REPUBLIC OF CABO VERDE BUDGET SUPPORT GROUP Budget Support Group Review November 14 - 1 8 , 202 2 AIDE MÉMOIRE EN 1 1. Introduction A mission of the Budget Support Group (BSG) took place in Cabo Verde from November 14 th to 1 8 th , 2022 and focused on macroeconomic stability, fiscal situation, public finance management, employment and employability, poverty reduction and social protection, energy transition, security, health, public administration reforms, and blue economy Luxembourg was represented by Mr. Thomas BARBANCEY (Chargé d’affaires a.i. of the Luxembourg Embassy), Ms. Michèle SCHMIT (Second Secretary) and Mr. Jorge WAHNON ( Attaché ); Portugal was represented by Mr. António MONIZ (Ambassador of Portugal), Ms. Odete Serra (Cooperation Attaché), Mr. Guilherme ZEVERINO (Camões I. P.), Mr. João Domingos (Defense Attaché) and Mr. João Amado (MAI Liaison Officer) ; Spain was represented by Ms. Dolores Rios Peset (Ambassador of Spain), and Ms. Patricia Ramos Fernandez ( Head of Cooperation ); the European Union was represented by Ms. Carla GRIJO (Ambassador of the European Union), Mr. Pedro C AMPO LLOPIS (Head of Coopera tion) , Mr. Stephan Van Praet (Program Manager) , Mr Francisco Pacheco (Program Manager) , Ms Graça Sousa (Program Manager) ; The African Development Bank was represented by Mr. Ibrahim Ansu BANGURA (Senior Governance and Economic Management Officer); the Wor ld Bank Group was represented by Mrs. Eneida FERNANDES (Resident Representative), Mr. Daniel REYES (Senior Economist) and Mrs. Rosa B RITO DELGADO (Country Economist). The BSG wishes to express its gratitude to the Government of Cabo Verde, especially to H.E. Vice - Prime Minister and Minister of Finance, Business Promotion and Digital Economy and his team, and would like to thank representatives from line ministries, the Central Bank, the Court of Auditors, and Parliament's Specialized Commission on Finance and Budget, for their constructive contributions to this review. Furthermore, Partners would like to thank all stakeholders for the written responses and numerous documents provided in the context of the BSG mission. The present aide - mémoire synthesizes key discussions. Specific recommendations from Partners are presented throughout the document and summarized in its annex 1 2. General eligibility criteria – Sector and Cross - cutting issues Macroeconomic framework Cabo Verde continues a path of economic recovery. After having grown by 7 percent in 2021, a strong recovery is underway in the first half of 2022, with real GDP growing at 17.2 percent. The recovery has been driven by the strong upturn in touris t arrivals , which returned to the pre - pandemic level in the third quarter of 2022 (around 24 0,000 tourist arrivals). Inflation pressures have persisted in 2022, driven by high international food and oil prices, due to the war in Ukraine. Headline inflation in Octobe r reached 8.2 percent , with food and energy inflation respectively at 17 .8 and 14.1 percent. Higher food prices, combined with low agricultural production due to sustained drought over the past five - years, have intensified food insecurity. Poverty (using U S$3.65 per day PPP in 2017) increased from 14.5 percent in 2019 to 20.4 percent in 2020 but has declined to 18.5 percent in 2021 because of the rebound in economic activity , but the ongoing inflationary pressure is likely to increase poverty. Real GDP is projected to grow by at least 8 percent in 2022, driven by the strong rebound in the tourism sector. However, uncertainty regarding global developments remains high. Downside risks over the medium term are the war in Ukraine, new variants of the COVID - 19 virus, and the high exposure of Cabo Verde to other external shocks, including those related to climate change. In the first quarter of 2022, the Government reacted to the 2 impact of the Ukraine war in the economy with a policy package aimed at protecting t he most vulnerable, including through measures to alleviate persisting inflation in fuel, wheat, corn, beans, rice, cooking oil, and powdered milk, and increased energy subsidies to the poor. The estimated fiscal cost of the response package in 2022 is US$ 85 million , which increase d fiscal financing needs in around 4 percent of the GDP. A further escalation and prolongation of the war in Ukraine could lead to a global deceleration and higher inflationary pressures, demanding continued state support to mitig ate its impact on energy prices and food insecurity. Key recommendations from Partners include: i) a continued focus on maintaining macroeconomic stability; ii) start planning the medium - term growth agenda with a focus on increasing the resilience of the economy to external economic and climate shocks; iii) drive structural reforms over the medium - term that promote private consumption and investment in digital economy, blue economy, and renewable energy to help close the output gap and support economic rec overy; iv) adopting better - targeted mechanisms to make sure that measures mitigating inflationary pressures in food and energy are aimed at the most vulnerable segments of the population. Fiscal Revenue, Expenditures and Deficit F iscal revenue until Oct ober of 2022 increased by 3 1.7 percent whereas expenditure increased by 5. 