Fitch Ratings has upgraded Cape Verde’s economic outlook from stable to positive while maintaining the country’s ‘B’ credit rating, citing the archipelago’s continued fiscal consolidation and robust economic performance.
The agency’s decision is underpinned by successful revenue mobilization reforms that are facilitating a rapid reduction in public debt, a trend expected to bring debt down to approximately 85% of GDP by 2027, a significant improvement from the 100% mark recorded in 2025 and the historic peak of 147% in 2021.
Tourism remains a primary pillar of the nation’s growth, with Fitch noting that the sector continues to bolster the country’s external position. While geopolitical tensions in the Middle East present a potential advantage as European travelers seek safer and more accessible alternatives, the agency cautioned that a prolonged conflict or disruptions in petroleum supplies could limit flight availability and dampen growth projections.
Read more about this topic: Cape Verde economy grows 6.3% in 2025
For 2026 and 2027, real GDP growth is expected to remain robust at an average of 5.4%, following a strong performance of 6.3% in 2025. This economic resilience is further evidenced by international reserves, which rose to the equivalent of 8.4 months of current external payments in 2025, with expectations to reach an average of 10.7 months by 2026 and 2027.
Fitch anticipates that the central government’s budget surplus, which reached 1.3% of GDP in 2025, will average 0.9% through 2026 and 2027, supported by the introduction of new tourism taxes and ongoing VAT reforms. Despite these positive indicators, the agency highlighted lingering challenges, including persistent levels of public and external debt, as well as vulnerabilities linked to state-owned enterprises.
These entities present the most significant fiscal risk, with their collective debt amounting to nearly 48% of GDP at the end of 2024. Furthermore, while Fitch does not anticipate that the upcoming legislative and presidential elections will significantly disrupt fiscal trajectories, the agency noted that any potential reversal of sector reforms concerning state-owned companies could pose risks to the country’s overall economic stability.
