Rédaction Africa Links 24 with Expresso das Ilhas
Published on 2024-04-19 09:52:16
The financial stability index of Cape Verde has strengthened “thanks to the robustness of the banking sector,” according to the bulletin released this Thursday by the central bank referring to the first three quarters of 2023.
“The financial stability index grew throughout 2023, reversing the trend of reduction observed previously,” an increase that “resulted from the strengthening of banking solidity and some improvement in the external economic climate, despite a slight increase in financial vulnerabilities,” it said.
The Central Bank of Cape Verde (BCV) concluded in the document that the “indicators attest to the strengthening of the patrimonial, financial, and prudential robustness of the banking and insurance sectors.”
The archipelago’s financial sector shows “high solvency capacity,” along with an “improvement in the profitability of the banking sector and the preservation of a comfortable liquidity framework, although there is still risk associated with institutional concentration of ‘funding’,” or the origin of funds in institutional clients.
On the other hand, the bulletin states, there is a “slight deterioration in credit quality indicators up to the third quarter of 2023, with an improving trend at the end of the year, keeping the NPL ratio below two digits.”
The NPL ratio refers to non-performing loans, meaning loans that have not been paid by clients.
The BCV also indicates that “the insurance sector remains solid” and, in another chapter, there was “a positive contribution of the capital market to financing the economy, despite a slight reduction in emissions.”
Among the warning signs, the central bank points to a “sharp reduction in investment” in 2023, “in a context of poor performance over the last five years,” something that “constitutes a concern, as the possible maintenance of this dynamic could condition the growth of total factor productivity and the generation of employment in the long term.”
Regarding the macroeconomic context, the BCV highlighted the “maintenance of an adequate level of foreign reserves” and a “favorable evolution of public accounts,” with a “significant increase in tax and donation revenues.”
Read the original article(Portuguese) on Expresso das Ilhas
