Cape Verde will remain reliant on external financing to fund its sizable current account shortfall in the coming years. While much of this is debt financing, the concessional nature of the country s obligations will limit risks to its external position. ...As a result, Cape Verde faces relatively little threat of capital flight, which lends stability to the country s external account position. External Debt: Cape Verde holds significant external debt, estimated at ---.- of GDP at end-----, as a result of its infrastructure investments and a shallow domestic debt market that has forced it to rely primarily on external financing. Over the coming decade, we expect the government will wind down its infrastructure investment programme and gradually narrow its fiscal deficit, which will slow the pace of debt accumulation. ...Over the coming decade, we expect the government will wind down its infrastructure investment programme and gradually narrow its fiscal deficit, which will slow the pace of debt accumulation. Nonetheless, we expect external debt will peak at ---.- of
...Economic growth in Cape Verde will remain subdued over the coming decade. While we anticipate growth in tourism and infrastructure investment will provide support, the economy faces a number of structural obstacles, not least due to its heavy reliance on the European Union as a source of remittances, tourist arrivals and investment. ...Cape Verde remains tightly linked to the European Union, which provides the vast majority of tourist arrivals, investment and remittance flows. A subdued growth outlook in the European Union will thus weigh on Cape Verde s prospects, while high debt limits public investment and environmental constraints, including exposure to climate change, expose the economy to weather-related risks (see `Structural Obstacles Will Limit Growth , August --). Although we estimate that growth picked up in ----, we expect average growth of -.- between ---- and ----, a deceleration from the -.- growth averaged between ---- and ----. Private Consumption: Private consumption will rise as a share of GDP over the coming decade, with tourism remaining the dominant sector providing employment. We expect the incoming administration to focus on promoting private sector development over the coming years, which will lead to improving access to credit and the development of a more diversified services sector
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