Cape Verde Economy 2025: Reserves Surge and Debt Falls
The Bank of Cape Verde (BCV) reported a significant strengthening of the nation’s financial standing in 2025, fueled by a booming export sector and a disciplined reduction in national debt. According to the central bank’s latest State of the Economy Report released Monday, Cape Verde has successfully lowered its external vulnerability indicators compared to the previous year.
Export Growth and Debt Reduction Drive Recovery
The central bank highlighted two primary drivers for the country’s improved economic health: an increased share in the global export market and a falling ratio of external debt relative to both exports and Gross Domestic Product (GDP). These factors have provided the Atlantic archipelago with a more stable financial buffer against global economic shocks.
Cape Verde’s current account flipped into the green, recording a surplus of 11,035.7 million escudos (€100 million), or approximately 3.7% of GDP. This surplus was largely sustained by steady growth in tourism revenues, consistent remittances from the Cape Verdean diaspora, and other private transfers.
Foreign Reserves Reach Record Highs
The nation’s financial account also showed robust health. Net financing inflows climbed to 27,998.6 million escudos (€254 million), thanks to a surge in foreign direct investment and strategic adjustments to the foreign assets held by commercial banks.
Crucially, this financial influx allowed Cape Verde to bolster its “safety net.” Net external reserves rose to €1,064.5 million, providing a comfortable cushion of 8.8 months of import coverage—a significant leap from the 6.5 months recorded in 2024.
Public Finances Move into Surplus
The report also brought good news for the national budget. Public accounts shifted from a 1.1% deficit in 2024 to a surplus of 1.1% of GDP in 2025, primarily due to increased tax collection and public revenue.
Total public debt, including liabilities from state-owned enterprises and local authorities, fell to 115.7% of GDP, down from 127.8% the previous year. While the BCV noted that this figure remains high, the downward trajectory reflects sustained economic growth and a positive primary balance.
Ongoing Vigilance Required
Despite the positive trend, the central bank urged caution. While the net international investment position improved by roughly €150.3 million—representing 108.4% of GDP compared to 123.2% the year before—the BCV warned that this deficit remains high enough to constitute a lingering source of external vulnerability for the island nation.
Image: Pexels – Nico Marín
