Cape Verde's External Vulnerability Indicators Improve in 2025, Says Central Bank
The Bank of Cape Verde (BCV) reported an improvement in the nation's external vulnerability indicators for 2025 compared to the previous year. Key improvements include an increased export market share and reduced ratios of external debt stock relative to both exports and Gross Domestic Product (GDP). The current account registered a surplus of 11,035.7 million escudos (100 million euros), representing 3.7% of GDP. This surplus was primarily driven by a moderate increase in revenues from tourism services, remittances from emigrants, and other private transfers.
The financial account also showed positive development, with net financing inflows to the economy rising to 27,998.6 million escudos (254 million euros). This increase is attributed to a reduction in commercial banks' net foreign assets and a rise in foreign direct investment in Cape Verde. Consequently, the country experienced a reserve asset gain of 333.1 million euros, boosting net foreign reserves to 1,064.5 million euros, sufficient to cover 8.8 months of imports, up from 6.5 months in 2024.
Despite these positive trends, the BCV noted that the net international investment position, while improving by approximately 16,557.5 million escudos (150.3 million euros) to 108.4% of GDP from 123.2% in 2024, remains a source of external vulnerability due to its high level. On the fiscal front, public accounts showed a surplus of 1.1% of GDP in 2025, a reversal from a 1.1% deficit in the prior year, mainly due to increased public revenues. Public debt continued its downward trend in 2025, though it remains elevated, reflecting economic growth and a positive primary balance. Including contingent liabilities from public enterprises and local authorities, total debt stood at 115.7% of GDP, down from 127.8% in 2024.
Cape Verde's economic performance in 2025 demonstrates a positive shift in external vulnerability metrics, driven by robust tourism, remittances, and foreign investment, alongside improved fiscal management. The reduction in debt-to-GDP ratios and the strengthening of foreign reserves provide a buffer against external shocks. However, the persistent high level of the net international investment position remains a structural vulnerability, indicating ongoing reliance on foreign capital. Future policy should focus on sustainable debt reduction and diversifying the economic base to mitigate this risk. The interplay between increased public revenue and controlled public spending suggests a strengthening of fiscal discipline, which is crucial for long-term economic stability in an increasingly interconnected global economy.
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