Africa > São Tomé and Príncipe

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International Monetary Fund. African Dept.
São Tomé and Príncipe has maintained macroeconomic stability in the period since the previous ECF review (February 2021). International support and the authorities’ swift actions helped mitigate the impact of the pandemic so far. Growth is estimated at 3 percent in 2020, supported by externally-financed spending. Growth is projected to slow to 2 percent in 2021, reflecting delays in the return of tourists, and to strengthen to 3 percent in 2022. The economic outlook is subject to high uncertainty and downside risks, notably the evolution of the pandemic.
International Monetary Fund. African Dept.
São Tomé and Príncipe has maintained macroeconomic stability in the period since the previous ECF review (February 2021). International support and the authorities’ swift actions helped mitigate the impact of the pandemic so far. Growth is estimated at 3 percent in 2020, supported by externally-financed spending. Growth is projected to slow to 2 percent in 2021, reflecting delays in the return of tourists, and to strengthen to 3 percent in 2022. The economic outlook is subject to high uncertainty and downside risks, notably the evolution of the pandemic.
International Monetary Fund. African Dept.
The COVID-19 pandemic is having a severe impact on São Tomé and Príncipe’s economy, exacerbating fiscal and external imbalances. Tourism activities and external remittances dropped sharply, while lockdown measures further deepened the recession. The authorities’ swift actions and unprecedented international financial support are helping the country weather the emergency. The economy began to reopen in the fall, but the outlook for 2021 remains challenging and subject to significant uncertainty.
International Monetary Fund. African Dept.
The pandemic is taking a heavy toll on the fragile island nation of São Tomé and Príncipe. Tourist arrivals came to an abrupt halt in mid-March, externally financed projects are being delayed, and supply shipments are disrupted. In response to the local outbreak, emergency confinement measures have been in place since March to contain infection. The authorities began phasing out these measures in late June, aiming for a full reopening of the economy by end-July. A disbursement supported by the Rapid Credit Facility (SDR 9.028 million) was approved in April 2020. The authorities request an augmentation of the ECF program by 10 percent of quota (SDR 1.48 million).
International Monetary Fund. African Dept.
The pandemic is taking a heavy toll on the fragile island nation of São Tomé and Príncipe. Tourist arrivals came to an abrupt halt in mid-March, externally financed projects are being delayed, and supply shipments are disrupted. In response to the local outbreak, emergency confinement measures have been in place since March to contain infection. The authorities began phasing out these measures in late June, aiming for a full reopening of the economy by end-July. A disbursement supported by the Rapid Credit Facility (SDR 9.028 million) was approved in April 2020. The authorities request an augmentation of the ECF program by 10 percent of quota (SDR 1.48 million).
International Monetary Fund. African Dept.
São Tomé and Príncipe is a fragile, small island-state, with limited resources and capacity. The last Extended Credit Facility (ECF) arrangement expired at end-2018 having gone off-track amid parliamentary elections, power outages, internal and external imbalances, and high debt vulnerability. Growth slowed, inflation rose, the fiscal position deteriorated, and foreign reserves declined sharply in 2018, while some critical structural reforms were delayed. Higher and more inclusive growth is needed to reduce poverty and unemployment, particularly among the large youth population.
International Monetary Fund. African Dept.
This paper discusses Democratic Republic of São Tomé and Príncipe’s Request for a 40-Month Arrangement Under the Extended Credit Facility (ECF). The ECF aims to support São Tomé and Príncipe’s economic and structural reforms. The program aims to reduce debt vulnerability, alleviate balance of payment pressures, restore fiscal and external sustainability over the medium term, promote sustainable and inclusive growth, and provide positive signals to stakeholders. Structural reforms should help mobilize revenue, enhance control over public spending, reduce contingent liabilities from state owned enterprises, improve financial stability, and promote sustainable and inclusive growth to reduce poverty, including through empowering women economically. The government plans to undertake sustained fiscal consolidation and reforms to reduce debt vulnerability. A floor on pro-poor spending, along with a World Bank social protection program, will protect the most vulnerable. The Fund-supported program will also play a catalytic role and provide positive signals to stakeholders.
International Monetary Fund. African Dept.
This paper discusses São Tomé and Príncipe’s 2018 Article IV Consultation, Fifth Review Under the Extended Credit Facility, Request for Waivers for Nonobservance of Performance Criteria, and Financing Assurances Review. São Tomé and Príncipe’s GDP growth in 2017 is estimated at about 4 percent, similar to the previous two years. Inflation spiked to 7.7 percent at end 2017, caused by unfavorable weather conditions and an increase in import taxes on selective goods. Fiscal consolidation continued albeit at a slower pace than expected. The macroeconomic outlook is positive. Growth is expected to remain at 4 percent in 2018 and to accelerate to 5 percent in the medium term as new externally-financed projects get under way.
International Monetary Fund. African Dept.
This paper discusses São Tomé and Príncipe’s Second Review Under the Extended Credit Facility (ECF) and Request for Waivers for Nonobservance of Performance Criteria and modification of performance criteria. The economic outlook for 2017 and the medium term is favorable, but not without risks. The main sources of short-term risks to the outlook are ongoing pressure on foreign exchange supply, liquidation of Bank Equador, and continued weakness in the banking sector. In addition, the economy will remain vulnerable to global developments, including weak demand in the key European and emerging markets. The IMF staff recommends completion of the second review and the disbursement of an amount equivalent to SDR 634,285 under the ECF arrangement.
International Monetary Fund. African Dept.
This paper discusses recent economic developments and economic outlook and risks of São Tomé and Príncipe. Although São Tomé and Príncipe’s economic development is constrained by its insularity, fragility, limited resources, and low capacity as a small island state, this African country has made commendable progress toward greater macroeconomic stability. GDP growth has averaged more than 4 percent per year since 2012, faster than many small islands states, but not sufficiently strong and diversified to meaningfully improve economic prospects and reduce poverty significantly. The forthcoming presidential election, with the risk of extra budgetary spending and continued weakness in the banking sector, are the main sources of short-term risks to the economic outlook.