IMF Approves €8.9M for Cape Verde Amid Economic Boom
The International Monetary Fund (IMF) and the government of Cape Verde have reached a staff-level agreement that will unlock approximately 8.9 million euros in fresh funding for the archipelago, the institution announced on Friday.
The agreement follows a successful eighth review of the Extended Credit Facility (ECF), worth 2.76 million euros, and a fourth review of the Resilience and Sustainability Facility (RSF), valued at 6.15 million euros. The disbursements now await final approval from the IMF’s management and executive board.
Strong Economic Performance
According to the technical mission, Cape Verde’s economic performance remains robust. All quantitative targets set for the end of 2025 were met, and structural reforms continue to gain momentum. “Cape Verde’s economy recorded strong growth in 2025, driven by record-breaking tourism levels,” the IMF stated in a communiqué. The fund also highlighted that the country achieved surpluses in its current account and primary fiscal balance, while gross international reserves climbed to an all-time high.
While the IMF noted that global uncertainties—specifically the ongoing conflict in the Middle East—continue to cast a shadow on the global outlook, it remains optimistic about the island nation’s stability. “The accumulated fiscal and reserve cushions provide significant protection in the short term,” the mission added.
Challenges in Aviation and Infrastructure
Despite the positive growth, the IMF issued a cautionary note regarding the national airline, Transportes Aéreos de Cabo Verde (TACV). Rising fuel costs and increased competition from low-cost international carriers are putting financial pressure on the state-owned airline.
The Fund advised the government to reconsider its spending in this area, suggesting that resources might be better used to improve essential inter-island connectivity. Furthermore, the IMF emphasized that structural reforms in the electricity and water sectors remain a priority to bolster the nation’s climate resilience.
Ongoing Support Programs
The ECF credit line, first approved in June 2022 and recently extended through December 2026, represents a total commitment of 60 million euros. The program is designed to stabilize public finances, put national debt on a sustainable downward path, and minimize fiscal risks from state-owned enterprises.
The RSF program, launched in late 2023 with a total value of 29 million euros, focuses specifically on helping Cape Verde adapt to climate change by attracting foreign investment and implementing green government reforms.
Image: Pexels – damien Saillet
