimed at containing fiscal costs and increasing efficiency in the SOE sector, modernizing public financial management, and strengthening the central bank’s framework and operations will enhance Cabo Verde’s competitiveness and boost growth potential. Higher fuel prices and the entry and expansion of low-cost airlines in external routes imply greater losses for TACV, so the government should reconsider reallocating these resources to improve inter-island connectivity. Doubling down on reforms to boost climate resilience, particularly in the electricity and water sectors, remains a priority. The IMF stands ready to continue supporting the authorities in advancing these critical reforms.

“The IMF team met with Vice Prime Minister and Minister of Finance Olavo Correia, Central Bank Governor Oscar Santos, other government and central bank officials, representatives of the private sector, and development partners. The IMF team would like to express their gratitude to the Cabo Verdean authorities and other stakeholders for the productive discussions and warm hospitality.”

Media contact:

Rahim Kanani RKanani@IMF.org

(+1) 202.623.7100

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