Cabo Verde is vulnerable to a slowdown in the growth of the European economy due to the concentration of European tourists and, for example, a terrorist attack or a volcanic eruption could end GDP growth, said Ravi Bhatia in a statement to Lusa.
In the week that Lusa is holding a conference on the future of Cabo Verde's economy, the analyst in charge of the African department explained that the country's main challenge is to grow rapidly and not to be too dependent on tourism, fishing and foreign aid and financing.
The main challenge, however, is also the main advantage, as Ravi Bhatia told Lusa that the main added value, from the point of view of analysing the quality of sovereign credit, is the good tourist offer, with the proximity to Europe and potentially to Brazil and the US, and also the vast fishing rights that the country has.
When asked about the high level of public debt, whose ratio exceeds 100% of GDP, Ravi Bhatia devalued the issue, recalling that the management of sovereign debt has improved and the ratio of debt to GDP has been falling, with the government and less debt, and added that most of the debt is concessional, that is, held by multilateral financial institutions that have lower interest rates and longer repayment periods than those practiced in commercial banking.
In the last S&P report on the country, which results from the analysts' visit to the archipelago in August, the financial rating agency, which assigns a rating of B, i.e., a speculative level or below the investment recommendation, with a Stable Evolution Perspective, forecasts a growth of 4.9% until 2022.
Currently, the risks to growth are mainly related to a slowdown in the number of tourists, and the government is working to reduce the very high weight of debt, anticipating modest progress by 2022, according to the report that summarises S&P's opinion on the quality of Cabo Verde's sovereign credit.
They estimated that public debt will be 106% of GDP by the end of this year, which is high globally and one of the largest among the African countries they analyse, noting that the large increase since 2015 mainly reflects the government's extensive investment program, which is mostly financed by concessional long-term debt with very low-interest rates, from 1 to 2%.
Having holidayed on Cape Verde this summer I honestly can't see where any Government funded housing or infrastructure projects are progressing.
By Peter k Roberts from UK on 14 Oct 2019, 17:21
Holiday this year, I can only see hotels spending any money here. Stayed at sal. Lethal for people with mobility issues. Pavements and roads a disgrace. The housing is shocking, looks war torn not up and coming. Paid airport tax and tourist tax...its not being spent locally.. will not return for years...
By Elaine carnell from UK on 15 Oct 2019, 17:45