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Overview

Located 500 km off the west coast of Africa, Cabo Verde is a ten-island archipelago, nine of which are inhabited. With a population of about 491,233 (2021 Census), only 10% of its territory is classified as arable land, and mineral resources are limited.

The fragmentation of its territory creates significant connectivity issues, as well as challenges for service delivery, including energy, water, education, and health. 

Cabo Verde has witnessed significant economic progress since 1990, driven in large part by the rapid development of tourism (25% of GDP), coupled with considerable social development thanks to strong social policies since the 1970s.

Until 2019, Cabo Verde could be considered one of the champions among Sub-Saharan African countries in terms of poverty reduction but is currently challenged by the impacts of COVID-19 and the Ukraine crisis. Estimates based on economic growth suggest that poverty rates, measured by the $5.5-a-day poverty line (2011 PPP), declined by six percentage points between 2015 and 2019, from 41% to 35%.

Political Context

Cabo Verde is considered an example of democracy in Africa, much for its political stability. Electoral processes have been held regularly, with peaceful alternation of power between the two major parties. The left-wing African Party for the Independence of Cabo Verde (PAICV), which headed colonial liberation, governed for two 15-year periods (1975-1991 and 2001-2016). The Movement for Democracy (MpD), a liberal and right-wing party, was re-elected for a five-year term in the legislative elections of April 2021, with Ulisses Correia e Silva reappointed as Prime Minister. The Independent and Democratic Cabo Verdean Union (UCID) represents the third political force in the country.

The PAICV-supported candidate, José Maria Neves, was elected president on October 17, 2021, and took office on November 9, 2021.

Cabo Verde conducted three peaceful elections, with electronically transmitted results, between October 2020 and October 2021.

Economic Overview

Economic activity expanded 7% in 2021, magnified by base effects after a contraction of 14.8% in 2020. On the supply side, manufacturing and construction led growth, while private and public consumption led on the demand side. Inflation rose from 0.6% in 2020 to 1.9% in 2021, due to higher international oil and food prices.  

The fiscal deficit remained high at 7.3% of GDP in 2021. Public debt increased slightly to 143% of GDP, driven by sustained current expenditures.

The war in Ukraine and the ongoing drought are exacerbating food and energy-driven inflation in 2022, threatening growth. Real GDP growth is projected at 4% in 2022 (2.9% in per capita terms), versus 7% in 2021, which is aggravating food insecurity. The Ukraine crisis will weigh on growth, mainly through inflation and its impact on private consumption and economic activity. Inflationary pressures will peak in 2022, with headline inflation expected to reach 7.5%.

Over the medium term, private consumption, investment in tourism, and the blue economy should support growth. The outlook is subject to substantial downside risks stemming from climate shocks, new COVID-19 variants, and increased global uncertainty due to the Ukraine war.

The fiscal deficit is projected to reach 9% of GDP in 2022, driven by increased current expenditures due to the response package to mitigate the impact of the Ukraine war. The public debt-to-GDP ratio is expected to improve from 147.7% in 2022 to 141.1% by 2024. 

Last Updated: Oct 07, 2022

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Cabo Verde: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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Additional Resources

Country Office Contacts

Main Office Contact
World Bank Office/United Nations Building
PO Box 62
Meio de Achada Santo Antonio
Praia, Cabo Verde
(+238) 260-96-00
(+238) 260-96-54
For general information and inquiries
Mademba Ndiaye
Sr. External Affairs Officer
+221-33-859-41-00
For project-related issues and complaints