[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111085-en":3,"doc-seo-111085-105":29,"detail-sidebar-cat-0-en-105":91},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},111085,1099513958762,"Logic","https://ap-avatar.wpscdn.com/avatar/1000023916a998db790?x-image-process=image/resize,m_fixed,w_180,h_180&k=1784791008015729253",8,"Research & Report","CABO VERDE - JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS - Debt Distress Risk Assessment","Cabo Verde’s overall risk of debt distress is assessed as high, while external debt distress remains moderate due to limited room to absorb shocks. Under the baseline, liquidity and solvency indicators stay below thresholds, supported by highly concessional external financing; however, public debt-to-GDP breaches thresholds during 2023–2027 and under export stress tests. Sustainability is conditional on meeting assumptions on steady growth, fiscal consolidation under the ECF program, and structural reforms, especially to strengthen state-owned enterprises and improve debt management and market functioning. Prudent borrowing and ongoing export diversification are critical given vulnerability to exogenous shocks.","Public Disclosure  \nPub lic Disc losure Authorized  \nApproved by:  \nAbebe Adugna and Manuela Francisco (IDA) and Costas Christou and Peter Dohlman (IMF) .  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF) .  \n\n| CABO VERDE: JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | Moderate |\n| Overall risk of debt distress | High |\n| Granularity in the risk rating | Limited space to absorb shocks |\n| Application of judgment | No |\n\nCabo Verde's overall risk of debt distress remains high, consistent with the last joint WB/IMF Debt Sustainability Analysis (DSA) of June 2023, 1 and the external debt risk continues to be moderate. The detailed risk rating for external debt distress shows that it has little room to accommodate shocks. The present value (PV) of public and publicly guaranteed (PPG) external debt-to-GDP ratio is below the threshold over the forecast horizon and breaches the threshold under the export stress test in line with the debt path of the last DSA. Liquidity indicators (debt service to revenue and to export ratios) continue to be below their respective thresholds under the baseline mainly due to the significantly concessional characteristics of Cabo Verde’s external debt. The PV of total public debt-to-GDP ratio is projected to breach the threshold during 2023–2027 under the baseline scenario and breaches the threshold under the stress tests over the forecast period. The external and overall debt outlook is assessed to be sustainable contingent on meeting several assumptions. These include steady economic growth around potential, consistent fiscal consolidation in line with the ECF program, and significant structural reforms, especially related to State-Owned Enterprises (SOEs) . Enhancing the performance of SOEswill help reduce critical fiscal risks and foster a better business environment. Prudent borrowing policies through  \n1 Cabo Verde’s debt-carrying capacity is assessed as “strong” as in the previous DSA with a composite index (CI) score of 3.24, which is based on the October 2023 WEO and the 2022 CPIA.  \nsourcing mainly concessional external loans and strengthened debt management, as well as measures to enhance the functioning of the government securities market are critical to sustainable debt dyna mics overtime. In view of Cabo Verde’s vulnerability to exogenous shocks, continuous progress in export and output diversification is also needed for long-term debt sustainability.  \n1. The debt coverage in this DSA comprises debt owed by the central government and certain government guarantees. Coverage of the public sector is in line with June 2023 DSA (Table 1) . Government guarantees to SOEs’ external borrowing are included in the baseline stock of debt (0 .9 percent of GDP at end-2022), but publicly guaranteed domestic debt (8 .2 percent of GDP at end- 2022) and non-guaranteed domestic debt by SOEs are not included. Consistent with the fiscal accounts, social security funds and local governments 2 are excluded from the DSA. The coverage of extra budgetary funds (EBFs) is focused on government support to State-Owned Enterprises (SOEs) through on-lending and capitalization. Authorities are undertaking efforts to widen the coverage and reporting of public sector debt, including through support from the World Bank.3 External debt is defined on a residency basis.  \n2. The contingent liability tailored stress test is amended to reflect gaps in the debt coverage discussed above (Table 1) . First, the default shock of 0 percent of GDP for the components of general government not captured in the baseline stock of debt is kept at the default level consistent with the size of publicly guaranteed domestic debt of local governments. 4 The social security fund (INPS) financial position is strong, and fiscal risk is minimal, as a result the contingent liability stress test is not adjusted for its exclusion. Seco","cbCaiqBUGg6RqosN","https://ap.wps.com/l/cbCaiqBUGg6RqosN","pdf",1749917,1,27,"English","en",105,"# Risk of debt distress\n## External debt distress and liquidity indicators\n## Threshold breaches and stress tests\n## Sustainability conditions and policy assumptions\n## Debt coverage, contingent liabilities, and stress test amendments","[{\"question\":\"What is the overall risk of debt distress for Cabo Verde?\",\"answer\":\"The overall risk of debt distress is assessed as high.\"},{\"question\":\"How do the report results differ between external debt and overall debt distress?\",\"answer\":\"External debt distress risk is rated moderate, but overall debt distress remains high because the economy has limited capacity to absorb shocks and public debt indicators breach thresholds under certain scenarios.\"},{\"question\":\"What conditions are required for debt sustainability?\",\"answer\":\"Debt is assessed as sustainable only if assumptions hold, including steady growth near potential, consistent fiscal consolidation under the ECF program, and significant structural reforms—especially strengthening state-owned enterprises, debt management, and the government securities market.\"}]",1784488504,68,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":86,"head_meta":88,"extra_data":90,"updated_unix":27},"cabo-verde-joint-bank-fund-debt-sustainability-analysis-debt-distress-risk-assessment","",{"@graph":35,"@context":85},[36,53,68],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/cabo-verde-joint-bank-fund-debt-sustainability-analysis-debt-distress-risk-assessment/111085/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":62,"encodingFormat":60,"isAccessibleForFree":63,"interactionStatistic":64},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-20","2026-07-19",true,{"@type":65,"interactionType":66,"userInteractionCount":20},"InteractionCounter",{"@type":67},"ViewAction",{"@type":69,"mainEntity":70},"FAQPage",[71,77,81],{"name":72,"@type":73,"acceptedAnswer":74},"What is the overall risk of debt distress for Cabo Verde?","Question",{"text":75,"@type":76},"The overall risk of debt distress is assessed as high.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"How do the report results differ between external debt and overall debt distress?",{"text":80,"@type":76},"External debt distress risk is rated moderate, but overall debt distress remains high because the economy has limited capacity to absorb shocks and public debt indicators breach thresholds under certain scenarios.",{"name":82,"@type":73,"acceptedAnswer":83},"What conditions are required for debt sustainability?",{"text":84,"@type":76},"Debt is assessed as sustainable only if assumptions hold, including steady growth near potential, consistent fiscal consolidation under the ECF program, and significant structural reforms—especially strengthening state-owned enterprises, debt management, and the government securities 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