[{"bbox": [83, 105, 1146, 239], "category": "Text", "text": "Strategically situated in the mid-Atlantic along main trade and illicit traffics routes, evolving as a hub for transatlantic digital optic cables, Cabo Verde is a reliable and stable democracy committed to the rule of law. Nonetheless the deep economic recession caused by COVID-19 is putting under strain the socio-economic achievements and social fabric of the country. With EU's support, Cabo Verde could regain its growth path, showing that it is possible to build back better, through a sustainable and inclusive economic model."}, {"bbox": [83, 263, 1146, 373], "category": "Text", "text": "The 2014 - 2020 Good Governance and Development budget support programmes under the 10th and 11th EDF proved that in Cabo Verde, budget support is an effective modality to promote reforms and to enhance a transparent policy dialogue that is critical to EU-CV relations. Cabo Verde has shown a strong performance and absorption capacity, while lessons learned include the importance of counter cyclical budget support operations during crisis for this SIDS."}, {"bbox": [83, 396, 1146, 478], "category": "Text", "text": "The EU Communication on budget support highlights the particular relevance of this implementing modality for SIDS as it can have an important impact to address their cross-cutting, long-term and structural challenges and threats, including:"}, {"bbox": [83, 478, 1045, 503], "category": "Text", "text": "- vulnerability (natural disasters, climate change, economic /trade shocks, aid volatility, high debt ratio's)"}, {"bbox": [83, 504, 1061, 531], "category": "Text", "text": "- volatility (in growth) due to concentration in specific sectors (for CV this is primarily the tourism sector)"}, {"bbox": [83, 531, 786, 557], "category": "Text", "text": "- risks related to the way natural resources or the tourism sector are managed"}, {"bbox": [83, 557, 296, 584], "category": "Text", "text": "- Institutional capacity."}, {"bbox": [83, 609, 1146, 824], "category": "Text", "text": "This SDG contract will provide much needed support to the Government in the form of fiscal space to continue its crises-related mitigation measures, in the midst of its worst economic recession since independence, while supporting a recovery model based on incentives to green investment/growth and an inclusive and sustainable approach to reduce inequalities and poverty. This action will also allow the EU to keep an important role in the Budget Support Group reviews and the related strategic policy and political dialogue at the highest level. The disbursement of the eligible amounts for fixed and variable tranches to the treasury will support the implementation of national development strategy and reflect as well the continued EU engagement towards the transformative impact of the CV-EU Special partnership."}, {"bbox": [83, 847, 1146, 929], "category": "Text", "text": "This action aims at supporting the Government's efforts to overcome the COVID-19 socio-economic crisis and promoting a more inclusive and green growth model. It will also contribute to create an enabling environment for the implementation of EU blending and guarantees as key instruments to support the country's development."}, {"bbox": [83, 943, 1146, 1049], "category": "Text", "text": "A technical assistance (TA) contract, part of this same AAP 2021, is being contracted in parallel to this SDG contract. This TA will contribute among others, to support the various Government entities (Ministry of Finance, Ministry of Industry and Energy, Ministry of Family and Social Inclusion, Court of Auditors) achieve this SDG contract's indicators."}, {"bbox": [83, 1067, 1146, 1174], "category": "Text", "text": "Supporting directly national strategies ensures ownership by the partner country and direct policy dialogue with leading institutions while limiting parallel implementation and reporting procedures. Finally, this action will allow the EU to steer a joint Team Europe Initiative (EU-MS) policy dialogue, as well as monitor reforms on the regulatory framework for a 'green and inclusive economy'."}, {"bbox": [72, 1218, 311, 1249], "category": "Section-header", "text": "## 2.2 Problem Analysis"}, {"bbox": [83, 1263, 319, 1291], "category": "Section-header", "text": "### Short problem analysis:"}, {"bbox": [83, 1315, 1146, 1500], "category": "Text", "text": "Due to the impact of the COVID-19 crisis, Cabo Verde is experiencing the worst economic crisis since independence. Macroeconomic indicators turned suddenly red as the tourism dependent country faced a more than 75% drop in tourism receipts in 2020 leading to a GDP drop of -14.8% in that same year. Formal unemployment reached 20%, public debt had reached 140% of GDP by December of 2020 (an exceptional strong increase compared to the 124.6% end of 2019). The public debt stock of EUR 2.33 billion brings Cabo Verde, a tourism dependent SIDS economy, into the countries with the highest debt per capita globally. The repercussions on the national developmental ambitions and the social fabric are considerable."}, {"bbox": [83, 1525, 1146, 1660], "category": "Text", "text": "The International Monetary Fund (IMF) and World Bank (WB) assess Cabo Verde's public debt still as sustainable, supported by manageable debt service indicators, even under various stress scenarios. However, debt sustainability is subject to considerable downside risks, including from a more severe or prolonged impact of the pandemic shock. The COVID-19 reality reversed the progress made during recent years and contributed to the recent strong increase of the public debt/GDP ratio."}, {"bbox": [1051, 1663, 1158, 1687], "category": "Page-footer", "text": "Page 5 of 28"}]