According to an IMF Technical Assistance Report released in April 2025, officials at Cabo Verde’s Ministry of Finance have successfully built capacity to analyse public debt dynamics using a new Debt Dynamics Tool. The support was delivered by the IMF Institute for Capacity Development between September and October 2024, following a request from the country’s National Directorate for Planning.
The intervention comes at a critical time for the island nation. While Cabo Verde’s external debt is assessed to be at a moderate risk of distress, overall public debt remains high, although on a declining path. The IMF notes that the country has maintained macro-financial stability despite global shocks, supported by concessional financing and a favourable debt structure dominated by fixed interest rates.
Before the assistance programme, no single unit within the Ministry of Finance was responsible for producing systematic public debt projections. This limited the government’s ability to assess fiscal risks, particularly in a tourism-dependent economy that is vulnerable to external shocks and climate-related events.
During the programme, officials from the planning, treasury and budget directorates were trained to use the Debt Dynamics Tool to model debt trajectories, stress-test fiscal scenarios and assess the impact of risks such as sovereign guarantees and natural disasters. The training included virtual sessions and an in-person mission in Praia in October 2024.
IMF staff report that ministry officials demonstrated a marked improvement in their ability to analyse debt sustainability and communicate fiscal risks. Participants produced baseline and alternative debt scenarios, including simulations based on shocks similar to past volcanic eruptions.
The authorities have committed to embedding the new tool into government processes. The Ministry of Finance plans to publish debt projections in its upcoming Macroeconomic Report, expected in the first half of 2025, and to incorporate the analysis into the 2026 national budget.
However, the IMF cautions that sustaining the gains will depend on institutional commitment, particularly given staff workload pressures. It recommends integrating debt analysis into the Medium-Term Fiscal Framework and strengthening macroeconomic forecasting through closer collaboration with the central bank.
–IMF/ChannelAfrica–
