Budget Support Group press release

November 20 - 28, 2025

A mission of the Budget Support Group (BSG), co-chaired by the Government of Cabo Verde and the African Development Bank Group, took place in the cities of Mindelo and Praia from November 20 to 28, 2025.

The BSG’s objective is to provide financial support and technical assistance to the State Budget through grants and loans, aligned with the Government’s national development priorities. The BSG is composed of Luxembourg, Portugal, Spain, the European Union, the African Development Bank Group, and the World Bank Group.

During the mission, discussions covered issues related to the macroeconomic, fiscal, and debt situation; public financial management; public administration reform; employment and employability; poverty reduction and social protection; health; security; gender equality; climate action; energy transition; the blue economy; digital and transport connectivity; and national statistical data.

The BSG Partners express their appreciation to the Government of Cabo Verde, in particular the Ministry of Finance, representatives of the sectoral ministries, the Bank of Cabo Verde, the Court of Accounts, and other public entities for their participation and engagement in this mission. The Partners also extend special thanks to the Municipality of São Vicente for the warm welcome during the visit to the island, which took place on November 20–21.

The BSG Partners likewise express their solidarity with the families affected by the floods in the islands of São Vicente, Santo Antão, and São Nicolau, as well as by the more recent floods in the inland municipalities of Santiago.

The Partners analyzed the recent macroeconomic framework and noted the favorable performance of the economy in 2025, driven mainly by services—particularly tourism—and by the gradual recovery of investments. Despite this dynamism, moderation is expected in 2025 compared to 2024, approaching the economy’s medium-term growth potential.

This outcome takes place in an international context marked by greater uncertainty, including geopolitical tensions, high freight costs, possible increases in energy prices, and signs of slowdown among key economic partners. Nevertheless, the BSG highlights the resilience of the Cabo Verdean economy and underscores the importance of accelerating economic diversification to mitigate external vulnerabilities and ensure more sustainable growth.

The BSG acknowledges the ongoing fiscal consolidation efforts in 2024 and 2025, reflected in robust revenue collection and moderate expenditure growth. By the third quarter of 2025, domestic revenues had reached 82% of the annual target, driven by strong performance of the Value Added Tax (VAT) and the Corporate Income Tax (IRPC), which benefited from improved tax compliance and administrative modernization. The BSG also recognizes progress in expenditure rationalization reforms, including the centralization of public procurement, process digitalization, the introduction of e-procurement, and the strengthening of internal controls.

The Partners emphasize the need to improve public investment execution. They also highlight the risks associated with exogenous shocks, including climate-related events, pressures on current expenditure, and investment needs in strategic sectors, stressing the importance of maintaining prudent and results-oriented fiscal management.

The BSG congratulates the authorities for continuing the downward trajectory of public debt, which in September 2025 stood below 100% of GDP—an important milestone for the country’s macro-fiscal sustainability. Despite this progress, the authorities reported that debt service reached 50.3% of State revenues in the second quarter of 2025. In this context, the Partners urge the authorities to maintain prudent debt management and strengthen fiscal risk monitoring.

The BSG was informed of progress in the State-Owned Enterprises reform agenda for 2025–2028, including the restructuring process of strategic companies. The Partners particularly highlight the importance of completing the restructuring of ELECTRA, ensuring the full operationalization of the new resulting entities (EPEC, EDEC, and ONSEC).

The Group emphasizes the need to continue strengthening governance, accountability, and risk management mechanisms, as well as improving the monitoring of State-Owned Enterprises. It is essential to ensure that guarantees, subsidies, and capitalizations remain at sustainable levels, contributing to greater predictability across the State-Owned Enterprises sector.

The BSG also took note of progress in the implementation of the National Strategy for Statistical Development (ENDE) and underscores the importance of producing and disseminating reliable statistical data in a timely manner to inform public policy. The Partners further highlight the relevance of creating a dedicated fund for statistical production as an essential instrument to ensure greater predictability, sustainability, and efficiency in financing statistical operations. The Group notes the announcement of new methodologies for the Household Income and Expenditure Survey (IDRF), representing an important step toward improving data quality.

In the area of Public Administration and State Modernization, the BSG Partners acknowledged progress in implementing the Careers, Functions, and Remunerations Plan (PCFR), covering both the general regime and the special careers in education and health. These reforms have had impacts on salary valorization, harmonization of the Unified Remuneration Table, and improvement of professional development conditions. The Partners also commend the authorities for the Program to Regularize Precarious Employment Contracts, which covers more than 4,800 workers, reinforcing job stability, access to social protection, and motivation among public servants.

