AfDB and Cape Verde Sign US $7.44 Million Loan Agreement for Budget Support Programme to Fight Poverty
The African Development Bank (AfDB) Group and Cape Verde have signed a loan agreement of UA 5 million, equivalent to US$ 7.4 million or CVE 667,990,000 on Wednesday, January 7, 2009, in Tunis. Approved by the AfDB Board of Directors on December 22, 2008, the loan is designed to finance the Second Budget Support Programme to Cape Verde’s Poverty Reduction Strategy (PASRP-II).
The country’s Finance Minister, Cristina Duarte, and the AfDB Resident Representative in Senegal, Mohamed H’Midouche, signed the agreement in a ceremony that took place in the country’s finance ministry in Praia, the nation’s capital.
Speaking during the event, Mrs. Duarte expressed satisfaction with her country’s excellent bilateral cooperation with the AfDB. She thanked AfDB President, Donald Kaberuka; board members, Bank Group experts who worked towards the programme’s conclusion as well as the AfDB’s regional office in Senegal for its continuous support to efforts at strengthening cooperation ties. Loan resources, she said, would be used to finance the poverty reduction programme in line with government priorities. She thanked the AfDB for its availability which made it possible to speedily meet the country’s financing needs. She expressed the wish to see the cooperation strengthened following the country’s transition to Middle Income Country (MIC) status.
Mr. H’Midouche, for his part, congratulated cape verdean authorities on their macro-economic performance. He assured Mrs. Duarte of the Bank’s availability to continue supporting the country in its social and economic development efforts.
The Second Budget Support Programme to the country’s Poverty Reduction strategy (PASRP-II) seeks mainly to obtain AfDB’s support for the government’s poverty reduction strategy which was adopted in May 2008. The budget support is provided as a loan to be disbursed in two installments of UA 3.37 million (CVE 450,225,260) and UA1.63 million (CVE 217,764,740) respectively.
The program is designed under a joint framework with the country’s major donors. The protocol agreement was signed by seven donors and bilateral partners with the government in 2006 to provide their support through budget support due to the country’s good economic performance and good governance. The coordination and harmonization by the country’s technical and financial partners is in line with the principles of the Paris Declaration on aid effectiveness.
Though a sahelian and resource-poor country, Cape Verde is one of the Bank Group’s regional member countries that has, since 1996, made significant social and economic strides. The country’s poverty rate fell from about 37 % in 2001/2002 to 27 % in 2007, a 10 percentage point reduction in six years. The country is on track to attaining the Millennium Development Goals (MDGs) in 2015.
The major factors for the country’s success include: (i) the existence of a vision, especially through its Economic Transformation Strategy; (ii) the country’s good governance, including a fair democratic system and policies which have resulted in smooth transitions; (iii) macro-economic stability and strong growth; (iv) prudent and rational use of external resources; and (v) the ownership of the development process. These results have been responsible for the country to be reclassified from a low income country to a middle income country by the United Nations in 2008.
Cape Verde is a country which is demonstrating the positive relationship between good governance and development. With this new operation, the AfDB’s portfolio in the country as of December 31, 2008, includes five operations with a disbursement rate of 63% (excluding the three new operations) against 44% in 2007. The impressive performance is due, in part, to the assistance of the AfDB regional office in Senegal along with the various project implementation agencies and its active participation in actions by the Transition Support Group (GAT), a consultative mechanism set up by the government to ensure a successful transition.
Since starting operations in the country in 1977, AfDB commitments to the country currently stand at about US$182 million for 38 operations. The over all disbursement rate for these operations stands at 91.13 %.