Cape Verde Seeks IMF Extension for €89M Support Programs
The Cape Verdean government has announced it will seek a three-month technical extension from the International Monetary Fund (IMF) to finalize two critical financial support programs. The extension, set to run from January to March 2027, aims to provide the time necessary to complete audits and satisfy reform requirements that are currently pending.
Missing Data and Airline Audits Delay Progress
Speaking at a joint press conference in Praia on Wednesday, Secretary of State for Finance Maria José Lopes explained that the delay is primarily due to the complexity of the ongoing reforms and missing documentation. A significant hurdle involves the financial records of the state-owned airline, Transportes Aéreos de Cabo Verde (TACV).
“For various reasons, the accounts for 2023, 2024, and 2025 have not yet been approved or audited, and they need to be,” Lopes said. She also noted that reforms involving the water and energy sectors under the Resilience and Sustainability Facility (RSF) require more time for comprehensive cost-benefit studies. “We have only been in government for four months. There were many issues and many clarifications needed, but we believe by March, the conditions will be in place to reach an agreement.”
Economic Resilience Amid Global Challenges
Martin Schindler, head of the IMF mission that concluded its visit today, echoed the need for a “careful review” of the voluminous data. Despite the administrative delays, Schindler offered a positive assessment of Cape Verde’s economic health.
“The economy continues to show resilience despite a challenging external context,” Schindler stated. “Growth remains robust, inflation is controlled, and international reserves remain at historically high levels.”
However, the IMF cautioned that while the 2027 budget target of a 0.9% primary surplus is welcome, there are risks on the horizon. Schindler warned that ambitious revenue projections combined with increased spending and new subsidies could limit the country’s ability to respond to future economic shocks.
Support Totals Nearly €90 Million
The extension affects two major funding lines. The first is the Extended Credit Facility (ECF), a €60 million line approved in 2022 designed to stabilize public finances and reduce debt. The second is the €29 million Resilience and Sustainability Facility (RSF), which focuses on climate change mitigation and attracting foreign investment.
The IMF mission was in the country to conduct the final reviews for both programs. The final disbursement of funds remains contingent on the completion of these reviews and subsequent approval by the IMF Executive Board.
Image: Pexels – damien Saillet
