Praia, Aug. 26, 2026 (Lusa) - Cabo Verde's Public Finance Council (CFP) has deemed the macroeconomic scenario set out in the Amended State Budget for 2026 plausible and highlighted the opportunity to address a deficit of 1.9% of Gross Domestic Product (GDP).
«Overall, the CFP considers that the Amended State Budget for 2026 is based on a broadly plausible macroeconomic scenario and maintains a projected trajectory of reducing the public debt ratio. However, the budget amendment results in a widening of the deficit and a significant reduction in the primary surplus, against a backdrop of renewed pressures on expenditure», the report states.
According to the institution, the assessment of the sustainability of the measures adopted can be further strengthened by enhancing the rationale behind the revenue projections, refining the quantification of the multi-annual costs of the new measures, and improving the assessment of the main macro-fiscal risks.
The projected deficit rises from 2.93 billion escudos (€26.6 million) to 6.056 billion escudos (€54.9 million), increasing from 0.9% to 1.9% of GDP.
The primary surplus, in turn, falls from 1.2% to 0.3% of GDP.
Total revenue is expected to rise by 5.5% to 97.83 billion escudos (€887.3 million), driven mainly by a 10.2% increase in tax revenue.
Total expenditure is expected to reach 103.88 billion escudos (€942 million), 8.6% more than in the originally approved Budget.
Among the main increases in expenditure are subsidies, up 153.3%; procurement of goods and services, up 14.7%; and transfers, up 11.1%, according to the CFP.
The amendment introduces new measures in the economic and social spheres, including free access to the first cycle of higher education and healthcare, increased funding for health and social protection, and compensation for electricity and fuel costs.
The CFP highlights that the full-year costs and multi-annual impacts of measures of a permanent or recurring nature can benefit from further detail.
Public debt is expected to continue on a downward trajectory as a percentage of GDP, falling from 101.1% in 2025 to 94.1% in 2026.
The CFP, however, considers that the reduction in the primary surplus makes this trajectory more sensitive to lower-than-expected growth or less favourable financing conditions.
Among the main budgetary risks, the CFP highlights the possibility that the projected increase in tax revenue may not materialise, the persistence of the energy shock, the possible extension of compensation measures, the future costs of new permanent measures, and the reduction or postponement of investment.
The Council recommends providing a more detailed justification for revenue forecasts, quantifying the annual and multi-annual costs of permanent measures, strengthening information on the conditions and risks associated with debt, and conducting sensitivity and alternative scenario analyses for the main macro-fiscal risks.
Budgeted expenditure rises from 95.7 billion escudos (€867.9 million), as set out in the initial State Budget for 2026, to 102.7 billion escudos (€931.3 million) in the Amending Budget.
The previous Government of the Movement for Democracy (MpD) had approved the State Budget for 2026, whilst the current government, led by the African Party for the Independence of Cabo Verde (PAICV), tabled the Amending Budget proposal after winning the parliamentary elections in May.
Parliament approved the budget on 30 July, and the president promulgated it on 12 August.
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