Cape Verde expects 4.8% growth in 2023, says government

Cape Verde expects Gross Domestic Product (GDP) growth of 4.8% in 2023 and 4% this year, according to the latest budget forecasts from the Cape Verdean government.

In the documents supporting the draft law of the State Budget of Cape Verde for 2023, consulted today by Lusa, the government admits that the “national economic dynamic is strongly conditioned by the geopolitical crisis” derived from the war in Ukraine.

“In this sense, the expectation is that real GDP will grow 4.0% in 2022, compared to a projection of up to 6.5% [earlier], derived from a prospect of recovery in the tourism sector less than in a scenario without this conflict, as well as the reduction in domestic demand due to the increase in prices,” the document says.

“For 2023, it is expected that with greater dynamics in tourism and the contagion effect to other sectors, the GDP will grow by about 4.8%,” it adds.

On Wednesday, October 5, the Cape Verdean prime minister announced the increase of the national minimum wage from 13,000 to 14,000 escudos (117 to 126 euros) in 2023 and wage increases of 1 to 3.5% for civil servants and pensioners with lower incomes.

“It is a budget truly turned to the people and with a human face,” said Ulisses Correia e Silva in a statement to the country from the Government Palace in Praia to present the main measures and priorities of the proposed State Budget for 2023.

“The lowest salaries and pensions will have greater increases,” said the prime minister, ensuring that the budget proposal for 2023, which “will still be a difficult and challenging year,” will “prioritize investment in the welfare state.”

Contingency to crises, protection of families, and preparing the country for the future are the three priorities of the State Budget for 2023 pointed out by the head of government in his speech, in which he also highlighted the “confidence” of international partners and investors in the “good governance” of the country.

Among the various measures summarized in the speech of the head of government included in the budget proposal are increased taxes on tobacco and alcoholic beverages to fund the sports sector, to increase the tourist tax by US$0.48 to fund measures to combat poverty, or the allocation of social pensions to 3,000 elderly people without income, outside the contributory scheme, to reduce the level of extreme poverty.

The proposed State Budget for 2023, delivered by the government to parliament on October 3, is estimated at around CVE 77 billion (US$675 million).

The Deputy Prime Minister and Finance Minister, Olavo Correia, has already explained that the government “only did not go further” in increasing the national minimum wage “due to the situation of uncertainty” that is experienced globally, admitting that this measure may still undergo a new update during next year depending on the evolution of the international environment.

He added that civil service salaries and pensions for National Institute of Social Security (INPS) pensioners from CVE 15,000 to CVE 33,000 monthly will increase by 3.5% in 2023, above CVE 33,000 and up to CVE 51,000 will increase by 2%, and from CVE 51,000 to CVE 69,000 will increase by 1%.

“We must protect at this stage the lower incomes in a straight way, and the higher incomes are protected indirectly through the measures we are taking to stop the galloping rise in prices,” he clarified.

The archipelago has been facing a deep economic and financial crisis due to the sharp drop in tourism demand – a sector that guarantees 25% of the Gross Domestic Product (GDP) of the archipelago – since March 2020 due to the covid-19 pandemic.

With information from Lusa

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