The Cape Verdean government announced on Monday, October 6, that the State Budget (OE) for 2026 will be 20 million euros lower than the 2025 budget, but will increase funding in areas considered essential.
According to Vice Prime Minister and Finance Minister Olavo Correia, during the presentation of the proposed law to be debated in Parliament — where the ruling Movement for Democracy (MpD) holds a majority — the decrease will be “from 890 to 870 million euros in 2026.”
According to Lusa, the minister explained that the reduction is mainly due to cuts in the acquisition of goods and services and in investments in non-financial assets.
Despite the “nominal reduction,” Olavo Correia highlighted that the budget for essential areas such as “education, health, social inclusion, energy, water, and sanitation is increasing.”
In the budget, general services account for 28%, health 13%, social protection 14%, education 14%, and economic affairs 13% of resources. “We have made efforts to reduce expenditures, including the purchase of goods and services and travel. For 2026, the budget is well-structured,” emphasized the minister.
The government also stressed that travel by doctors, magistrates, inspectors, and other public employees remains a priority and is essential for the functioning of the state and the country’s participation in international agreements.
“We have a budget that invests in economic diversification and addresses crucial growth issues, anchored in climate action, energy transition, and social inclusion,” said Olavo Correia.
At the macroeconomic level, the budget projects a Gross Domestic Product (GDP) growth of around 6%, inflation of about 1.6%, an unemployment rate of 7.3%, and a budget deficit of 0.8% of GDP. Regarding public debt, the expectation is to reach 97.4% of GDP in 2026. “Since 2020, we have been reducing debt as a percentage of GDP. We are one of the best-performing countries in this area in the post-pandemic period. This evolution demonstrates the government’s efforts to ensure budgetary sustainability,” said the minister.
The proposal also foresees a reduction in the Corporate Income Tax (IRPC) from 21% to 20%, and measures are planned to reduce the Personal Income Tax (IRPS).
Other measures include the elimination of the special consumption tax on new cars, reductions for used vehicles, and the lowering of import duties on around 400 products, as part of convergence with the special rate of the Economic Community of West African States (ECOWAS).
The budget is also expected to accelerate the public investment program and launch projects such as the Cape Verde Hospital and the development of the country’s airports.
The 2026 State Budget proposal awaits scheduling for debate in the National Assembly plenary, whose work is set to begin on Wednesday, October 8.
Source: Diário Económico
