Banco de Cabo Verde extends prudential measures in banking until September – Economy

“In line with the measure of extension of public moratoriums, exclusively on capital, by the Government, the Bank of Cabo Verde decided to maintain, until September 2022, the prudential measures currently in force”, refers in a statement from the central bank. , signed by the institution’s governor, Óscar Santos.

The document adds that, in relation to banks’ capital requirements, “the maintenance of the total capital adequacy ratio at a minimum level of 10%”.

“It should be noted that the maintenance of this measure represents a greater margin for banks to continue to finance viable projects and, thus, contribute to the recovery of the national economy”, it reads.

Another of the measures is the suspension of the deduction of the values ​​of the goods received, in the period from 2013 to 2016, in the reimbursement of own credit, as “dation in compliance, “also with a positive impact on the level of financing capacity on the part of banks”.

The Cape Verdean banking system currently has eight commercial banks.

For credits that are still under public moratorium, while the measure lasts, the possibility of not being automatically classified as ‘restructured credit’ or ‘default’, with no impact on the prudential and financial indicators of credit institutions” , says the central bank.

It is also allowed, “temporarily and exceptionally” that, within a period of six months, banks do not classify as “restructured credit due to the customer’s financial difficulties” of credit operations whose capital reimbursement started on April 1, as well as “in situations in which customers request debt restructuring and/or renegotiation, provided that, in the credit institution’s assessment, there is a prospect of economic and financial viability of the beneficiary entity”.

“With regard to monetary policy measures, and so that credit institutions can continue to finance the economy, the current situation is maintained until further decisions are made”, it reads.

The BCV communiqué also mentions that in order to “safeguard the stability of the financial system, in addition to the monthly monitoring process of the portfolio of public moratoriums granted by banks and implemented in the last two years”, it will carry out “specific verification/inspection actions in loco with the objective of evaluating the quality of operations and the level of risk associated with debtors”.

“Although there is some improvement in the epidemiological situation in the country, signs of uncertainty prevail that justify the continuity of support measures aimed at sectors still in difficulty”, recognizes the central bank, regarding the economic crisis caused by the covid-19 pandemic and the current price hike caused by the war in Ukraine.

It adds that from the permanent monitoring of the loan portfolio in arrears granted by banks, in January this year there was “a 25% decrease in its volume”, given the “gradual recovery of economic activity, as well as the exit strategy gradual, since July 2021, of exceptional measures to support companies most affected by the economic impact of the pandemic”.

The Cape Verdean Government approved an extension of the moratorium on bank credit for another six months, until September 30, which applies only to the reimbursement of capital and essentially to companies linked to the tourism sector.

“This new supplementary extension package, which is in force for a period of six months, is exclusively with regard to the suspension of capital reimbursement”, announced on April 1st the Deputy Prime Minister and Minister of Finance, Olavo Correia, about the approval of the measure, in the Council of Ministers, on Thursday, the day on which the previous extension period of the moratorium ended, as a measure to mitigate the economic consequences of the covid-19 pandemic.

“The Government continues to go to the limit of the possibilities of the State of Cape Verde to protect the national business fabric, despite the complexity of the current scenario”, he added.

According to Olavo Correia, this extension of the moratorium on bank credit – approved for the first time in March 2020, due to the pandemic, and successively extended – will cover companies whose main activity is in the area of ​​”air transport, storage and auxiliary activities”. air transport, accommodation, catering, beverage establishments, real estate, travel agencies, tour operators and other booking activities”.

This new moratorium period on capital reimbursement can also be accessed by companies whose main activity “is in other areas unequivocally related to tourism” and that prove a reduction in invoicing of at least 25%, in December 2021, compared to December 2019.

It also covers companies in the area of ​​capture, treatment and distribution of water and energy, in this case “applicable only to the islands of Sal and Boavista”.

Cabo Verde faces a deep economic and financial crisis, due to the sharp drop in tourist demand – a sector that guarantees 25% of the archipelago’s Gross Domestic Product (GDP) – since March 2020, due to restrictions imposed to control the covid-19 pandemic. .

In 2020, the country recorded a historic economic recession, equivalent to 14.8% of GDP, and economic growth of 7% in 2021, driven by the recovery in tourist demand in the fourth quarter.

PVJ // VM

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