CAPE VERDE TRANSFORMS INTO A DEVELOPING COUNTRY
Thirty-two years after its independence, Cape Verde has joined the category of Developing Countries, after graduating from the United Nations’ list of Least Developed Countries. In this new phase in the nation’s existence, the effects of which Cape Verdeans will not immediately feel, the government and its international donors are encouraging Cape Verdean society to “take on its responsibilities” regarding the challenges ahead.
Cape Verde should continue to accept its responsibilities in the face of the challenges of development. This was one of the recommendations from the Informational Report the Cape Verdean government submitted on December 27 to the United Nations Secretary General on the process of Cape Verde’s graduation from the category of Least Developed Countries.
On the occasion, Minister of Foreign Affairs Victor Borges affirmed, according to news agency Inforpress, that development must not be a gift from the international community, but rather the result of work on the part of Cape Verdeans, namely the government, the country’s political parties and municipalities, civil organizations and the private sectoe.
Cape Verde, according to the Transition Support Group, which met for the last time on December 3, satisfied two of the three graduation criteria: per-capita income and the human development index rating. The third criterion has to do with economic vulnerability, which the country has yet to free itself from. Cape Verde maintains “higher-than-average economic vulnerability,” according to the report, a factor dur, in large part, to its island condition.
“The transition consists of a central challenge of economic growth for the reduction of economic vulnerability,” explains Minister of Foreign Affairs Victor Borges.
But the challenge has become greater in 2008, for other reasons. As a member of the list of Developing Countries, Cape Verde will no longer benefit from a series of aid instruments the international community grants to the so-called Third World - namely, concessional loans.
Recently, the director of International Debt Relief, Matthew Martin, who was in Praia to participate in a seminar on the sustainability of Cape Verde’s public debt within the context of its graduation to the category of Developing Countries, affirmed that if Cape Verde hopes to keep concessional and inexpensive funds flowing to finance its development, it will have to investigate and mobilize new sources of financing. Some of the options available are “the various governments that could be convinced to finance Cape Verde because of its success as a democracy” or “commercial loans that could be used to finance the development of countries in the transitional phase.”
Matthew Martin also pointed toward the need to revise the tax exemption system in Cape Verde in order to assure foreign investment in the country. Another of Martin’s concerns is the contribution of internal financing, which, with the reinvigorated Cape Verde Stock Exchange, could contribute to the mobilization of more resources from the Cape Verdean diaspora and from foreign investors.
Meanwhile, the World Bank and the African Development Bank have guaranteed that Cape Verde may continue to benefit from concessional loans with lower interest rates even after 2008. And the country continues to benefit from budget aid from various European countries, including Spain, Luxembourg and Portugal, and from the United States government’s Millennium Challenge Account program.
View Country Summary