Cabo Verde budget deficit projected to rise to 1.9% of GDP

The Public Finance Council (CFP) of Cabo Verde has issued an alert regarding the 2026 Revised State Budget, noting a projected increase in the budget deficit to 1.9% of Gross Domestic Product (GDP). While the council considers the macroeconomic scenario generally plausible and maintains that the projected trajectory for reducing the public debt ratio remains intact, it warns of growing pressures on expenditure.

The deficit is expected to rise from 2,933 million escudos (26.6 million euros) to 6,056 million escudos (54.9 million euros). Consequently, the primary surplus is projected to decrease from 1.2% to 0.3% of GDP. Total expenditure is anticipated to reach 103,888 million escudos (942 million euros), an 8.6% increase over the initially approved budget.

Key drivers of this expenditure increase include a 153.3% rise in subsidies, a 14.7% increase in the acquisition of goods and services, and an 11.1% rise in transfers. The revised budget includes new social and economic measures, such as free first-cycle higher education and healthcare, increased social protection, and compensations for electricity and fuel costs. The CFP noted that the sustainability of these options is subject to limitations in revenue projection foundations and the quantification of multi-year costs for permanent measures.