Cape Verde Public Finance Council Warns on 2027 Budget Risks
Cape Verde’s Public Finance Council (CFP) has issued a cautionary note regarding the government’s 2027 State Budget, warning that while the executive’s economic targets are “globally plausible,” they remain highly vulnerable to external shocks and global instability.
Optimistic Growth Forecasts Meet Cautious Realities
The Ministry of Finance has built its 2027 fiscal plan on a forecast of 5.6% real GDP growth and a steady 2% inflation rate. However, the CFP’s independent projections are more conservative, estimating economic growth at 5.3% and inflation at 2.2%. This discrepancy reflects what the council describes as a “slightly more cautious perspective” on how the nation’s economic activity and consumer prices will evolve over the next few years.
The 2027 Budget outlines ambitious fiscal consolidation goals, including narrowing the deficit from a projected 1.9% in 2026 to just 1%. Additionally, the government aims to keep public debt on a downward trajectory, moving from 94.1% of GDP to 90.4% by 2027.
Global Volatility Threatens Local Stability
The CFP emphasized that achieving these fiscal milestones depends heavily on factors beyond the archipelago’s borders. “The CFP warns of risks associated with a potential slowdown in the Eurozone economy, volatility in international energy and food prices, and the escalation of geopolitical and trade tensions,” the council stated. Such factors could dampen growth, drive up inflation, and severely erode the purchasing power of Cape Verdean families.
Internal Risks and Climate Vulnerability
Beyond international pressures, the council highlighted several domestic challenges that could derail the budget. Key concerns include the financial health of state-owned enterprises and contingent liabilities that could suddenly strain the national treasury. Furthermore, the council pointed to the country’s high exposure to extreme weather events, which can trigger spikes in public spending and threaten the overall sustainability of public finances.
To navigate these uncertainties, the CFP is urging the government to maintain “budgetary programming based on realistic macroeconomic assumptions.” The council concluded that prudent risk management is essential to ensure the economy remains resilient enough to withstand potential adverse shocks in the coming years.
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