Cabo Verde has a US$9.2 million deficit in public accounts in January

According to the summary report of the January budget execution, to which Lusa had access today, this performance continued to be conditioned by the economic consequences of the covid-19 pandemic, but with revenues up 12.1% compared to January 2021, as well as expenses, by 16.8%.

The deficit equivalent to 0.6% of the Gross Domestic Product (GDP) in January compares with a deficit of 0.4% in the same month of 2021, then of CVE 696 million (US$ 6.1 million), according to the report data.

In Cape Verde’s State Budget for 2022, the government has entered a public accounts deficit forecast of 6.1% of a GDP — all wealth produced in the country — expected to be above CVE 188,945 million, compared to CVE 177 billion projected for 2021, resulting in the economic growth of up to 6% this year.

Cape Verde’s deputy prime minister, Olavo Correia, said on November 3 in parliament that the 2022 budget will be one of the “most challenging in the history” of the archipelago due to the economic crisis caused by the pandemic, prepared in a “scenario of great uncertainty.

Cape Verde’s public accounts recorded a deficit of over CVE 14.4 billion in 2021, equivalent to 8.1% of the estimated GDP, but lower than expected, according to previous data from the Ministry of Finance.

According to the State Provisional Account report in the fourth quarter, this performance continued to be constrained by the economic consequences of the covid-19 pandemic, albeit with a recovery in total revenues, up 1.8% from 2020, and a 0.5% increase in expenditures.

The 8.1% deficit through December compares with a deficit of 8.9% in the same period in 2020, according to data in the same report.

According to the government’s previous forecast, Cape Verde’s public finance deficit was expected to reach 9.6% of GDP in 2021, as stated in the Rectifying State Budget, approved last July and still heavily influenced by the health and economic crisis caused by the pandemic.

Cape Verde reversed in 2020 — a deficit of 9.1% of GDP — the downward trend of the previous six years, of decreasing public accounts deficit, according to previous data from the central bank.

Over the past ten years, Cape Verde’s (annual) public accounts balance has always been in deficit, with peaks in 2012 (-10.3% of GDP) and 2013 (-9.3% of GDP), dropping to a low of -1.8% of GDP in 2019, before the pandemic-induced crisis.

Cape Verde has been facing a deep economic and financial crisis, stemming from the sharp drop in tourism demand – a sector that guarantees 25% of the archipelago’s GDP – since March 2020 due to the covid-19 pandemic.

The country experienced a historic economic recession in 2020, equivalent to 14.8% of GDP. The Cape Verdean government admits that the economy may have grown 7.2% in 2021, driven by the recovery of tourism demand, and predicts a 6% growth in 2022.

With information from Lusa