The International Monetary Fund said it had reached a staff-level agreement with Cabo Verde on the eighth review of the country’s Extended Credit Facility programme and the fourth review under its Resilience and Sustainability Facility, after strong economic growth and solid reform progress in 2025.
The agreement, announced at the end of an IMF mission to the Atlantic island nation, paves the way for new disbursements once approved by the IMF Executive Board.
Completion of the reviews would unlock about US$3.26 million under the ECF arrangement and up to US$7.25 million under the RSF programme, depending on progress on agreed reforms, the IMF said in a statement issued late Thursday.
The IMF said Cabo Verde’s economy expanded by 6.3 percent in 2025, driven by record tourism arrivals, resilient private consumption and higher public investment.
Inflation averaged 2.3 percent last year, broadly in line with euro zone trends and consistent with the country’s currency peg to the euro, while the primary fiscal surplus reached 3.1 percent of gross domestic product, comfortably above programme targets.
More Read
The current account also posted a surplus equivalent to 3.7 percent of GDP, while gross international reserves climbed to a record 1.07 billion euros (US$1.21 billion) at the end of 2025, covering 7.6 months of prospective imports.
“I am pleased to announce that the IMF team and the Cabo Verdean authorities have held productive policy discussions and reached staff-level agreements,” mission chief Martin Schindler said following the visit to the capital Praia.
The IMF said all quantitative performance criteria and continuous performance criteria under the ECF programme for end-December 2025 had been met.
Structural reforms were also progressing, although delays remained in the publication of audited financial statements for all state-owned enterprises, it added.
Under the resilience facility programme, reforms aimed at improving climate resilience had also advanced, including expansion of the social registry system, development of climate-related banking frameworks and efforts to move electricity and water tariffs toward cost-reflective pricing.
However, the IMF noted that some reforms were moving more slowly than expected because of capacity constraints and the complexity of implementation.
Despite the strong economic performance, the IMF warned that risks to Cabo Verde’s outlook remained tilted to the downside, citing potential spillovers from the conflict in the Middle East through higher global energy and food prices, as well as weaker external demand that could affect tourism and remittance inflows.
The Washington-based lender forecast economic growth would moderate to around 4.7 percent in 2026, partly reflecting the exceptionally strong expansion recorded last year.
The IMF said Cabo Verde’s fiscal and external buffers provided protection against immediate external shocks, but cautioned that prolonged disruptions would require “decisive and durable policy adjustments”.
More Read
It urged authorities to ensure that any support measures introduced to shield households from rising fuel prices remained temporary and did not evolve into permanent subsidies.
“The automatic price adjustment mechanism should be resumed to close the differential between international import prices and domestically regulated energy prices,” the IMF said.
The fund also called for the 2027 state budget to maintain a cautious fiscal stance consistent with reducing public debt under the ECF programme.
It stressed that stronger execution of public investment projects in 2026 would be important for attracting greater private investment and easing supply-side constraints on growth.
The IMF further urged the government to continue reforms aimed at improving public financial management, strengthening the central bank’s operations and reducing inefficiencies in the state-owned enterprise sector.
It highlighted concerns over losses at national airline TACV, saying rising fuel costs and increased competition from low-cost carriers on international routes meant the government should reconsider allocating resources to the airline and instead prioritise improvements in inter-island transport connectivity.
The IMF mission met Vice Prime Minister and Finance Minister Olavo Correia, central bank governor Oscar Santos and other senior officials, as well as private sector representatives and development partners during the visit.
