“O The Portuguese government approved a new suspension of the payment of debt service, until December 31, 2021, by the Republic of Cape Verde, related to direct loans granted, following the request presented by this country”, reads the press release released this afternoon in Lisbon.

“This is the third moratorium that the Portuguese Government grants to Cape Verde, in response to the appeal launched by the Paris Club and the G20, to all official and private bilateral creditors, for a global mobilization in support of less developed partner countries, through of the Debt Service Suspension Initiative, “DSSI its acronym in English, is also read in the statement.

According to the Government, this postponement of the payment of the debt “is part of the set of efforts that Portugal has made to support its partner countries in mitigating the economic, social and health impacts caused by the covid-19 pandemic, among which it also includes the sharing of vaccines, drugs and medical equipment”.

With the adoption of this measure, which suspends payments of capital and interest, it will now be necessary to “negotiate loan contracts and establish a new payment plan for the debt subject to the moratorium”, concludes the Portuguese Executive.

Although the amount owed, now postponed again, has never been specifically pointed out, Lusa Pública reported on June 22 that Cape Verde’s externally contracted debt increased 1% in the first quarter of 2021, to 1,684 million euros, from 33% to Portugal, namely Caixa Geral de Depósitos (CGD), the largest individual creditor in the archipelago, which has a debt-to-GDP ratio above 150%.

According to one from the Cape Verde Ministry of Finance with data on external debt in the first quarter, between bilateral (State to State), multilateral (through international reports, such as the International Monetary Fund, World Bank or African Development Bank) ) or with commercial banks, this ‘stock’ rose to 195.5 billion escudos (1,684 million euros).

Of this total, more than 64.5 billion escudos (584 million euros) concern the total debt to Portugal, between bilateral and commercial financing, which did not increase in the first quarter.

Among all external creditors, Cape Verde has the largest individual debt with Caixa Geral de Depósitos, which at the end of March amounted to practically 40.9 billion escudos (370 million euros).

On a bilateral level, after Portugal, with a debt of over 15 billion escudos (135.8 million euros), comes Japan, with more than 8.6 million escudos (77.9 million euros), and France, through the French Development Agency, with 5.5 billion escudos (50 million euros), while the debt to China is around 3 billion escudos (27 million euros) and to a Saudi fund more than 1 , 7 billion escudos (15.4 million euros).

The presidents of Portugal and Cape Verde assumed on May 17 that steps were being taken to resolve Cape Verde’s debt, announcing that the matter would be closed after a meeting between the finance ministers of the two countries.

The subject was discussed during the meeting that the Portuguese President, Marcelo Rebelo de Sousa, held during his visit to Cape Verde with his Cape Verdean counterpart, Jorge Carlos Fonseca, although you are moving both, this is a matter of government sphere.

The Portuguese President also met with the Prime Minister of Cape Verde, Ulisses Correia e Silva, who guaranteed the guarantee on a solution for Cape Verde’s debt, namely the 200 million euros that Portugal financed (through CGD) the program implemented by the previous government “Casa para Todos”, for social housing built by Portuguese companies and which should start to be paid for this year.

“We have been working on this dossier for some time,” Ulisses Correia e Silva reminded journalists, acknowledging recent advances in the former and praising the role of Portugal, which since 2020, due to the pandemic, has granted a moratorium on the payment of debt service. of Cape Verde.

“We are all set to go further and make the Portuguese leadership also contagious in relation to other countries and creditors, because the extraordinary and exceptional cost of covid-19 for a country like Cape Verde is enormous, there are no eternal savings and no country is prepared to face these costs without additional support. This is what we hope so that our debt can reach a level of sustainability and can then clear what are exceptional costs derived from covid-19”, he pointed out.

Last week, on the sidelines of the 9th Conference on Climate Change in Africa, in the city of Santa Maria, on the island of Sal, the deputy prime minister of Cape Verde announced that he will propose to international creditors the conversion of part of the external public debt in climate funds to finance post-pandemic economic recovery and mitigation of the consequences of climate change.

“We are proposing, and all the small island countries too, to convert part of the external debt into climate funds. It means that the developed countries, which are our creditors, can convert a part of the external debt into financing lines, in funds, for investment in climate change”, then announced Olavo Correia.

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