Government approves rules for public support for companies in the state business sector

The government of Cape Verde approved Resolution 71/2026 of May 7, published in the Official Bulletin No. 54, Series I, which establishes the principles and rules applicable to public support granted to companies in the State Business Sector, compensation for public service obligations, the discipline of public capitalisations and the consolidated reporting of associated risks and charges.

The measure is part of the strengthening of transparency, financial sustainability, accountability and good governance of public companies, in line with the Legal Framework of the State Business Sector. At the same time, it aims to ensure more efficient use of public resources allocated to the sector and prevent fiscal risks associated with recurrent, disproportionate or insufficiently substantiated support.

The Resolution defines a set of guiding principles for granting and monitoring this support, including the transparency and integrity of public accounts, the sustainability of public finances, the necessity, proportionality and temporariness of the support, competitive neutrality, efficiency in the use of public resources and the primacy of economic substance over legal form.

The law also introduces a functional classification of companies in the State Business Sector, distinguishing between companies of a predominantly commercial nature, companies of a mixed nature and companies whose main mission is to provide public services or implement public policies. This classification is approved by the member of the Government responsible for Finance, on a technical proposal from the State Business Sector Monitoring Unit.

With regard to public support with a budgetary impact, the Resolution clarifies that this includes, in particular, compensation for public service obligations, operating subsidies, current and capital transfers, support for the continuity of essential services and regularisation of charges assumed by the state. The formal name of the support does not prejudice its classification according to its economic substance.

With regard to public service obligations, the law establishes that the respective compensation depends on an express definition of the obligation, a public service contract or equivalent instrument, objective quantification of the charges and control and performance mechanisms, and must correspond to the actual net cost of the obligation. Overcompensation or undercompensation that could jeopardise the continuity or quality of the service is also prohibited.

The Resolution also lays down specific rules for capitalisation operations, supplementary instalments, shareholder loans, assumption of liabilities or equivalent instruments, determining that they should be assessed according to their actual economic substance and subject to prior technical and financial assessment. When there are no assumptions of economic recoverability, such operations should be treated as public support with a budgetary impact, with due reflection in the state budget and public accounts.

The law also makes the admissibility of this support conditional on the existence of economic and financial sustainability plans, prior technical assessment by the State Business Sector Monitoring Unit, approval by the member of the Government responsible for Finance and a decision by the competent corporate bodies. It also stipulates that non-compliance with reporting obligations, assumed targets or previous support conditions implies reinforced requirements and may determine the refusal of new support, except in duly justified situations of essential public interest.

In terms of transparency and reporting, the Resolution gives the State Business Sector Monitoring Unit the power to issue a technical opinion, verify the compliance of support, monitor sustainability plans, support the exercise of the shareholder function and consolidate relevant information on the sector. It also determines the annual publication, by the end of the first half of the following year, of a consolidated report on public support for the State Business Sector, including amounts, support modalities, guarantees, contingent risks, compliance with sustainability plans, execution of public service contracts and public policy recommendations.

The Resolution entered into force the day after its publication and is available for consultation in the Official Electronic Bulletin: https://boe.incv.cv/Bulletins/View?id=101314

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