9 percent, driven by the strong economic performance in 2022 The increase of revenues was driven by the increase in the collection of value added (VAT), international trade, and inc ome and profit taxes by 42.7, 32.2, and 9 percent, respectively. Current expenditures also increased (7.9 percent) with the measures to prevent food insecurity and control electricity and fuel prices adopted by the Government to alleviate the impact of the Ukrainian war on the most vulnerable. However, capital expenditure decreased by 16.4 percent due to the reprogramming of several public investment projects, but also delay in the procurement stages of some projects. As a result, the overall fiscal deficit improved to 2.8 percent of GDP (from - 7 percent in October 2021). Fiscal financing needs in 2022 are projected to reach 5 percent of GDP and be covered by domestic financing, external concessional financing from the IMF, World Bank, and the African Develo pment Bank , and grants . The primary and overall fiscal deficits are projected to lower to 2 and 4.5 percent of GDP respectively. Key recommendations from Partners include: i) prioritize critical structural reforms linked to reducing fiscal risks, increa sing debt transparency, and restructuring of the SOE sector ; ii) strengthen domestic revenue mobilization with a focus on review ing and streamlin ing fiscal incentives, to make sure that the trade - off between forgone fiscal revenue and investment attractio n is carefully considered ; iii) return to a prudent fiscal policy stance in the short term. Debt Public debt reached 132.4 percent of GDP as of September 2022 The increase in concessional external borrowing and domestic lending to cover fiscal financial needs (and the contraction of GDP) resulted from the COVID - 19 pandemic increased public debt from 124 percent of GDP in 2019 to 1 43 percent in 202 1 . External debt accounted for 1 01.5 percent of GDP, whereas domestic debt represented 4 1. 5 percent of GDP. Public external debt remains highly concessional (94.5 percent). Average maturity of external debt is about 19 years, and weighted average interest is 1 percent. Around 60 percent of the external debt portfolio is euro - denominated, and th erefore, exchange rate risk is low given that the Cabo Verdean Escudo (CVE) is pegged to the Euro. Public debt is expe cted to decrease to 128.1 percent of GDP in 2022. According to the latest joint world Bank/IMF DSA, published in June 2022, public debt r emains sustainable. The risk of overall debt distress is high whereas the risk of external debt distress has improved to moderate. The debt coverage of the DSA comprises the central Government, extra budgetary funds, the central bank, and guarantees, in li ne with fiscal accounts. Compared to the previous joint World Bank/IMF DSA, published in October 2020, the risk of external debt distress was upgraded from high to moderate. The main driver of this upgrade is the rebasing of the GDP, which mechanically imp roved debt indicators. 3 Key recommendations from Partners include i) increas e the frequency and quality of debt reporting, including publishing debt for the non - financial public sector ; ii) follow prudent borrowing policies to contain debt accumulation, i ncluding refraining from non - concessional borrowing; iii) reduce the net financing needs stemming from loss - making SOEs to limit their impact on overall debt. SOE and liabilities Fiscal risks coming from the SOE sector further increased in 2022 and chall enges remain to be addressed at the policy and institutional level. These risks stem mostly from the worsening operational performance of Cabo Verde Airlines (CVA) and Electra (the electric and water utility company), triggering increased Government suppor t through direct budget support and loan guarantees. Up to September 2022 the State extended loan guarantees to SOEs amounting to US$45.6 million, most of it to CVA and Electra. However, the Government is strongly committed to implement a SOE reform agenda for 2022 - 2026 that includes various degrees of privatization for 11 SOEs, ranging from full privatization to partial divestments, concessions, and public private partnerships (PPPs). Fiscal vulnerabilities may undermine Cabo Verde’s efforts to restore fis cal sustainability and bring debt (as a share of GDP) back to a declining trajectory. Even before the pandemic, the finances of many of the SOEs were poor. Reducing exposure to fiscal risks through improved monitoring, management, and increased transparenc y of the debt portfolio, outstanding loan guarantees and non - guaranteed debt of SOEs, and local governments is central to ensure fiscal