The Partners further note reforms aimed at strengthening public administration capacities, including the ongoing review of the governance model for the future National School of Public Administration and the National Capacity-Building Plan. They also welcome the inclusion of gender equality as a core pillar of both the future School and the Plan.

The BSG acknowledges advances in the implementation of the National Action Plan for Open Governance (PANGA), the expansion of integrated service channels, and the development of the State’s Single Portal, while stressing the need to accelerate public administration reform.

The Partners also note progress in modernizing the public procurement system, including the growing use of the Electronic Public Procurement Platform and the completion of the new Public Procurement Code, which strengthens transparency and market competition while limiting the use of direct awards. Nevertheless, the BSG underscores the need to accelerate the extension and interoperability of the platform at the municipal level, enhance SME participation, and ensure full implementation of the Public Procurement System Assessment Methodology (MAPS II) action plan and the forthcoming National Public Procurement Strategy.

In the area of public finance oversight, the Partners noted the strengthening of the Inspectorate-General of Finance, with the recruitment of new inspectors, as well as the initiation of procedures for the development of a digital platform to monitor the implementation of recommendations by public entities. Increased activity of the Court of Accounts was also recorded, including the opinion on the 2023 General State Account and successive and concomitant audits of municipalities and public bodies. Despite these advances, BSG’s stresses the need to consolidate operational capacities to maximize the impact on transparency and public financial management.

In the domain of gender equality, the Partners observed continuous progress, reflected in the strengthened response to gender-based violence, the expansion of economic opportunities for women, and training initiatives on the Parity Law directed at decision-makers and the general population. The Partners further underline the importance of accelerating the implementation of the National Gender Equality Plan and consolidating gender indicators within the national statistical system.

In the area of social protection, the BSG Partners commend the Government’s efforts to consolidate social policies, which already cover more than 60% of the population. In the contributory regime, managed by the INPS, revenues from the investment portfolio have stabilized, with robust capitalization equivalent to 38% of GDP. The Partners encourage the swift completion of the actuarial study and the gradual implementation of reforms to strengthen financial sustainability.

In the non-contributory regime, the Partners value the expansion of coverage and the strengthening of the Social Inclusion Income (RSI) and Social Pensions, as well as the diversification of funding sources for the Fundo Mais. They nevertheless highlight the need to reinforce coordination with municipalities to reach the 9,000 households targeted by the RSI and to rationalize the supply of social programs based on evidence. The Partners also warn of persistent challenges, calling for the completion of the Household Income and Expenditure Survey (IDRF)—essential to identify potential errors in the Unified Social Registry and to monitor inequalities. The Group also encourages the Government to accelerate the publication of municipal poverty eradication plans and the social charter.

In the field of public support for employment and employability, the Partners congratulate the Government for the sustained expansion of professional training services and entrepreneurship promotion, reaching in 2025 a record number of young beneficiaries. They also noted advances in the digitalization of public employment services, reforms to improve training quality, and projects to modernize training centers. The BSG further highlights the encouraging results of the pilot project supporting the transition from the informal economy—a situation that particularly affects women—demonstrating the significant impact of these measures in promoting decent work.

The BSG acknowledges progress in labor regularization and in the implementation of the Careers, Functions, and Remunerations Plan (PCFR) for the medical and nursing professions, underscoring the importance of extending this dynamic to other professional categories. The Partners welcome the increase in the budget allocation for 2026, emphasizing the importance of continuing to raise the budget execution rate to fully leverage available resources. Efforts to enhance autonomy and quality of care are positively noted, particularly through the strengthening of health infrastructure, the acceleration of digitalization and telemedicine, and the programming of specialized medical training.

In the Justice sector, the BSG recognizes advances in digitalization, with the Justice Information System already operational in all districts, and observes progress in reducing judicial backlogs, reiterating the importance of accelerating this dynamic. The Group further stresses the urgency of providing the Mediation and Arbitration Center with the necessary human resources for its functioning. The Partners positively note the continued reduction in recidivism rates, improvements in prison infrastructure, access to vocational training programs in correctional facilities, and the creation of conditions to launch the pilot phase of electronic monitoring.

