The Bank of Cape Verde has published a roadmap for introducing loan-to-value (LTV) and debt service-to-income (DSTI) limits for new household credit contracts. No numerical limits have been set, with their levels to be determined through empirical analysis. The indicative timetable envisages approval and entry into force by the end of 2029. The LTV limit would constrain lending relative to the value of property pledged as collateral, helping reduce losses in the event of default. The DSTI limit would restrict debt service relative to borrower income, helping reduce the probability of default. The roadmap fulfils a commitment under the International Monetary Fund’s Extended Credit Facility program to strengthen the macroprudential policy framework. By the end of 2027, planned work includes improving credit registry data, defining the DSTI reporting methodology and establishing the instruments’ legal framework. New reporting fields are scheduled to become operational by the end of 2028, alongside empirical analysis, calibration and a decision on introducing the limits. Preparation of the implementing instrument and public consultation are also planned for that stage. The 2029 phase provides for an adjustment period for institutions and monitoring and evaluation of the limits’ effects.
Bank of Cape Verde publishes roadmap for household lending limits through 2029
The Bank of Cape Verde has outlined plans to introduce loan-to-value and debt service-to-income limits for new household credit contracts. No thresholds have been set, with empirical calibration and a decision on introduction planned by the end of 2028. The indicative schedule envisages approval and entry into force by the end of 2029, with an adjustment period for institutions.