sustainability. Key recommendations from Partners include: i) establish a High - level Steering Committee to lead the SOE sector reform ; ii) strengthen the SOE oversight unit capacity to monitor the sector and PPPs ; iii) limit financial support to the SOE sector ; iv) adopt a SOE policy with clear performance targets and transparency obligations of SOEs. National Development Strategy PEDS II Authorities presented an overview of the preliminary version of the Plano Estratégico de Desenvolvimento Sustentável 2022 - 26 (PEDS II) The vision s tatement aims “ to become by 2026 an advanced democracy, a dynamic, digitalizing and divers ifying economy, an inclusive nation, integrated into ECOWAS , with shared prosperity, high international prestige and a source of pride for all.” This strategic plan , which is aligned with the Sustainable Development Goal approach, includes four pillars – economy , social , environment and sovereignty – implemented through 29 programs to be funded by the annual State B udget s 2023 - 2026 A new monitoring and evaluation system for the implementation of the PEDS II was announced BSG partners received a n indicat ion of the required overall budget of 2.3 billion euro F or each of the 29 programs , a general budget figure is provided . The BSG partners encourage the Government to prepare a medium - term fiscal frame work , including more in detail the financing needs to implement this ambitious development agenda. 4 Employment and Employability The BSG Partners reviewed the progress made in the Education, Training and Employment (ETF) sector until September 2022. This assessment was based on the policy dialogue held wi thin the BSG framework, as well as on the documentation presented by the Government, namely: (i) Biannual Activity Report of the Directorate General of Employment (DGE); (ii) SEFE presentation GAO nov.2022(iii) Answers GAO Nov.2022 Questions for Employment and Employability Authorities; (iv) Activity reports from the following entities: IEFP, EHTCV, CERMI, FPEF, EMAR; DNE - technical education, UC - SNQ; Draft State Budget 2023 and SEFE QDS 2022 2023. Despite having been requested, Partners did not receive the reports on PROEMPRESA or OMT, having also asked to receive the diagnosis of anticipation of skills and its action plan. Of the elements presented by the Government regarding progress in the sector, the following stand out: a) the imminent approval of the National Strategy for the Promotion of Decent Employment 2022 - 2026 (ENPED) by the Council of Ministers to be aligned with the objectives of the PEDS; b) the launch of the process of developing monitoring - evaluation tools and planning and management support instruments for the ENPED; c) the creation of a Youth Portal to interact directly with training entities or for registration; d) the strengthening of the technical capacities of the FPEF considered essential for the sustainability of the sector; e) the st udy on alternative scenarios that ensure the economic and financial viability of the EHTCV and CERMI. Nevertheless, BSG Members pointed out some concerns with the aim of supporting the authorities' reflection and decision - making process, with a view to i mproving the sector's performance. First, they found that the physical and financial execution rates of the actions implemented by the entities was lower than planned for 2022. According to the shared data, by September, the IEFP had executed 29% of the t raining actions planned for the year, benefiting about 2,000 young people against an annual target of 6,800 beneficiaries. For its part, the CERMI had only had 125 young people in initial training. On the other hand, the Government indicated that a signifi cant part of the training actions had started as of August, expecting positive results in the fourth quarter. The Partners have asked the authorities about the availability of value chain studies of the sectors considered as catalytic (Blue Economy, Green Economy, Digital Economy, Agribusiness). These analyses would make it possible to determine the potential for job creation in these areas and, therefore, better define and plan the training offer according to market needs. In its response, the Government indicated that the studies would be carried out within the framework of the PEDS II implementation. Considerin g that in the Platform for Accreditation of Training Entities, only 23 of the 65 accredited were public, the Partners asked how the Government saw the possible competition between public and private training operators. Namely, if it anticipated a progressi ve decrease in the number of young people attending the public training service. The Government said it did not foresee any problems, considering that in general the quality of public training remained higher than the private offer, and was therefore more attractive, especially since several private entities offered short training courses, without equivalence in the National Qualifications