Cape Verde
Small island developing states (SIDS) have been acutely affected by the economic impacts of the COVID-19 pandemic. This paper takes a broader perspective to explore how the revenue effects of this crisis in SIDS are connected to their unique financing and development challenges. It also suggests how SIDS governments and development co-operation providers can better partner together to strengthen mobilisation of domestic revenues – in particular tax revenues – in the recovery post-COVID-19.
Given the fast pace of global socio-economic development, more tailored, focused, and localised efforts to strengthen public sector capacity in small island developing states (SIDS) is increasingly important. SIDS have unique vulnerabilities, rich histories and contexts, and strengths that can be harnessed for sustainable development. Development partners need to adapt how they provide capacity-strengthening support, taking individual SIDS’ circumstances and needs into account to better help them achieve their ambitions. This report summarises perspectives from small island developing states (SIDS) on current experiences and opportunities to improve capacity-strengthening support to make it more tailored, impactful, and sustainable. The report uses the broad definition of capacity-strengthening as activities that improve the competencies and abilities of individuals, organisations, and broader formal and informal social structures in a way that boosts organisational performance. It concentrates on public sector capacity, including interactions with other stakeholders across sectors.
Cape Verde: Stock of Total External Debt (percentage of GDP) and Debt Service (percentage of exports of goods and services) appears in African Economic Outlook 2009.
Cape Verde: Real GDP Growth and Per Capita GDP (USD/PPP at current prices) appears in African Economic Outlook 2009.
Cape Verde: Public Finances (percentage of GDP at current prices) appears in African Economic Outlook 2009.
Cape Verde: Current Account (percentage of GDP at current prices) appears in African Economic Outlook 2009.
The slowdown observed since the end of 2011 persisted in 2012, due to economic stagnation around the globe, and in the euro area in particular. Reduced foreign aid and sluggish foreign investment resulted in gross domestic gross domestic product (GDP) growth dropping from 5.0% in 2011 to a projected 4.0% in 2012. Remittances inflows held up, however, and tourism did well. Tourism and ancillary activities remained the driving force of the economy in 2012, accounting for around 30% of GDP and 90% of total exports. Yet the deteriorating global economic outlook and the euro zone sovereign debt crisis is likely to continue to weigh on Cape Verde’s economic performance. However large new public investments are expected to provide support to domestic demand and raise the GDP growth to 4.8% in 2013. Over the medium term, the resumption of structural reforms will be critical if Cape Verde is to sustain the high growth rates of the past decade.
Cape Verde, a small island state, is a lower middle-income country (MIC) under the African Development Bank’s (AfDB) credit policy. [1] Cape Verde’s Gross National Income (GNI) per capita in 2010 was about USD 3 270, exceeding the MIC classification threshold of USD 1 175 GNI per capita by a large margin. However, in spite of significant progress over the past two decades, Cape Verde continues to be confronted by a number of fundamental constraints and challenges to its development. Apart from its insularity, Cape Verde is facing problems in the form of its fragmented territory (there are ten islands), small population (fewer than 500 000 people) limiting its internal market, a dry Sahel climate, and scarce natural resources.
Cape Verde's economy showed signs of recovery from the impact of the global financial crisis with 2010 gross domestic product (GDP) growth estimated to reach 5.3% compared to 3.6% in 2009. In 2010 there were signs of recovery in tourism and air transport and strong support from the Public Investment Programme (PIP). However, in 2010 foreign direct investment (FDI) and associated construction inflows continued to shrink. The outlook remains uncertain for 2011 as investment largely originates from the European Union (EU), which is growing only slowly. Remittances remained fairly constant in 2010 after a slight decrease of 2.2% in 2009.
Cape Verde’s economy was adversely impacted by the global financial crisis with its gross domestic product (GDP) growth rate contracting to 3.9% in 2009 from 5.9% in 2008. Growth decreased owing to the fall in tourism, construction, and foreign direct investment (FDI), but by late 2009 both tourism and construction had started to recover and FDI flows stabilised. Remittances remained fairly constant and even rose by 1.7% in 2009.
CAPEVERDE’S STRONG PERFORMANCE in recent years has left it well placed to weather a slowdown. GDP is estimated to have expanded by 6.1 per cent in 2008. It is expected to slow to 3.6 per cent in 2009, and to register somewhat stronger growth in 2010. That forecast is, however, subject to downside risk, as it is based on the assumption of a 10 per cent decline in tourism receipts in 2009, which may fall yet further as the global economic crisis unfolds.
CAPE VERDE’S ECONOMY IS ESTIMATED to have grown by 6.6 per cent in 2007, down from 10.8 per cent in 2006. This strong growth reflects a relatively high rate of execution of the public investment programme (PIP) and a dynamic private sector, supported by a substantial increase in domestic credit and private investment, including large inflows of foreign direct investment (FDI). In 2008 and 2009, real GDP is expected to grow by 7.6 per cent and 7.0 per cent respectively.The annual average inflation rate fell to 4.5 per cent in 2007, from 6 per cent in 2006, and it is projected to drop further to under 3 per cent in 2008.
A transition finance country pilot was initiated by the OECD Development Assistance Committee (DAC) in partnership with the government of Cabo Verde. The study aims to capture the challenges facing Cabo Verde following graduation from Least Developed Country (LDC) to Lower Middle Income Category (LMIC), including the shifting financing for sustainable development landscape, the mounting risk of debt distress and the economic and environmental vulnerabilities as a Small Island Developing States (SIDS). In line with the Addis Ababa Action Agenda (AAAA), the pilot study proposes a new “ABC” approach targeted to assess all available sources of financing (ODA, OOF, private investment, domestic resources, and remittances), identify emerging SDG financing gaps and promote better alignment of resources with national financing for sustainable development strategies.