INE reforms tighten Cabo Verde’s debt-market discipline

Cabo Verde’s National Institute of Statistics is turning data reliability into a fiscal and market signal. The institute’s reform agenda, highlighted at the Praia conference, positions statistical governance as a macro policy instrument. Real GDP growth is projected at 5.1% for calendar 2025, supported by tourism recovery and remittance inflows. Inflation slowed to 2.3% year on year in September 2025, while international reserves stood at about €620 million — equivalent to seven months of import coverage — anchoring the escudo’s fixed peg to the euro at 110.27 CVE per EUR. Public debt remains high at roughly 105% of GDP, leaving limited fiscal room and elevating the premium investors assign to policy transparency. In a $2.9 billion economy that imports 80% of its consumption needs, the precision of data publication now determines the credibility of fiscal consolidation and the cost of external borrowing.

The economic logic is straightforward. Consistent and transparent data reduce information asymmetry, compressing sovereign spreads by stabilising investor expectations. Regular publication calendars, harmonised classifications, and shorter data lags lower the opacity premium embedded in yields. Interoperable datasets among the Ministry of Finance, the central bank, and audit institutions enable quarterly debt reporting within 90 days of period end, closing information gaps that can widen volatility in thin secondary markets. Digitised, machine-readable databases accelerate due diligence for multilaterals and private creditors, supporting disbursement speed and compliance under IMF and World Bank programmes. Even marginal gains in frequency and accuracy can shift investor pricing: halving fiscal-data revision magnitudes can narrow projected debt-path dispersions and reduce tail-risk premiums.

The transmission to markets is measurable. Cabo Verde’s euro peg imports monetary stability but transfers the burden of credibility to fiscal management and data accuracy. With inflation subdued and the peg steady, the fiscal transparency channel dominates yield formation. Improved data discipline enhances debt-sustainability assessments and sharpens issuance calendars, which can reduce refinancing risk. Cabo Verde’s 2030 eurobond trades near an 8% yield, roughly 100 basis points above Senegal’s comparable maturity. A credible data-governance upgrade could compress this differential by 50–75 basis points, mirroring the experience of Mauritius and Rwanda after adopting open-data protocols. For global allocators, the reform reduces Cabo Verde’s correlation with risk-off cycles captured by EMB and improves frontier-equity volatility metrics proxied by EEM.

Regional benchmarks highlight why the stakes are high. Small economies with fixed-exchange regimes, limited monetary flexibility, and high import ratios are disproportionately punished by uncertainty. Cabo Verde’s structural composition — tourism contributing around 25% of GDP, remittances 14%, and grants 6% of fiscal revenue — amplifies sensitivity to global conditions. Integrating real-time tourism arrivals, remittance volumes, and fuel-import data into public releases would help investors calibrate current-account resilience and revenue elasticity, essential for pricing the sovereign’s external sustainability. Transparent, high-frequency data would also reinforce compliance with ECOWAS convergence criteria on deficits below 3% and debt ratios under 70%, prerequisites for deeper regional integration and concessional access.

Execution defines credibility. The INE’s new framework targets three reforms by mid-2026: publish quarterly debt and deficit data within 90 days, align fiscal classifications with national-account standards, and cap average absolute data revisions below 1 percentage point. Meeting these benchmarks would align Cabo Verde with the IMF’s e-GDDS and Eurostat metadata norms, strengthening eligibility for climate and blended-finance facilities that require audit-grade data. The agenda also supports broader ESG alignment, as investors increasingly link statistical transparency to governance scores and pricing models in emerging-market debt.

Forward evaluation will rest on quantifiable indicators. By Q4 2026, success can be gauged through timely publication of fiscal data, narrower bid-ask spreads on Cabo Verde sovereign paper during volatility episodes, and lower variance in inflation revisions relative to 2022–2024 averages.

If GDP growth sustains above 4.5%, inflation remains between 2–3%, and yield spreads tighten toward the West African average, the reform will have delivered a measurable reduction in funding costs and volatility. Cabo Verde’s strategy therefore extends beyond statistical compliance: it converts the credibility of numbers into fiscal resilience and cheaper capital in a world increasingly pricing governance as an asset class.