System. Nevertheless, in order to ensure the quality of the system as a whole, the authorities said they were preparing an amendment to the Accreditation Act for Training Entities to introduce the possibility of auditing training entities since accreditations are granted for 5 years. The partners also stressed the importance of the Government seeking to ensure greater effi ciency of the public system and to optimize the supply of training and employment services in the public network, promoting complementarity of action and avoiding duplication whenever possible. Regarding the participation of the private sector in the fina ncing system for vocational training, the Government indicated its intention to start consultations with the private sector in 2023, following the economic recovery and upon evidence of a recovery of the companies. The expectation was that the discussions would result in a consensus on the definition of the amount of the fee to be imposed on companies for financing vocational training, foreseen in the respective legal regime. 5 Regarding the matrix of indicators for the employment and employability sector proposed by the Government, the Partners welcomed the process of defining the various elements of the matrix and indicator guide developed over the past few months. However, the y regretted that the process could not be completed before the meeting, although most of the indicators had been finalized. During the GAO, elements were still missing for the completion of the indicators related to the formalization of the Informal Produc tion Units (ind.8) and the proportion of workers enrolled in the INPS (ind.9). The Partners also expressed some concern regarding the level of ambition proposed, considering that for some indicators the targets for the period 2022 - 2026 could have been more ambitious. Nevertheless, the matrix was validated on a provisional basis, and it was requested that the elements that needed to be adjusted be completed as soon as possible, with the hope of being able to adopt the matrix definitively at the first GAO mee ting of 2023. Key recommendations from partners include: i) Finalize the indicator matrix as soon as possible to ensure its adoption at the first BSG meeting of 2023 ; ii) Ensure that the implementation of the ENPED incorporates a planning device, manageme nt support and, above all, monitoring and follow - up tools for the sector ; iii) Continue strengthening the technical capacities of the FPEF and finalizing the mechanism for managing the financing of vocational training through the Fund ; iv) Define and adopt governance and management models that ensure the economic and financial viability of the EHTCV and CERMI ; v) Move forward quickly in the process of dialogue and consultation with the private sector, in order to structure the co - funding of vocational train ing by companies. Poverty reduction and social protection policies The Government has continued its investment in upscaling the social protection system through cash transfers and keeping the ambitious goal of poverty eradication in the country by 2026. This is also translated in the recently agreed PEDS II targets, with the commitment to reach 31.1% of vulnerable families from Group I and II with social transfers until 2026 ( Rendimento Social de Inclusão ( RSI ) and Inclusão Produtiva ( IP) ) A number of measures are being implemented, namely the expansion of social pension coverage, the increased single social register (CSU) enrolment and the roll out of productive inclusion, for families receiving the RSI, including the household social assistance services. The figures provided by Ministério da Família, Inclusão e Desenvol vimento Social (MFIDS) in Mid November 2022 indicated that 81 094 households were registered in the CSU, representing 64% coverage of the resident population (310 346 individuals). This represents a slight increase from 62% in early June 2022. Sal (25%), P raia (45%) and São Vicente (53%) are the municipalities with the lowest registration rate (gender - disaggregated data not available). Further efforts are in place to expand coverage, in particular in the poorest areas. Government is advancing in drafting a n extreme poverty eradication strategy to set out the measures foreseen to attain the eradication of extreme poverty by 2026, in particular benefiting women and children. It is then essential that this strategy includes instruments to protect the extreme p oor, namely through the RSI, to ensure no one lives below the USD 1.9/day threshold of extreme poverty while they graduate to higher income levels. The elaboration of the national plan to increase school enrolment of adolescent girls is also being drafted as to protect the most vulnerable girls in group 1 (which are more prone to fall into extreme poverty) and ensure social assistance measures. The costing and the sustainable funding of these strategies is essential to ensure implementation and a strong bet ween line