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Fitch raises Cabo Verde's outlook to positive on easing public debt

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Fitch raises Cabo Verde's outlook to positive on easing public debt

Fitch Ratings upwardly revised the outlook on Cabo Verde's long-term foreign-currency issuer default rating to positive from stable on easing government debt and improved growth potential, among other things.

The rating agency expects Cabo Verde's gross general government debt ratio to drop below 100% of GDP by 2025 from an estimated 122% at the end of this year primarily due to strong nominal GDP growth, lesser payments to state-owned enterprises and an improving primary fiscal balance.

Meanwhile, Fitch upgraded its outlook on Cabo Verde, or Cape Verde, to project medium-term growth potential of 5% from 4.7% previously. Capital investments — especially foreign direct investment in aviation and maritime transport sectors — and productivity growth are anticipated to drive Cabo Verde's growth in the medium term, Fitch wrote.

Cabo Verde's real GDP is projected to accelerate to 5.2% in 2019 from 5.1% a year ago, led by net exports and private consumption, while the current account deficit is expected to narrow to 3.1% of GDP in 2019 compared with an average of 5.5% of GDP between 2016 and 2019.

Fitch affirmed Cabo Verde's issuer default rating at B.