- The government of Cape Verde is to receive a US$ 15 million credit from the World Bank to implement its strategy to reduce poverty by spurring economic growth. The credit is to be used to promote governance and economic reform to increase effectiveness and competitiveness.
The credit was announced yesterday by the World Bank's board of executive directors. It is part of Cape Verde's so-called Growth and Poverty Reduction Strategy, an economic reform package tailored by the Bank and the International Monetary Fund (IMF). As the Cape Verdean government goes on making progress implementing these reforms, it assures further funding from the two financial institutions.
This so-called first Poverty Reduction Support Credit from the World Bank is one of three loans to finance the current reform package. It was already agreed on at a meeting in the Cape Verdean capital Praia in April 2003 and made dependent of reform progress.
The reform package aims to promote good governance centred on reforms in public expenditure management, civil service, the judiciary and decentralisation. Further, it is to develop human capital in the areas of education and health and improve the effectiveness and sustainability of the social protection system.
In practical terms, the reforms aim at increasing the Cape Verdean government's ability to receive donor aid and implement the development programmes financed from abroad. "The operation is a response to the government's request for their external partners to align with national strategies and systems for poverty reduction," according to the World Bank's Julie Van Domelen.
- This move to support poverty reduction through the national budget process is consistent with Cape Verde's level of institutional, economic and political development and acknowledges the country's strong and sustained performance in recent years, added Hélène Grandvoinnet of the Washington-based Bank.
According to the World Bank, "Cape Verde is a success story among African nations." Following a shift from a socialist to a market-oriented model in the late 1980s, Cape Verde's growth performance has raised it to the ranks of lower middle income countries, with a gross national income per capita of US$ 1,400 in 2002.
Recent economic growth of around 4 percent per capita has been sustained through public and private investment based on high levels of donor support, strong private capital flows and remittances. This growth has enabled poverty to decline by one-fourth over the last decade.
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