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Cabo Verde – Economic Growth Support Programme (Pace I and II) - Project Completion Report
Cabo Verde faced several challenges in 2014/2015, during which the economy went through a period of turmoil due to its high vulnerability to external shocks and dependence on the euro zone. The deteriorating international economic environment resulting from the 2008 financial crisis as well as that of the euro zone in 2009 had an adverse impact on the country's economy until 2014, when a slight recovery brought a GDP growth of about 2.7%. Meanwhile, the expansionary, counter-cyclical fiscal policy initiated in 2009 through a major public investment programme to tackle the global economic contraction, led to a further deterioration of the budget deficit and an increase in public debt. These cyclical impacts were aggravated by structural constraints attributable to the size of the domestic market, the country’s geographic nature (comprising several islands), and the lack of natural resources over which the authorities have little or no control. In this context, the relevance of PACE is underscored by its objectives, namely creating conditions for sustained economic growth through enhanced effectiveness of public investments and promoting a more dynamic and competitive private sector. Therefore, the aim is to (i) help revive growth through private sector support, and (ii) improve economic return on investment programmes.