Praia, April 28, 2026 (Lusa) – The credit rating agency Fitch improved Cabo Verde's outlook from stable to positive on Tuesday and maintained its 'B' rating.
"The outlook revision reflects continued fiscal consolidation, supported by revenue mobilisation reforms," which should allow for a rapid reduction in public debt, it said in a communiqué. The agency pointed to a "robust growth outlook, benefiting from the strength of the tourism sector," which continues to support the country's external position.
"Cabo Verde may benefit from geopolitical tensions in the Middle East as European tourists seek shorter, safer, and more affordable alternative trips."
However, it said that a prolonged conflict or oil supply issues could limit flights and restrain growth.
In its global assessment, it said that Cabo Verde maintained "strong governance indicators compared to peers, a robust growth outlook, sustained fiscal consolidation, and adequate international reserves." On the downside, the agency noted high, albeit falling, levels of public and external debt, contingent liabilities associated with state-owned enterprises, and persistent external vulnerabilities.
Regarding this year's legislative (17 May) and presidential (15 November) elections, it does not foresee "significant changes in growth or fiscal trajectories in the event of a political transition." However, risks could arise from a potential reversal of sectoral reforms in state-owned companies.
Tuesday's statement summarises several figures regarding macroeconomic indicators and forecasts for the archipelago.
Cabo Verde's public debt should fall to around 85% of Gross Domestic Product (GDP) in 2027, following 100% in 2025 and a peak of 147% in 2021, according to Fitch. The agency predicts that the central government's budget balance will shift to a surplus of 1.3% of GDP in 2025, after a 0.7% deficit in 2024, as revenue growth offsets higher spending.
A one-off airport concession fee and a 1.8 percentage point increase in tax revenue as a share of GDP explained the rise in income. This resulted from a broader tax base, reduced tax benefits, and improved tax compliance.
It expects the central government's budget balance to average 0.9% of GDP in 2026 and 2027, supported by a new tourist arrival tax and a VAT reform.
Cabo Verde’s real GDP growth should remain robust, averaging 5.4% in 2026 and 2027, following 6.3% in 2025, it estimates. It expects the current account surplus to increase in 2026, after reaching 3.6% in 2025, driven by growth in tourism receipts.
International reserves rose to 8.4 months of current external payments in 2025, up from 5.8 months in 2024. These should average 10.7 months in 2026 and 2027.
The agency identifies state-owned enterprises as the primary risk to public finances.
Debt from these entities accounted for nearly 48% of GDP at the end of 2024, with around 8% backed by state guarantees.
LFO/RYOL // ADB.
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