CABO VERDE · ECONOMY · IMF
Key Facts
- —The country Cabo Verde, also called Cape Verde, is an Atlantic archipelago of about 517,000 people off West Africa. It lives largely on tourism and on money sent home by emigrants, and its escudo is tied to the euro.
- —Why it matters The government’s 2027 budget assumes growth of 5.6% and inflation of 2.0%. The IMF projects 5.0% growth and 2.8% inflation for the same year.
- —Why now The IMF published its October World Economic Outlook on 13 October, during its annual meetings with the World Bank in Bangkok. The budget, worth 101.7 billion escudos (about US$1.04 billion), went to parliament on 1 October.
- —The government The left-of-centre PAICV took office in June after winning the 17 May legislative election. Prime Minister Francisco Carvalho also runs the finance portfolio.
- —The numbers The IMF sees public debt falling from 109.9% of GDP in 2026 to 103.6% in 2027. It puts unemployment at 8.5% in both years.
- —For US readers About 29% of the money emigrants send home comes from the United States. The US State Department advises Americans to exercise normal precautions in Cabo Verde.
- —Still open It is unclear whether the government will revise its figures while parliament debates the budget. Nor is it known what follows the IMF programme that ends in December.
The International Monetary Fund (IMF) expects Cabo Verde’s economy to grow 5.0% in 2027, below the 5.6% built into the government’s 2027 budget, and sees inflation at 2.8% rather than the 2.0% the budget plans for. The IMF figures come from its World Economic Outlook of Tuesday 13 October 2026, and the Praia weekly Expresso das Ilhas set them against the budget report in its 14 October print edition, published online on Sunday 18 October.
The gap matters because the budget, sent to parliament on Thursday 1 October, is the first full spending plan of a government that took office in June and has promised cheaper ferries and flights from January. It also comes as Cabo Verde’s current IMF programme runs out in December, with the government still discussing what support should follow.
For US readers, the island nation is a small but closely watched case: a stable democracy off West Africa that depends on tourists and on money from emigrants, about 29% of it sent from the United States. Growth and inflation forecasts shape the tax take, the debt path and the cost of living on the islands, which matter to visitors, to families who send money home and to lenders.
Two Forecasts for 2027
The IMF’s World Economic Outlook gives Cabo Verde growth of 5.0% in both 2026 and 2027, after an estimated 6.3% in 2025. It sees average consumer prices rising 1.2% this year and 2.8% next year, with unemployment steady at 8.5%.
The government’s numbers are more optimistic on both counts, according to Expresso das Ilhas, which cites the report that accompanies the 2027 budget. That report assumes growth of 5.6% and inflation of 2.0% next year.
Even the IMF’s lower figure keeps Cabo Verde ahead of most of the continent. The Fund projects 4.5% growth for sub-Saharan Africa in 2027, and only 15 of the region’s economies with a 2027 forecast are expected to grow faster than Cabo Verde.
Other small island economies fare worse in the same tables. The IMF expects Mauritius to grow 3.2% in 2027, the Seychelles 4.0% and São Tomé and Príncipe 1.9%.
Why the IMF Is More Cautious
The IMF’s global report says energy-importing economies that sit outside the technology supply chain face the hardest outlook, and Expresso das Ilhas places Cabo Verde in that group. The Fund expects world growth of 3.4% in 2027 and world inflation of 4.1%, with risks tilted to the downside if conflict in the Middle East keeps energy and food prices high.
The IMF also expects Cabo Verde’s current account to swing from a surplus of 3.4% of GDP in 2025 to deficits of 1.9% in 2026 and 2.2% in 2027. In plain terms, the country is projected to spend more abroad than it earns from tourism, exports and transfers.
What the 2027 Budget Promises
The government delivered the 2027 budget to the National Assembly with total spending of 101.7 billion escudos (about US$1.04 billion). Dollar figures in this article use about 98.1 escudos per US dollar, derived from the escudo’s fixed peg of 110.265 per euro and the euro’s closing rate on Friday 16 October.
Secretary of State for Finance Maria José Lopes told reporters that about 98 billion escudos (about US$1 billion) of the total is revenue and that 78% is domestic revenue collected by the tax authorities. Clóvis Silva, the minister for justice and parliamentary affairs, said a ferry ticket between islands would cost 500 escudos (about US$5.10) and a domestic flight 5,000 escudos (about US$51) from January 2027.
The budget also funds free health care measures, education spending and new career and pay plans for civil servants, according to the government. Revenue estimates rest on the government’s own growth and inflation assumptions, so a weaker economy would usually mean less tax collected than planned.
The 2027 total is slightly below the amended 2026 budget of 103.9 billion escudos (about US$1.06 billion), which the new government took to parliament in July. During that debate, Prime Minister Francisco Carvalho accused the previous government of letting spending run about 8 billion escudos (about US$82 million) above plan around the election.
