The IMF support program for Cape Verde, with financing of 59 million euros, provides for the commitment of, by the end of the year, at least half of VAT revenue come from electronic invoicing.
In the document of the International Monetary Fund (IMF) that summarizes the commitments of the government of Cape Verde with the program under the Extended Credit Line (ECF), the objective is to extend the electronic invoice, which is already mandatory in the country for some sectors of activity, “to at least 50% of VAT taxpayers“, to increase this collection.
The Value Added Tax (VAT) is the most profitable in Cape Verde, having represented more than 12,993 million escudos (118 million euros) for public finances in 2021, 3.1% more than the previous year.
For 2022, the Government estimates in the State Budgets to collect 15,826 million shields (143.8 million euros) with VAT.
Among other measures, the government must “present to parliament a State Budget for 2023 that is in line with the commitments made” with this program, publish periodic reports on the financial situation of the State and public companies and apply the “recommendationsof the IMF to the law of the Bank of Cape Verde, according to documentation consulted by Lusa.
The archipelago is facing a deep economic and financial crisis, due to the sharp drop in tourist demand since March 2020, due to the Covid-19 pandemic.
In 2020 it registered a historic economic recession, equivalent to 14.8% of GDP, followed by 7% growth in 2021, driven by the resumption of tourism demand. By 2022, due to the economic consequences of the war in Ukraine, namely the increase in prices, The Cape Verdean Government lowered its growth forecast from 6% to 4%.
On June 16, the IMF approved an agreement for a US$60 million (€59.1 million) Extended Credit Line for Cape Verde, with US$15 million (€14.8 million) available for immediate disbursement.
In a statement, the IMF executive board announced at the time that it is a three-year ECF agreement, for the period from June 2022 to June 2025, to support the archipelago, through special drawing rights (SDR).
The financing package will help mitigate the lingering impact of the Covid-19 pandemic and fallout from the war in Ukraine, as well as reduce the fiscal deficit. and preserve debt sustainabilityaccording to the IMF.
In addition, it will help protect vulnerable groups and support a reform agenda that leads to higher and more inclusive growth.
This agreement follows the Fund’s emergency support to Cape Verde in April 2020, under the Rapid Credit Facility, which corresponded to 32.3 million US dollars (30.1 million euros) at the time of the approval.
Source: Observadora
