Cape Verde Challenges World Bank Over ‘Income-Only’ Criteria
Cape Verde is urging the World Bank to rethink its lending criteria, arguing that the nation’s recent economic promotion shouldn’t lead to a loss of vital financial support. Speaking at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank in Bangkok, Cape Verde’s Secretary of State for Finance, Maria José Lopes, warned that judging a nation solely on its income per capita ignores the harsh realities of small island states.
The ‘Success Trap’: Income vs. Vulnerability
Last year, the World Bank reclassified Cape Verde from a lower-middle-income country to an upper-middle-income country. While this serves as a testament to the nation’s economic growth, it carries a double-edged sword: the potential loss of access to grants and concessional financing instruments that provide lower interest rates and better repayment terms.
“Many bilateral partners were already telling us that, as an upper-middle-income country, we might lose access to certain grants,” Lopes said. She argued that the current classification system is too narrow, failing to account for the “multidimensional vulnerabilities” that island nations face, such as high exposure to external economic shocks and climate change.
A Call for New Eligibility Standards
The Cape Verdean government is advocating for a shift in how international financial institutions measure eligibility. Lopes emphasized that a country’s specific geographic and environmental conditions should be weighed alongside its financial statistics.
“We ask that eligibility criteria not only be income, but that the country’s conditions be taken into account,” she stated. For an archipelago like Cape Verde, the costs of infrastructure, transport, and resilience against environmental disasters remain disproportionately high, regardless of its middle-income status.
Refining the Partnership
The World Bank remains a cornerstone of Cape Verde’s development, with over $300 million (€268.4 million) currently invested in various projects. As a new executive under the African Party for the Independence of Cape Verde (PAICV) takes the lead, the government is looking to realign its partnership with the World Bank to focus on strategic priorities.
Lopes noted that the government’s focus is twofold: identifying new areas for intervention and drastically improving the speed of existing projects. “It makes no sense to have a funded project with very slow execution. We want to accelerate that,” she said.
While the Secretary of State expects the core relationship with the World Bank to remain stable, she stressed that the coming years must be characterized by “continuity with adjustments.” The goal is to ensure that Cape Verde’s economic progress does not result in a “success trap” that leaves it without the tools necessary to survive in a volatile global market.
Image: Pexels – Nico Marín