A New Government Tested by the IMF
The African Party for the Independence of Cabo Verde (PAICV), a left-of-centre party rooted in the movement that won independence from Portugal in 1975, won the legislative election of 17 May 2026. Its leader, Francisco Carvalho, a former mayor of the capital Praia, was sworn in as prime minister in June and kept the finance portfolio for himself.
The PAICV replaced the centre-right Movement for Democracy (MpD) of former prime minister Ulisses Correia e Silva. In July, Carvalho accused the MpD of having misled the IMF about spending, while MpD parliamentary leader Luís Carlos Silva replied that the Fund considers its relationship with Cabo Verde excellent and historic.
Maria José Lopes, who led Cabo Verde’s delegation to the annual meetings in Bangkok from 12 to 18 October, said the current IMF programme ends in December. She said the government would discuss with the IMF and the World Bank which kinds of support best fit its own programme.
André Roncaglia, the IMF executive director whose constituency includes Cabo Verde, said in Bangkok that the Fund wants to deepen the relationship. On the margins of the meetings, the government also held talks on new financing with the Saudi Fund for Development and the Arab Bank for Economic Development in Africa (BADEA).
What It Means for US Readers
Cabo Verdean families in the United States sent about 29% of the islands’ emigrant remittances in 2025, second only to Portugal with about a third, according to central bank data reported by the Portuguese news agency Lusa. Remittances reached a record of about 31 billion escudos (about US$316 million) last year.
Because the escudo is tied to the euro, what a dollar buys on the islands moves with the euro-dollar rate rather than with Cabo Verde’s own economy. Inflation at the IMF’s 2.8% would still be far below the 8.6% the Fund projects for sub-Saharan Africa, but it would push up prices for visitors and for families who rely on help from abroad.
The United States broke ground in July 2025 on a new US$443 million embassy in Praia, which Ambassador Jennifer Adams described at the time as a message that the United States is there for the long term. The State Department’s advice for American travellers is to exercise normal precautions in Cabo Verde, with crime the risk it names.
For US investors, the World Bank’s private-sector arm, the International Finance Corporation (IFC), has grown its investments in Cabo Verde from zero about five years ago to nearly US$500 million, World Bank executive director Harold Tavares said in Bangkok. The IFC is holding a Lusophone Africa investment forum on the island of Sal on 26 and 27 October.
What Is Not Known
The budget report that Expresso das Ilhas quotes was not available on the finance ministry’s website on 19 October, so the 5.6% and 2.0% figures could not be checked in the original. No public government response to the IMF’s lower forecast could be found by Monday 19 October.
It is also not known what will replace the IMF programme that ends in December, or whether parliament will change the budget before its final vote. The IMF will update its forecasts again in its April 2027 World Economic Outlook.
Frequently Asked Questions
How fast will Cabo Verde’s economy grow in 2027?
The IMF projects 5.0% growth in 2027, the same as in 2026. The government’s 2027 budget assumes 5.6%, according to Expresso das Ilhas.
Why does the gap between the forecasts matter?
Budget revenue is estimated from the government’s growth and inflation assumptions. Slower growth and faster inflation than planned would usually mean less tax collected and higher costs for the state.
Who governs Cabo Verde now?
The left-of-centre PAICV has governed since June 2026 after winning the 17 May legislative election. Prime Minister Francisco Carvalho also holds the finance portfolio.
Does Cabo Verde have an IMF programme?
Yes, and the government says the current programme ends in December 2026. It plans to discuss with the IMF and the World Bank which support best fits its new agenda.
What does this mean for American visitors?
The escudo is tied to the euro, so dollar costs follow the euro-dollar rate. The State Department advises Americans to exercise normal precautions in Cabo Verde.
Sources: IMF DataMapper, World Economic Outlook October 2026, Cabo Verde real GDP growth, IMF DataMapper, World Economic Outlook October 2026, inflation, IMF DataMapper, World Economic Outlook October 2026, general government gross debt, IMF, World Economic Outlook October 2026, 13 October 2026, IMF, Cabo Verde country page, Government of Cabo Verde, 2027 budget delivered to the National Assembly, 5 October 2026, Government of Cabo Verde, IMF and World Bank at the annual meetings, 12 October 2026, Government of Cabo Verde, Saudi Fund for Development, 13 October 2026, Government of Cabo Verde, BADEA, 15 October 2026, Expresso das Ilhas, IMF forecasts less growth and more inflation than the government, 18 October 2026, RTP/Lusa, IMF projections for Portuguese-speaking economies, 13 October 2026, RTP/Lusa, new government sworn in, 19 June 2026, Observador/Lusa, amended 2026 budget debate, 30 July 2026, Notícias ao Minuto/Lusa, remittances in 2025, 13 March 2026, US Embassy in Cabo Verde, new embassy groundbreaking, 29 July 2025. All retrieved 19 October 2026. The State Department travel advice is quoted from the US Embassy in Cabo Verde website.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief