Cabo Verde: Fifth Review Under the Extended Credit Facility Arrangement, Request for a Waiver of Nonobservance of Quantitative Performance Criterion, Modification of Quantitative Performance Criteria, and Second Review Under the Resilience and Sustainability Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Cabo Verde

CABO VERDE FIFTH REVIEW UNDER THE EXTENDED CREDIT FACILITYARRANGEMENT, REQUEST FOR A WAIVER OFNONOBSERVANCE OF QUANTITATIVE PERFORMANCECRITERION, MODIFICATION OFQUANTITATIVEPERFORMANCE CRITERIA, AND SECOND REVIEWUNDER THE RESILIENCE AND SUSTAINABILITYFACILITY ARRANGEMENT—PRESS RELEASE;STAFFREPORT;AND STATEMENT BY THE EXECUTIVEDIRECTOR FORCABO VERDE February2025 In the context of theCabo Verde–2024-FifthReviewUnder theExtendedCreditFacilityArrangement,Request for aWaiver ofNonobservance ofQuantitativePerformanceCriterion,Modification ofQuantitativePerformanceCriteria, andSecondReviewUnder theResilience andSustainabilityFacilityArrangement,the following documents have beenreleased and are included in this package: •APress Releaseincluding a statement by the Chair of the Executive Board. •TheStaff Reportprepared by a staff team of the IMF for the Executive Board’sconsideration onJanuary 17, 2025, following discussions that ended onNovember 26,2024, with the officials ofCabo Verdeon economic developments and policiesunderpinning the IMF arrangement under theExtended Credit Facility. Based oninformation available at the time of these discussions, the staff report was completedon[date on page 1 of final reportcirculated]. •ADebt Sustainability Analysisprepared by the staffs of the IMF and the World Bank. •AStatement by the Executive DirectorforCabo Verde. TheIMF’s transparency policy allows for the deletion of market-sensitive information andpremature disclosure of the authorities’ policy intentions in published staff reports andother documents. Copies of this report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202) 623-7201E-mail:publications@imf.org Web:http://www.imf.org International Monetary FundWashington, D.C. IMF Executive Board Completes Fifth Review Under theExtended Credit Facility Arrangement, Request for a Waiver ofNonobservance of Quantitative Performance Criterion,Modification of Quantitative Performance Criteria, and SecondReview Under the Resilience and Sustainability FacilityArrangement for Cabo Verde FOR IMMEDIATE RELEASE •The IMF Executive Board completed the fifth review of the 36-month arrangement under theExtended Credit Facility (ECF) with Cabo Verde, and the second review of the 18-montharrangement under the Resilience and Sustainability Facility (RSF). •The ECF-supported program aims to strengthen public finances and put debt on adownward path, reduce fiscal risks from public enterprises, modernize the monetary policyframework, and raise growth potential. The RSF supports government efforts to implementmacro-critical climate reforms and catalyze private climate finance. •All ECF performance criteria were met except the gross international reserves (GIR)quantitative performance criteria (QPC), although the Bank of Cabo Verde has takencorrective actions to address the missed target. All indicative targets (IT), except for GIR,and structural benchmarks (SBs) through September 2024 were met. One RSF reformmeasure (RM) was completed, with three delayed to the next review. Washington, DC: The Executive Board of the IMF completed the fifth review of Cabo Verde’sperformance under the 36-month ECF arrangement that was approved on June 15, 2022, andthe second review of the 18-month RSF arrangement that was approved on December 11,2023. The completion of the fifth ECF review allows the authorities to draw the equivalent ofSDR 4.5 million (approximately US$ 5.87 million), while completion of the second RSF reviewwill allow disbursement of SDR 2.632 million (approximately US$ 3.43 million). In completing the fifth review under the ECF arrangement, the Executive Board approved theauthorities’ request for modification of the end-December 2024 performance criteria. TheExecutive Board supported the delayed implementation of three RMs under the RSFarrangement. Cabo Verde continues to grow strongly, reflecting a rebound in tourism, robust exportperformance, as well as private consumption growth. The authorities have been successfulin maintaining macro-financial stability. Real GDP growth is projected at 6 percent in 2024with low inflation, a small current account deficit, and an adequate level of internationalreserves to protect the peg. The public debt-to-GDP ratio continues a downward path,reflecting continued high growth and an improved primary balance. Performance under the ECF continues to be strong. All QPCs for end-June 2024 were metalong with the continuous PCs, except for the QPC on GIR. GIR still cover the minimum 5-months of imports target followed by Banco de Cabo Verde (BCV), and the BCV hasembarked on corrective actions with two policy rate increases of a cumulative 75 basispoints in November and December 2024 and forward guidance to indicate the intent of closingthe differential with the ECB policy rate. All ITs to September 2024 were met, exceptfor the one on GIR. One S