Cape Verde’s Public Finance Council (CFP) considered on Tuesday (30) that budget execution improved in 2024 compared to 2023, but warned of persistent problems such as low public investment and the high stock of public debt.
In its report assessing the 2024 General State Account, released by the CFP, it highlights that “the budget execution rate rose to 76.5%, from 72.6% in 2023, reflecting short-term macrofiscal stability and continuity in the consolidation of public accounts”.
The primary and current balances remained positive, at 1.18% and 1.03% of Gross Domestic Product (GDP), respectively, showing a “balanced budgetary position”, despite the worsening of the overall balance compared to 2023.
The 2024 results exceeded the projections of the reprogrammed budget, but the CFP points to the weak performance of public investment.
Execution of non-financial assets reached only 2.5% of GDP, representing 9.4% of total expenditure.
“This rate is below the average of developing countries (3.8 to 4.3%) and may be insufficient to meet climate resilience and infrastructure needs,” it added.
Regarding public debt, the ratio fell to 111.4% of GDP, but remains “significantly above” the legal limit of 80%.
According to the report, the country remains exposed to exchange rate risks, mainly linked to the US dollar, and to potential increases in interest rates.
The stock of the State’s contingent liabilities, including guarantees and sureties, reached 24.8 billion escudos (224.9 million euros), while tax benefits grew by 7.2%, totalling 11.3 billion escudos (102.4 million euros), requiring strict monitoring to avoid erosion of the tax base, the report notes.
The CFP acknowledges compliance with the targets for the deficit and the current balance, but warns of non-compliance with the debt sustainability rule.
The reduction in the debt ratio in 2024 was mainly due to a favourable differential between economic growth and the average cost of debt, rather than a nominal reduction in the debt stock.
The report recommends that the Government strengthen realism in budget planning, reorient expenditure to create fiscal space for public investment, strictly control personnel spending, and improve transparency and monitoring of risks in the state-owned enterprise sector.
Source: Lusa
