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- GDP (PPP):
- $3.4 billion
- 1.8% growth
- 1.9% 5-year compound annual growth
- $6,522 per capita
- Inflation (CPI):
- FDI Inflow:
Cabo Verde has benefited from moderately well-maintained monetary stability and a relatively high level of market openness that facilitates engagement with the world through trade and investment. The small island economy benefits significantly from a sound and transparent legal framework that institutionalizes and supports the rule of law.
However, Cabo Verde’s institutional strengths, including an independent judiciary and government transparency, are not matched by a commitment to the sound management of public finance. The country’s overall fiscal health has been undermined by relatively high levels of government spending and deficits. With public debt reaching a level equal to more than 100 percent of GDP, reducing the chronic deficit needs to be a high priority.
Cabo Verde is a stable, multi-party parliamentary democracy. President Jorge Carlos Fonseca, the chief of state since 2011, appointed Ulisses Correia e Silva as prime minister after his Movement for Democracy party won the March 2016 parliamentary election. The Cabo Verde islands have few natural resources. Services dominate the economy, and most of the country’s food is imported. Cabo Verde’s expatriate population is larger than its domestic population. Ongoing economic reforms are intended to boost foreign investment and diversify the economy.
Private property is reasonably well protected. In 2016, the government made transfers of property less costly by lowering the property registration tax. The judiciary is constitutionally independent and generally respected, but the judicial system is inefficient, and a case backlog causes significant delays. Compared to other African nations, Cabo Verde has relatively high levels of transparency and relatively low levels of corruption.
The top personal income tax rate is 35 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax. The overall tax burden equals 18.0 percent of total domestic income. Government spending has amounted to 31.2 percent of total output (GDP) over the past three years, and budget deficits have averaged 7.0 percent of GDP. Public debt is equivalent to 119.3 percent of GDP.
The overall business environment has become more efficient. The process for launching a business is more streamlined, and licensing requirements are less burdensome. Despite efforts to reform the labor market, the unemployment rate remains persistently high. The market determines most prices. The state subsidizes electricity and water, but subsidies to the state-owned, loss-making airline were reduced in 2016.
Trade is moderately important to Cabo Verde’s economy; the value of exports and imports taken together equals 38 percent of GDP. The average applied tariff rate is 10.9 percent. Nontariff barriers have been lowered, and foreign and domestic investors are generally treated equally under the law. The number of nonperforming loans in the banking system has decreased. Credit is generally allocated on market terms.