At the level of Internal Security, the Government reported a reduction in crime rates, supported by more effective judicial responses, preventive actions targeting youth and former inmates, continuous police training, and modernization of equipment. The Partners highlight the importance of strengthening institutional coordination capacities and Civil Protection response, emphasizing the added value of external partnerships in supporting its operationalization.

In the domain of Defense, the BSG underscores the need to finalize the essential strategic documents that define the role of the Armed Forces, establish capacities, and enable the structuring of a multiannual financing program for capability development and maintenance of assets. The Partners note the reinforcement planned in the 2026 State Budget, including updated remuneration and the allocation of funds for the operation and maintenance of naval and air assets, which are critical for maritime surveillance, aerial patrol, and emergency response.

In the fight against the Climate Crisis, the BSG took good note of the progress achieved, namely the submission of the new version of the Nationally Determined Contribution (NDC 3.0) to the Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC), the integration of climate expenditure into the 2026 Budget, the operationalization of the Climate Governance Framework, the approval of the Climate Framework Law, and the launch of the Strategic Plan for Climate Support Mobilization (PEMAC), strengthening the predictability of climate action with a strategic focus on national targets. The Partners encourage the swift regulation and operationalization of the Climate and Environmental Fund as a key instrument for channeling climate investments in the country, with both national and external resources.

The Partners positively welcome the results achieved by the Government in installing renewable energy generation and storage capacity and in advancing the schedule of the flagship pumped storage project on Santiago Island. Despite the progress made and ambitious targets, governance challenges in the sector remain. The completion of ELECTRA’s restructuring and the consolidation of a robust sectoral governance framework will accelerate investments aimed at resilience and preventive maintenance of the electricity system, which in turn will translate into significant efficiency gains, greater reliability in electricity supply to end consumers, and the envisioned energy transition. In addition, the Partners stress the need to implement ARME’s capacity-building plans to consolidate sector regulation. Finally, the Partners reiterate the need to accelerate the implementation of social energy tariffs, expanding their coverage in line with established targets.

In the Blue Economy sector, the Partners highlight the sector’s high potential to drive economic diversification and strengthen the country’s resilience, recommending the prioritization of strategic actions. The update of the Ocean Satellite Account shows that growth remains moderate and concentrated in tourism, reinforcing the need to improve interinstitutional coordination and the efficiency of public investments. In parallel, the Partners emphasize the importance of developing industrial fishing, noting that financial and infrastructure efforts are required to leverage exports and ensure food security. They also stress the urgency of intensifying the expansion and strengthening the management of Marine Protected Areas, which are essential for the sector’s sustainability, in line with international commitments undertaken.

In the domain of connectivity and the digital economy, BSG Partners recognize the importance of the Tech Park as a key component of the National Strategy for the Digital Economy, currently employing more than 300 professionals and hosting over 50 offices. The Partners also take note of initiatives aimed at strengthening the digital ecosystem, mobilizing the entrepreneurial diaspora, and the Morabeza Innovation Project, which seeks to promote knowledge transfer and Cabo Verde’s integration into regional and global markets. The Group encourages the Government to continue efforts toward implementing the pillars of the Strategy, highlighting the importance of mobilizing private capital to complement public investments and thereby ensure the sector’s expected impact on economic growth.

In the current challenging context, the BSG noted that the current policy foresees Cabo Verde Airlines (LACV) gradually assuming domestic connections after a transition period supported by TACV, while TACV focuses on international expansion. The growing interest of low-cost carriers demonstrates the country’s attractiveness. At the same time, it is essential to ensure that the strategy safeguards public service obligations for inter-island connectivity without undermining the sector’s financial and fiscal sustainability. Effective implementation of these measures will be fundamental to ensuring the development of the aviation sector and meeting the expected increase in demand.

The Group was also informed of the Government’s plans for integrated investments in terminals and vessels, promoting intermodality among the islands. The Partners acknowledge that challenges persist, such as fleet renewal, improvement of port management services and transport predictability, as well as infrastructure modernization. Maritime connectivity in Cabo Verde is expected to advance with the transfer of economic regulation of the maritime sector to ARME and the institutional strengthening initiated in 2025.

The BSG Partners reiterate their continued support to Cabo Verde and express their appreciation to all entities for their commitment to a constructive and fruitful dialogue.

Source: Budget Support Group (BSG)