Ministries including MFIDS and the Ministry of Finance is needed. The B S G partners welcome the announced diploma that creates a new Social Fund as a source of internal tax revenue for poverty eradication , which is a crucial step to guarantee domestic resources for the fight against extreme poverty, the RSI in particular. In a context of significant foreseen economic growth for 2023 including 6 increased tourism revenues, the State Budget for 2023 appears to be inc oherent with the objective of poverty eradication through required strong investment in social protection. The 2023 Budget indicates a significant reduction in budget allocations for social transfers in particular from 430 203 070 Escudos/3.9 M Euros for S ocial Transfers (RSI) to 111 985 423 Escudos/ 1.01 M Euros in 2023, which would mean a drastic reduction of 75% on the number of RSI beneficiaries. This would also affect disproportionally children (37% of group 1) and women headed households (84.9% of gro up 1). Even if the Social Fund provides some additional funding, this trend is not sufficient reach the PEDS II target by 2026 , or to eradicate extreme poverty by 2026. Regarding the contributory social protection pillar, the Instituto Nacional de Previdên cia Social (INPS) indicated that by the end of 2021, 52 % of the resident population was covered. While this ratio is already very positive within the West African region, the BSG invites all stakeholders to improve further this coverage, especially with r egard to the categories "domestic services" and "self - employed workers”. The partners took note of the measures taken to reduce the considerable public service debt to INPS. While progress was made, notably through the transfer of the historic TACV debt t o NEWCO, the overall public debt amount of EUR 47 million remains problematic and deserves full attention, in particular for the debt accumulated by the Central Government entities and the municipalities. Key recommendations from partners include: i) the G overnment to finalise its extreme poverty eradication Strategy within 2022 , including costing and financial gap analysis as well as annual action plans; ii) State Budget allocations 2023 - 26 for Social Protection to be co herent with the ambition of the E xtreme P overty E radication Strategy and the PEDS II targets to ensure 31.1% of poor households from group 1 and 2 have access to social transfers ; iii) the implementation of the Extreme Poverty Social Fund , funded amongst others, through increased tourism tax revenues, with a prime focus on RSI to the poorest families; iv) Government, municipalities, State Owned Entities and public institutions to further reduce their share of debt to INPS ; v) INPS to continue broadening the contribution base by strengthening the coverage for the categories “domestic services” and “self - employed workers”. Energy sector The BSG Partners reviewed the progress made in the energy sector up to September 2022. This assessment was based on the policy dialogue held duri ng the meeting with the Budget Support Group, as well as the documentation presented by the Government, namely: (i) “Dados Electra GAO 2022”; (ii) “Dados Electra GAO 2022 Tarifa Social”; (iii) “Respostas GAO nov. 2022 - Questões para as Autoridades do sect or da Energia – lista consolidada 21112022 ” Among the elements presented by the Government, the following were highlighted: (i) the imminent approval of the construction and installation of two solar - photovoltaic plants (one 5 MW for São Vicente, another 5 MW for Sal) and a 10 MW plant in Calheta, Santiago; (ii) the signature of a MoU with Cabeólica to expand and double the production capacity of the Praia wind farm and for the installation of 5 MW batteries in Santiago and 5 MW in Sal for electricity stor age. Additionally, BSG Partners took good note of the Government's intention to launch (a) small solar - photovoltaic parks, with an expected total production of 5 MW, on the 4 islands with lower energy consumption (Santo Antão, São Nicolau, Maio, Fogo); (b) the repowering of the Palmarejo solar - photovoltaic plant increasing capacity from 4 MW to 10 MW (noting that the budget of €10 million presents a challenge) and; (c) the installation of a Pump - Storage infrastructure in Santiago (project at an advanced sta ge of discussion with development partners). Notwithstanding the progress made in 2022, BSG Members raised a number of concerns with the aim of supporting the reflection and decision of the Authorities with a view to improving the sector's performance. Pa rtners noted with concern the forecasted increase of the average price of electricity tariffs for 2023, despite 7 its anticipated stabilization and decrease over the medium term. They also noted the still significant difference between the number of families benefiting from a social electricity tariff (16,000) and the number of potentially eligible families (44,000 - registered in groups I and II of the Single Social