Cape Verde’s finance minister said this Sunday that the country expects to outperform the International Monetary Fund’s (IMF) growth forecast for 2022, stressing that public debt, the country’s most important macroeconomic element, is sustainable.
In an interview with Lusa following the IMF’s spring meetings in Washington, Olavo Correia commented on the organization’s growth forecasts of 4.4% for 2023, recalling that the country has a history of exceeding those expectations.
“In 2022, they predicted growth of 4%, and we grew by almost 18%”, and “we know that we have conditions and obligations even for growth well above 5%, if the international context helps us in this promotion strategy” . economic growth, also associated with the diversification of the Cape Verdean economy,” the Deputy Prime Minister said.
Of the meetings in Washington, the official makes “a positive balance, because meetings always allow for a more global approach to the national context”, namely “managing the consequences of crises, inflation and food insecurity”, underlined by “this invasion of Ukraine for Russia.”
One of the country’s structural problems is the public debt, about 120% of the gross domestic product (GDP), which is a very high figure that does not concern the executive branch.
“We, Cape Verde, have been pursuing a debt policy for several years,” which “obliges the state to take on only concessional and multilateral debt,” he explained, adding: “Unlike many other African countries that have public debt, as a percentage percent of GDP lower than Cape Verde, our debt is sustainable.”
And he insisted: “All the stress tests that have been done to date point to the sustainability of the public debt, because it is a constitutional debt payable in the long term of 30, 40 years with multilateral institutions.”
Despite this, the Minister acknowledged that the current amount of debt represents a “high ratio”, so the Government is working to reduce this ratio in the medium term.
He explained that economic growth is one of the executive’s decisions to reduce the weight of Cape Verdean public debt in a “sustainable trend over 10 to 15 years.”
To this end, the government wants to “increase the tax base” in order to collect more tax revenue, which currently affects only 22% of GDP, aiming to reach 30% soon, through a policy of dematerialization of the state’s relations with citizens and further struggle. against tax evasion, following international best practices.
“We don’t want to increase tax revenue, we want to increase the tax base, make everyone pay fairly and allow the state to collect more taxes in order to better serve citizens with quality services,” said Olavo Correia.
According to the minister, “the state needs resources, this is obvious”, and “these resources cannot come in and go out of debt”, but “are mobilized within the country through taxes that everyone has to pay”, with the help of “a tax machine that can force everyone to pay”.
Rationalizing public spending, improving the efficiency of the public business sector, a series of privatizations and new concessions are other measures taken by the executive to reduce the weight of the public debt.
As part of this effectiveness, Olavo Correia acknowledged, “more transparency in the public sphere” is needed, so the executive branch has permanent measures of “electronic patrol and digital public procurement”, in an “open data portal system” for all, in addition to “strengthening regulatory authorities so that citizens are confident in how the state uses state resources.
“Our goal is to bring this ratio to 100% of GDP between 2026 and 2030,” Olavo Correia concluded.
Author: Portuguese
Source: CM Jornal
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