H.E. Tania Serafim Yvonne Romualdo, Permanent Representative of Cabo Verde to the United Nations, shared an overview of Cabo Verde's innovative sustainable finance approach during the FfD4 Third Preparatory Committee session on 'Triangulating Climate, Nature and Development through Integrated Finance' held on 14 February 2025 at the United Nations Headquarters, New York.
H.E Tania Serafim Yvonne Romualdo provided insights into how Cabo Verde transformed from a 160% debt-to-GDP ratio to a leader in sustainable finance. Cabo Verde's approach focuses on measuring financing gaps and mobilizing investments for priority sectors such as climate change adaptation, renewable energy, blue economy, and sustainable development.
She emphasized that Cabo Verde is committed to strengthening partnerships with international stakeholders, including the UN and UNDP, to mobilize investments for achieving the country’s SDGs and NDC targets. She also highlighted the role of south-south cooperation and debt-for-nature swaps in advancing the nation’s sustainable finance strategy and renewable energy transition.
The full transcript of the speech is attached below:
Good morning, all.
First, a word of appreciation for the invitation by UNDP, a very special partner to Cabo Verde's Sustainable Development, to participate in today's event.
Cabo Verde is well on its way to recovering from a particularly dire situation of debt distress. Just after the worst phase of the COVID pandemic and the geopolitical crisis between 2020 and 2022, Cabo Verde's debt-to-GDP ratio was 160%. That was among the highest in the world. Despite these lingering challenges, the government of Cabo Verde demonstrated a huge commitment to addressing climate change and environmental sustainability with substantial financial investments, highlighting its dedication.
The state budget for 2025, for example, clearly outlines several policy priorities that underscore these commitments. One of the centerpiece proposals is the establishment of a carbon tax in 2025, designed specifically to fund initiatives aimed at mitigating and adapting to climate change effects. Additionally, the government is set to introduce tax incentives to support the use of renewable energy in irrigated agriculture, enhance renewable energy production and microproduction, and support the water desalination sector.
There are further plans to facilitate the importation of animals, food, medicine, irrigation materials, greenhouse food transport equipment, and agricultural implements, with an eye toward bolstering the sector's sustainability. At the same time, initiatives aimed at recycling and promoting alternatives to single-use plastic items are also being prioritized not only in rhetoric but also through the financial resources committed in the budget and expenditure frameworks.
There's a holistic approach to government and fiscal management, blending climate action and environmental stewardship with economic foresight. The measures I just mentioned are much more than just being ecologically sustainable. They were crafted towards the country's financial stability under the 2025 budget. The risk of debt distress is clearly diminishing, and the economy is projected to grow.
The budget deficit is anticipated to narrow to -3.3% of the country's GDP by the end of this year. Furthermore, forecasts by the World Bank also project a significant reduction in public debt, expected to decrease to 107% of GDP.
We do, however, recognize that public resources alone are not enough to achieve our strategic vision at the intersection of climate, nature, and development. The entire 2025 budget of Cabo Verde is projected at US$900 million, with a revenue-to-GDP ratio of 20%. Correspondingly, the availability of public financing to address the urgent need for adaptation to climate change and regenerative nature remains circumscribed. Meanwhile, our new SDG-aligned Strategic Plan for Sustainable Development, in Portuguese, it's called PEDS (Plano Estratégico de Desenvolvimento Sustentável), has already launched its second iteration in 2023. It calls for the mobilization of €5 billion in public and private investment until 2027.
Our 2021 NDC update also requires an additional €2 billion by 2030. In short, the entire state budget would not be enough to achieve only, and of course, I don't mean it's not that much, sustainable development, biodiversity, and climate goals under the program that I already mentioned earlier. To create an enabling environment from the bottom up, financing sustainable development during the pandemic and subsequent crisis, we implemented some innovative financial solutions. Since 2020, our ambitious 2030 strategy, supported by the UN and UNDP, identified blue and green economies as crucial for sustainable, nature-regenerative, and climate-aligned development. This strategy emphasizes the importance of sustainable finance and human capital for achieving our long-term SDGs and NDC goals.
A key outcome was the development of the Blue X sustainable finance platform by the Cabo Verde Stock Exchange, again in very strong partnership with UNDP. The initiative creates a decentralized platform that aligns global, regional, and local impact investment supplies with the financing needs of sustainability, nature, and climate projects.
In less than two years of operation, the platform has already supported the issuance and listing of six thematic bonds of the internationally recognized blue, green, social, and sustainable varieties, with a total investment now exceeding $40 million. The bonds are subject to alignment with both international standards as well as domestic taxonomies and regulations, as encapsulated in the Blue Bond regulation published by our capital markets regulatory authority.
Last year, the platform received two global banking and finance awards and was distinguished as the most innovative initiative and recognized for issuing the best sustainability bond in the region of ECOWAS. These investments are now turned into sustainable and climate-conscious actions through a diverse range of public and private sectors, from municipalities and microcredit agencies to shipping companies and public utilities, just to name a few.
Our first sustainability bond listing and issuance from a consortium of private companies supported by a public state guarantee was designed to provide the financing necessary to invest in the greening of industrial buildings as a means of reducing carbon emissions and pollution. Our ongoing process underlines the importance of alignment. Financial strategies will only produce the desired impact when they integrate climate, nature, and development goals. Institutional coordination between all sectors and engagement by the private sector, which can be brought on board by market incentives, risk-sharing mechanisms, and financial innovation, are crucial. As part of our debt sustainability strategy, we initiated a bilateral swap with Portugal, converting debt into a Climate and Environment Fund.
This fund will support our renewable energy transition, aiming for net-zero emissions by 2050. Encouraged by this model's success, we now aim to pursue similar debt-for-nature swaps with other creditors, leveraging their interest in fulfilling Paris Agreement and Cumming Montreal global CPD framework commitments through credible financial reforms and actions. Cabo Verde has proven itself as a reliable partner in implementing climate and biodiversity objectives.
Those include rapid scale-up in the renewable energy sector and, of course, as a big ocean state—after all, our geographic composition is 99.6% oceanic, only 0.4% is soil. Developing a vibrant blue economy sector with adequate technical and financial support from our partners, we envision the reduction of maritime sector emissions through non-fossil fuel bunkering services, as well as greening of shipping and other transportation services that will position Cabo Verde strategically and geographically as an attractive blue hub in the mid-Atlantic.
As our Minister for the Ocean once remarked to our Minister of Finance, green in Cabo Verde is blue.
Thank you for your attention.