Register). The Government clarified that due to other eligibility criteria (namely a maximum monthly consumption of 120 kW/h per household), the measure cannot benefit all families registered in groups I and II of the Single Social Register (CSU). Nonetheless, Authorities have sought to reduce this gap, and have set a goal to reach 30,000 benefici aries. To this end, they are preparing the launch of awareness - raising actions and incentives for the adoption of energy efficiency measures in order to reduce the electricity consumption of families and allow them to access the social tariff. On the other hand, the Government is studying the possibility of attributing solar micro - production kits to large households, in order to compensate for the potentially unfair impact of consumption limitations on the more disadvantaged large families. Regarding the unbundling of Electra, Partners expressed their concern about the delays in the process and questioned whether a date had already been set for the privatization of the recently - created production entity (EPEC) and the distribution and commerc ialization entity (EDEC). Partners took note that the recent Decree - Law also created a new public entity (ONSEC) which will carry out the role of "single buyer". The Budget Support Group also recalled that the unbundling and privatisation of part of Electr a is a precondition for part of the support provided by the BSG and that this process should, according to the Government’s own schedule, have been completed by January 2023. The Government reaffirmed its intention to compensate for the delay, with the hel p of the technical assistance to be mobilized as planned as of January 2023 for this purpose. Partners expressed concern regarding the data on electricity losses (24.85%, September 2022) provided by ELECTRA, given the target to reduce losses by 2% in 202 2, and given that in January 2022 losses were of 23.10%. The Group was informed that ELECTRA intends to start a pilot project with General Inspection of Economic Activity (IGAE) and the National Police to fight fraud, targeting commercial establishments an d the middle class. The Cape Verdean Authorities confirmed their intention to update the Electricity Sector Master Plan 2018 - 2040 (Master Plan) in 2023, respecting the legal obligation to review it every 5 years. The Government also shared its intention to reformulate the Master Plan’s targets in a two - pronged approach: (i) elaborate a schedule of disbursements (investments) incorporating new elements; (ii) create a track - record of greater reliability. With regard to micro - production, the Government explain ed that actions are underway to inspect and certify private micro - production facilities. In 2022, more than 151 micro - producers were connected to the grid, 110 certified and 54 signed a contract with ELECTRA for the sale of their excess electricity. Author ities also clarified that, due to the demand, ELECTRA would be having difficulties in meeting the desired demand (especially to carry out inspections outside Santiago), and has created a specific office for renewable energies, also in charge of monitoring the connection to micro - production. Regarding the Energy Information Management System (SGIE), Partners took good note of its gradual operationalization. In that sense, they appealed to the Government to support data producers (operators and concessionaire s of the electricity sector and fuel sector) to present the required data in the established format and deadlines. The Government further indicated that it was already receiving data from operators and concessionaries, which the National Directorate of Ind ustry, Commerce and Energy (DNICE) was going to upload into the SGIE. The system was expected to become fully functional by 2023, enabling the different stakeholders to upload data autonomously Regarding the human resources needs in the sector, the Govern ment confirmed the intention to recruit 8 technicians for the DNICE, pending the fulfilment of the necessary conditions to launch the tender. At the 8 same time, the Government clarified that there are plans to temporarily reinforce the DNICE’s team with 3 t echnicians in the framework of the BSG partners’ support aimed at increasing the production of Renewable Energies The BSG also recalled the need for sector’s coordination through a dialogue mechanism between the Government and the Partners. The proposal wa s well received by Authorities who indicated their intention to reactivate a concertation mechanism that would foresee the organization of periodic meetings for this purpose. Key r ecommendations from partners include : i) Accelerate the unbundling proces s of ELECTRA; ii) Update (in 2023) the Electricity Sector Master Plan 2018 - 2040; iii) Continue to expand the functionalities of the SGIE by strengthening the data input component for micro - production and work with data producers to ensure that the informat ion is sent in the