IMF Staff Concludes Visit to São Tomé and Príncipe

IMF News, March 2, 2023

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Long-standing socio-economic vulnerabilities were compounded by the COVID-19 pandemic, persistent energy shortages, the floods at end-2021 and early-2022, and a sharp increase in global food and fuel prices.
As a result, 2022 growth slowed to an estimated 0.9 percent, down from an average of about 4 percent in the previous few years.
Inflation reached 25.6 percent year-on-year in January 2023.
International reserves fell substantially.

São Tomé and Príncipe’s economy is facing serious challenges and experiencing large imbalances, sluggish growth, and high inflation.
Considerable progress was made during the visit on policy measures to address domestic and external imbalances.
The IMF team welcomes the authorities’ commitment to implement policies needed to restore macroeconomic stability, improve living conditions, foster economic recovery, and promote sustainable and inclusive growth.

The authorities have committed to an ambitious and front-loaded fiscal adjustment, identified as the key instrument for addressing the country’s high public debt and rebalancing the economy under a pegged exchange rate.
Complementary measures include:
- an end to monetary financing of the budget, and
- a tighter monetary policy.
The IMF emphasized that timely and decisive implementation of these policies, along with financial support from official partners, would be critical for São Tomé and Príncipe to successfully regain macroeconomic stability and advance its sustainable development.
Virtual discussions will continue in the next few weeks on the appropriate policy package.

An IMF team led by Mr. Slavi Slavov, Mission Chief for São Tomé and Príncipe, visited São Tomé during February 9 – 23, 2023, to discuss IMF support for policy and reform plans.
During the visit, the mission met with:
- President Carlos Vila Nova;
- Prime Minister Patrice Émery Trovoada;
- Minister of the Presidency of the Council of Ministers and Parliamentary Affairs Gareth Guadalupe;
- Minister of Planning, Finance, and the Blue Economy Ginésio Valentim Afonso da Mata;
- Governor of the Central Bank Américo D’Oliveira dos Ramos;
- other government officials; representatives of the private sector including banks; and development partners.
End-of-Mission press releases convey preliminary findings; staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.

Press Release No. 23/58 — IMF Communications Department, March 2, 2023.