IMF vice-director and acting president Murilo Portugal presented the Bretton Woods institution’s seventh Policy Support Instrument (PSI) report on December 8. The report praises the “prudent management and strong economic foundations” undertaken by the Cape Verdean government, which have allowed the country to “resist the impact of the global crisis well.”
“Growth remains solid, inflation has returned to low levels and the internal debt continues to go down. The global financial crisis had little impact on the financial sector and, in spite of a moderate downturn, international reserves remain adequate,” according to the IMF.
With regards to the 2010 budget deficit, Murilo Portugal believes that it comes as a result of investment needs and of social spending.
“The planned acceleration of public investments in infrastructures, financed with external resources through concessions with extremely favorable terms and deadlines, is consistent with foreign stability, and should have a positive impact on mid-term growth with regards to the country’s competitiveness,” according to the communiqué, which may be found on the IMF’s web site.
Also according to the report, the risk of problems related to Cape Verde’s debt “remains low.” According to Murilo Portugal, “further on there will be room to gradually lower interest rates as he country’s international premium risk goes down,” adding that in the mid-term “it will be important to continue to improve the monetary policy transmission mechanism and develop the domestic financial market.”