IMF: Cape Verde's drought shows vulnerability to climate change
Wednesday May 10 2023
Camels walk on a dusty road in drought-hit northern Kenya. In Cape Verde, the IMF has said that the Portuguese-speaking country, is highly susceptible to the effects of climate change as evidenced by the recent four-year drought. PHOTO | FILE | NMG
Cape Verde is highly susceptible to the effects of climate change as evidenced by the recent four-year drought, the International Monetary Fund (IMF) said Tuesday as its team visited the Portuguese-speaking country between May 2-9.
The visit aimed at discussing the Cape Verde Economy for the 2023 Article IV Consultation and Second Review under the Extended Credit Facility (ECF) Arrangement, approved on June 15, 2022.
According to the international lender, the Cape Verde government is rightly focusing on implementation of climate adaptation and mitigation measures in its most recent 5-year development strategy.
The authorities are balancing the need for fiscal consolidation to reduce debt levels with capital spending to accelerate investments in climate action and are seeking support from partners (including the IMF) to access financing, it added.
In January, the UN Secretary-General António Guterres said Cape Verde has shown climate leadership in words as well as in action and has highlighted the efforts to convert debt into climate projects, including in the blue economy.
Read: Assoumani: We demand slot at table where global decisions are made
Up to 20 percent of Cape Verde’s energy production now comes from renewable sources – one of the highest in sub-Saharan Africa – and the goal is to increase renewable energy use by up to 50 percent by 2030.
The World Bank says that Cape Verde has witnessed significant economic progress since 1990, driven in large part by the rapid development of tourism (25 percent of GDP), coupled with considerable social development due to strong social policies since the 1970s.
“Real GDP growth is projected to moderate to 4.4 percent in 2023 as export growth normalises. Inflation is projected at 5.2 percent in 2023, as fuel and food prices decline,” the IMF added in its Tuesday statement.
“The current account deficit is expected to widen in 2023 as exports of goods and services, tourism, remittances, and foreign direct investment slowdown from levels recorded in 2022”, it also said.