Following a recent visit to Praia, Cabo Verde, a team from the International Monetary Fund (IMF) and local authorities have reached an agreement. This follows the country's fourth review under the Extended Credit Facility (ECF) and a first review under the Resilience and Sustainability Facility (RSF). Both of these programs offer support to the government in distinct ways.
Justin Tyson, mission chief for Cabo Verde at IMF, announced the development. "I am pleased to announce that the IMF team and the Cabo Verdean authorities have reached staff-level agreement on the policies needed to complete the Fourth Review under the ECF-supported program and the First Review of the RSF arrangement. Subject to approval by the IMF Executive Board in the coming weeks, Cabo Verde will receive a disbursement of SDR 4.50 million (approximately US$ 5.94 million) and SDR 5.264 million (approximately US$ 6.95 million), respectively. Cabo Verde continues to recover well from recent shocks," said Tyson.
Low-income countries are eligible for financial assistance through what is known as the Extended Credit Facility (ECF). According to information on IMF's website regarding its medium-term financial assistance program, countries that qualify for assistance through the Poverty Reduction and Growth Trust (PRGT) are also eligible for ECF funding. The terms of this aid last between three and five years.
The Resiliency and Sustainability Facility (RSF), according to information available on IMF's webpage dedicated to it, is a program that offers longer-term financing for PRGT-eligible low-income countries, small states, and middle-income countries that meet certain requirements. Each agreement lasts a minimum of 18 months with repayment having a maturity period of 20 years and a grace period of 10.5 years.
Tyson further elaborated on Cabo Verde's economic performance in a news release dated May 10. "The authorities have successfully maintained macroeconomic and financial stability and remain committed to the program objectives. Macroeconomic performance was strong in 2023 with growth at 5.1 percent, low inflation, and a prudent level of international reserves to protect the peg. The public debt-to-GDP ratio continues on a downward path, reflecting high growth and a record 2023 fiscal primary surplus. Performance under the ECF was strong. All quantitative performance criteria (QPCs) for end-December 2023 were met, as well as the non-quantitative continuous PCs. The indicative targets (IT) for end-September and end-December 2023 were met and the structural benchmarks (SBs) for end-December 2023 were met. The Reform Measures 1 and 3 under the RSF arrangement have been completed," Tyson said.