The International Monetary Fund (IMF) has reached a staff-level agreement with São Tomé and Príncipe on an Extended Credit Facility (ECF) arrangement. This announcement follows discussions led by Slavi Slavov, the IMF Mission Chief for São Tomé and Príncipe, who visited the country from May 23 to June 5, 2024, and held subsequent virtual meetings.
"The São Toméan authorities and the IMF team have reached a renewed staff-level agreement to support the authorities’ economic adjustment and reform policies with a new 40-month program supported by an arrangement under the Extended Credit Facility (ECF)," said Mr. Slavov. The agreement is pending approval from the IMF’s Management and Executive Board, contingent on prior actions by local authorities and confirmation of necessary financing assurances from development partners.
São Tomé and Príncipe faced significant challenges in 2023 due to high fuel import needs and depleted international reserves. A major external shock occurred when a key fuel exporter ceased credit-based supplies, creating a large external financing gap. These issues contributed to sluggish GDP growth rates of 0.2 percent in 2022 and 0.4 percent in 2023, while inflation peaked at 19.2 percent in April 2024 before falling to 12 percent by August.
The government's program aims to stabilize the economy, improve living conditions, stimulate recovery, and promote sustainable growth. Key reforms include fiscal adjustments designed to lower public debt while protecting vulnerable populations. Significant measures have already been implemented: Value-Added Tax was introduced in June 2023; fiscal adjustments were made; fuel prices adjusted; explicit subsidies eliminated; monetary financing ended; and tightening measures applied by Banco Central de São Tomé e Príncipe (BCSTP).
Further efforts will focus on strengthening tax administration, rationalizing expenditures, enhancing social safety nets, addressing electricity sector crises, ensuring transparency, improving governance to combat corruption vulnerabilities, reinforcing BCSTP autonomy, and fostering structural reforms across energy sectors.
"During the visit and subsequent virtual discussions," added Mr. Slavov, "the mission met with President Carlos Vila Nova; Prime Minister Patrice Émery Trovoada; Minister of Planning and Finance Ginésio Valentim Afonso da Mata; Minister of Economy Disney Leite Ramos; Governor of the Central Bank Américo D’Oliveira dos Ramos; President of the Court of Auditors Ricardino Costa Alegre; other government officials; representatives of the private sector including banks; and development partners."
The mission expressed gratitude for cooperation during policy dialogues with São Toméan authorities.