required format and according to the established schedule; iv) Reactivate a periodic coordination and consultation mechanism between Government and Partners; v) Adopt public policies and measures conducive to reducing electricity losses in the grid, increasing the efficiency and sustainability of the system; vi) Enhance the implementation of the social electricity tariff to increase the coverage of beneficiaries registered in the Single Social Register. Blue Economy BSG members reiterate the prioritization of the blue economy sector as a key element for the country's development. In this sense, the members of the BSG recognized the Government for including for the first time institutions such as ENAPOR, the Tourism In stitute and INE , in addition to the Ministry of the Sea. For future sessions, BSG members suggested and encouraged to also invite the INE representative responsible for the blue economy satellite account to the meetings. Regarding the “Pilotagem Committee of the Blue Economy Policy Charter”, included in the MOU for Spain's budget support to Cape Verde. BSG partners invited to create and activate this Committee as soon as possible and appoint a focal point whose main objective would be to interact with the partners and provide an overview of the sector at a technical and financial level. Due to the need to have real data that give a vision of the contribution of the Blue economy to the economic growth of the country, during the session BSG reinforced the nec essity to have the satellite account of the Blue Economy not only with data related to fishing, but also with statistics of tourism, maritime transport, among others. At the session, the members of the BSG were informed about the progress made by the INE in this area and committed to present the first results and statistics at the next meeting of the BSG. In port matters, BSG members invited the sector represented by ENAPOR to present an investment plan for maritime logistics infrastructures in the countr y, linked to the National Investment Plan for the Blue Economy (PINEA) in the next BSG This plan should also include pipeline of related projects (such as CABNAVE; bunkering) and existing or proposed source of financing (State Budget, partners, etc.). On the other hand, and considerin g that the guiding document in terms of development is the PEDS, the Government of Cape Verde was invited to make a presentation of projects that will be part of the Cape Verde Maritime Platform Program of the future PEDS II, as well as its financing plan in the next BSG mission. This programme aims to: "Promote the transition to the blue economy with the development of ports, maritime transport and logistics, fisheries, maritime tourism and water sports, bunkering fuelling, in ternational ship registration, ship repair and construction, sustainable resource management with coastal and maritime planning, and combating marine pollution and illegal, unreported and unregulated fishing." 9 Key recommendations from partners include: i ) Activate the Blue Economic Policy Charter Steering Committee and appoint a focal point whose main objective would be to interact with partners and provide an overview of the sector ; 2) Fill the satellite accounts of the Blue Economy not only with data re lated to fishing, but also statistics of maritime tourism, transport, among others. This exercise can be presented by the INE during the next meetings of the GAO (first semester 2023) ; iii) Present the National Investment Plan for Port logistics facilities in the country linked to the National Investment Plan for the Blue Economy (PINEA). Security BSG partners commend the Government for the progress achieved in the reform of Justice with a view to reducing pendency, combating the slow pace of justice and improving the organisation and management of the courts. Challenges remain, including strengthening institutional capacity, updating the legal framework and modernising infrastructure, which are core components for improving the performance of this sector. In terms of the prison system and social reintegration policies, Partners also acknowledge the Government's measures towards a more humane system, while noting the extent of the difficulties faced in this domain. Partners welcome the growing level of digi talisation of the Registry and Notary services. Regarding Security, the data presented for the first semester shows a worrying trend of increasing crime rates, mainly in the urban centers of Praia and Mindelo , despite the recognized efforts of the Government in implementing operational security measures to prevent and combat criminality. Partners acknowledge the intention and efforts of the Government to, soon, make the Multinational Maritime Coordination Cen tre for Zone G operational, as defined in the Yaoundé Code of Conduct, although, in the first phase, operating solely with national military personnel. Key recommendations from Partners include i) that the authorities