Cape Verdean Prime Minister Ulisses Correia e Silva estimated this Friday in parliament that the archipelago’s economy will grow to 15% in 2022 despite the inflationary crisis.
“In difficult conditions of crises, the economy will grow by 12-15% in 2022 compared to the pre-war periods in Ukraine,” the head of government said, speaking at the National Assembly.
Today, the Cape Verdean Parliament hosts a monthly debate with the Prime Minister on the topic “Inflation and incomes of the population, January 2023”.
Ulisses Correia e Silva recalled that Cape Verde went from inflation from 1.9% in 2021 to 7.9% in 2022, driven by higher prices in Portugal and the euro area, the main economic relations of the archipelago.
“We have put in place financial, fiscal and regulatory measures to mitigate the effects of imported inflation, which has hit fuel and electricity prices, as well as the prices of basic commodities, cereals by 2.1 million PTE. [2.100 milhões de escudos, 19 milhões de euros]. A huge external shock, exacerbated by the devaluation of the euro against the dollar in 2022,” he said.
“Thanks to the measures taken by the Government, only 20% of this shock was transmitted to consumers. The state directly and indirectly absorbed 80% of the shock,” the Prime Minister stressed to the deputies.
He added that “if these measures had not been implemented by the government”, the prices of butane, gasoline, diesel and electricity “would have risen much higher than recorded”, as in the case of butane gas, the price of which did not exceed in February 2022, before the start of the war.
“Without the measures, the tariff for electricity in the second tier, which applies to most household consumers, would be 67% higher than the pre-war value. It has increased by 15%. Without the measures, the social tariff for electricity would have increased by 157%. It hasn’t increased,” he said.
Ulisses Correia e Silva recalled that since 2017, Cape Verde has been subjected to climatic, economic and social shocks that have a strong impact on the incomes of Cape Verdean families.
“Severe droughts have caused a drop in agricultural production. Weight of agriculture in gross domestic product [PIB] increased from 8.6% in 2016 to 4.9% in 2021. Rural families suffered the most. We have implemented programs to mitigate the effects of drought and lean agricultural years for the benefit of farmers, pastoralists and families in rural areas,” he added.
Cape Verde is recovering from a deep economic and financial crisis caused by a sharp drop in tourism demand – a sector that guarantees 25% of the archipelago’s GDP – since March 2020 due to the covid-19 pandemic. It experienced a historic economic downturn equivalent to 14.8% of GDP in 2020, followed by a 7% growth in 2021 driven by a recovery in tourism demand.
For 2022, due to the economic consequences of the war in Ukraine, namely the rise in prices, the Government lowered the growth forecast in June from 6% to 4%, which was later revised again, but by more than 8%.
Author: Portuguese
Source: CM Jornal
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