IMF Staff Completes Combined 2018 Article IV Consultation and Fifth ECF Review Mission for Sao Tome and Principe

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April 12, 2018

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • Real GDP growth is expected to stay at around 4 percent in 2018, and accelerate gradually in the medium term, supported by structural reforms and infrastructural projects.

  • The government reduced the fiscal deficit in 2017 by aligning spending with lower than expected revenues. Efforts are underway to strengthen revenues through collecting tax arrears and introducing a VAT.

  • The IMF mission reached staff-level agreement on measures needed to meet the 2018 program targets and support growth over the medium term.

A staff team from the International Monetary Fund (IMF) led by Xiangming Li visited São Tomé and Príncipe during March 28-April 12, 2018 to conduct the 2018 Article IV consultation and the fifth review of São Tomé and Príncipe’s economic program supported by the IMF’s three-year Extended Credit Facility (ECF) arrangement.

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At the end of the visit, Ms. Li issued the following statement:

“Following productive discussions, the IMF team and the authorities of São Tomé and Príncipe reached a staff level agreement on measures for the completion of the fifth review under the ECF arrangement subject to approval by the IMF’s Executive Board. The IMF Executive Board is tentatively scheduled to consider the fifth ECF review and the 2018 Article IV Consultation in June 2018.

“Economic growth in 2017 decelerated somewhat to 3.9 percent in 2017, as the public spending impetus was constrained by reduced external inflows. Year-on-year inflation increased to 7.7 percent at end-2017, mainly driven by unseasonal rainfall and one-off factors, such as new import taxes and charges.

“Program performance at end-2017 was uneven. The performance criteria (PCs) on the domestic primary balance and net bank financing of the central government were missed marginally, and the PC on net international reserves was missed as external inflows fell short. Other quantitative targets were met, and structural reforms are advancing but with delay.

“Economic growth is expected to stay at around 4 percent in 2018 and accelerate gradually in the medium term, supported by externally-financed projects in the construction, agriculture, and tourism sectors. The near-term outlook, however, is subject to downside risks, including pre-election fiscal pressures and lower than expected disbursement of external funds for projects. On the upside, interest has heightened for acquiring petroleum exploration rights from the country, which will help to boost reserves and deliver more inclusive growth through both the local operations and social project components.

“The mission encouraged the authorities to maintain commitment to macroeconomic stability and reform momentum, especially in an election year; to move forward in implementing the tourism development strategy; and to pursue complementary policies that remove supply-side bottlenecks, promote inclusive growth, and tackle environmental challenges. In addition, the mission encouraged the authorities to continue their efforts to regularize arrears to Angola, Brazil, and Equatorial Guinea, and debt to Nigeria.

“Program review discussions focused on policies to strengthen public finances, reduce the debt burden, build the international reserves buffer, and safeguard macroeconomic and financial stability. The mission discussed with the authorities the essential steps for a successful introduction of a VAT in 2019 and measures for achieving the 2018 fiscal targets, including the key priority of collecting tax arrears from large debtors. It recommended continued efforts to strengthen public financial management, reform the state-owned enterprises, particularly the utility company, EMAE, to mitigate the fiscal risk posed by its large losses, and strengthen the management of externally funded projects to facilitate infrastructural development and social spending. In addition, the mission advised the authorities to continue to implement the strategy for resolving non-performing loans and expedite the liquidation of Banco Equador and resolution of Banco Privado.

“During its visit, the mission met with the Prime Minister Patrice Trovoada, Minister of Finance, Commerce and the Blue Economy Américo Ramos, the Governor of the BCSTP Hélio Almeida, other ministers and senior government officials, representatives of the private sector, including banks and the Chamber of Commerce, and development partners.

The team expresses its deep appreciation to the authorities for their cooperation and policy dialogue. It looks forward to an active and continued dialogue with the aim of maintaining macroeconomic stability and achieving inclusive growth in São Tomé and Príncipe.


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The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems. The arrangement for São Tomé and Príncipe (SDR 4.4 million, about US$6.2 million or 60 percent of quota) was approved by the IMF Executive Board on July 13, 2015 (see

Press Release No. 15/336

).

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