continue to take steps to consolidate progress in the Justice sector and ii) that the police authorities can evidence the operational activity carried out in the prevention and fight against crime and the respective results. Public Administration and E - Governance With regards to Public Admini stration and E - Governance , BSG members and the authorities discussed three key issues ; (i) Roll - out of the government’s e - Governance agenda ( ii) Update on the Public Administration and Human Resource Management systems; (iii) PFM reforms including, e - Procurement and strengthening oversight systems. i. In relation to e - governance , BSG note s the satisfactory progress made on the state modernization program. The approval of the e - Governance strategy in December 2021 led to a series of reforms that have in crease d in the use digital tools to deliver a wide range of public services fo r citizens. The creation of the e governance unit within the Ministry of Public Administration and Modernization (MMEAP) has since been completed. Training of assigned and newly recruited staff of the new unit is ongoing. BSG noted that the methodology for developing the e governance action plan has been completed. The methodology will inform the development of the e - governance action plan and define a road map for 10 rolling out a n e governance strategy. The action plan, expected to be completed before the end of the year will drive e - governance reforms in the medium to long term. The BSG commend s the government for passing the access to information law but urged the government to expedite completion of the open data policy that will allow citizens to access and demand for public information. The BSG note s that the e governance reforms undertaken during the past two years led to a slight increase in the UN ’s E - Governance index score s released in September 2022. The BSG noted this welcome development and urge d the authorities to continue the current reform trajectory. ii. With regards the strengthening of the public administration system, the BSG took note of the progress made in modernizing the public service and strengthening human resource management system. BSG commends the approval of the public employment Law in Parliament, which will lay the foundation for the approval of the Plan for Careers, Functions and Remunerations ( Pl ano de Cargos, Funções e Remuneraçoes PCFR) by the cabinet. The PCFR is expected to rationalise, recruitment and performance management, institute equity - based promotion and staff mobility, harmonise pay grades and align local public administration with th e national systems. In further accelerating human resources’ reforms, BSG urges the authorities to complete the audit of the old HR system and fast track the adoption of the Integrated Management System for Human Resources (SIG - HR) to strengthen its effi ciency nationally. iii. On PFM reforms the BSG notes the substantial progress made by the procurement authority (ARAP) to better regulate procuring entities, promote transparency in procurement and transition to an e - procurement system. BSG notes with concer n that the adoption of the e procurement platform is progressing slowly. T he BSG commend s e fforts to conclude the regulations on the public procurement platform and urges the authorities through the cabinet to approve the diploma for e - procurement platform Key recommendations from Partners include: i) BSG urges the authorities to complete the audit of the old HR system and fast track the adoption of the Integrated Management System for Human Resources (SIG - HR) to strengthen its efficiency nationally External control of Public Finances BSG recognize the independence of the Court of Auditors (TdC) and commends the authorities for the timely submission of some flagship audit reports, especially submission of the COVID - 19 Budget Support Audit report to the AfDB. BSG however urges much stronger collaboration with the General Financial Inspection in ch arge of internal oversight and the Public Finance Committee in Parliament to enhance follow up of audit recommendations. The B SG recognize the need to support capacity building efforts of the external audit staff in critical areas such as performance and forensic audits. The authorities are encouraged to consider undertaking a new Public Expenditure and Financial Accountability (PEFA) assessment given the recent progress in PFM reforms and given the fact that the last PEFA exercise was last undertaken in 2 016. 11 Key recommendations from Partners include : i) Government to further improve the follow - up on recommendations made by the Court of Auditors in its reports on the State Accounts; i i ) plan within Q1 2023 for a PEFA to be launched before the end of 2023. Health sector The Budget Support Group (BSG) Partners of Cabo Verde reviewed the progress made in the Health Sector until September 2022. This assessment was made based on the policy dialogue held during the B