Cabo Verde would be receiving $32 million from the International Monetary Fund (IMF) to respond to COVID-19 pandemic, the IMF said in a statement on Wednesday following its board’s approval of the disbursement.
The release of the loan money was approved under the Rapid Credit Facility (RCF).
It will help the country to meet urgent balance of payment needs generated by the economic impact of the COVID-19 pandemic, IMF said.
Mr. Tao Zhang, Deputy Managing Director and Acting Chair, said Cabo Verde has been severely hit by the COVID‑19 pandemic.
‘As a small tourist dependent island economy, the global economic downturn, travel restrictions, and the lock down have led to social hardship and is likely to result in a significant output loss and increased fiscal and external financing gaps,” he said.
Zhang said addressing the impact of these shocks requires a combination of policy actions from the authorities with support from Cabo Verde’s development partners.
“There is a need to further scale‑up health and social protection programs, which will put public finances under additional strain. Grants and concessional loans from Cabo Verde’s development partners are critically needed to help the authorities respond timely and effectively to the crisis while preserving debt sustainability.
“Beyond the crisis, the medium‑term outlook remains broadly favorable, under the assumption of a recovery of the global economy, resumption of tourism and capital inflows, and the growth‑enhancing reforms envisaged under the authorities’ Plan for Sustainable Development (PEDS). Therefore, it will be critical that after the pandemic, policies and reforms remain focused on achieving medium‑term objectives in the authorities’ development program supported by the IMF’s Policy Coordination Instrument (PCI),” Zhang added.
Simon Ateba is Chief White House Correspondent for Today News Africa. Simon covers President Joe Biden, Vice President Kamala Harris, the U.S. government, the United Nations, the International Monetary Fund, the World Bank and other financial and international institutions in Washington D.C. and New York City.