Cabo Verde Second State-Owned Enterprises Reform and Fiscal Management Development Policy Financing

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Closed

This DPF supports reforms to strengthen the foundations for economic recovery and increased resilience in the context of the COVID-19 crisis. It is structured around two pillars aimed at: (i) reducing fiscal risks from SOEs while improving service delivery in infrastructures; and ii) strengthening accountability and effectiveness in fiscal management. The first pillar supports reform in four important sectors. First, in the maritime sector, it supports the implementation of the strategic partnership with the private sector for improved quality and financial sustainability of inter-island maritime transportation. Second, in the energy sector, it improves affordability of electricity for low-income households, strengthens the financial position of the public energy utility by fostering the use of renewables, and promotes energy efficiency. Third, in the housing sector, it improves fiscal transparency and social inclusiveness of the social housing program. Fourth, in the telecoms and Information and Communication Technology (ICT) sector, it addresses alleged anti-competitive practices in the sector through effective implementation of relevant regional (ECOWAS) regulations, with the overarching goal of reducing costs of broadband services. The second pillar aims to strengthen further accountability and effectiveness in fiscal and debt management in three areas. First, it supports the implementation of the recently approved legal framework for budget and debt management. Second, it enhances external controls on public finances. Third, it supports streamlining tax expenditures. The economic outlook is subject to high downside risks due to a prolonged global contraction and a potential widespread domestic outbreak. A sharper or more sustained contraction in Europe will weigh more on growth and increase pressure on external and fiscal balances. A widespread domestic outbreak would call for additional reprioritization of government expenditure towards public health, and further revenue mobilization measures, impacting public debt. This would increase fiscal imbalances and require stronger adjustment efforts in the medium-term to maintain a downward trajectory for public debt.

World Bank Group

Project

Power Transmission, Broadband, Seaport, Telecommunications, Power Generation (CCGT), Government