International Monetary Fund Staff Completes Staff Visit Mission for São Tomé and Príncipe
A staff team from the International Monetary Fund (IMF) led by Xiangming Li visited São Tomé and Príncipe during January 23-31, 2019
Lower than expected growth in 2018 was particularly affected by considerable difficulties in the energy sector and low external inflows
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.
A staff team from the International Monetary Fund (IMF) led by Xiangming Li visited São Tomé and Príncipe during January 23-31, 2019. At the end of the visit, Ms. Li issued the following statement:
“The mission team discussed with the new government its priorities and vision for economic development, as well as recent economic performance and plans for 2019. Lower than expected growth in 2018 was particularly affected by considerable difficulties in the energy sector and low external inflows. The government is committed to economic reforms to improve the business environment and strengthen public finances in order to promote economic growth and generate employment.
“In particular, it plans to implement tax reforms to broaden the tax base, share the tax burden equitably, curtail tax evasion, and generate revenue to enhance public services, such as health and education, and investment in infrastructure. To ensure macroeconomic stability and avoid crowding out the private sector, it will seek to limit the growth of the public sector and avoid the accumulation of new arrears to suppliers by projecting revenue realistically and strengthening expenditure control. The government also plans to expedite reforms of the state-owned electricity and water supply company, EMAE, to reduce both the power shortage and EMAE’s large losses. The government recognizes the importance of balancing the country’s large investment needs with the need to reduce public debt by limiting external borrowing to loans at concessional terms and at a measured pace. These efforts will help attract external investment and contain domestic demand, which are essential to buttress foreign exchange reserves.
“The authorities have requested that Fund staff return to Sao Tome in the near future to conduct discussions on a new IMF-supported program under the Extended Credit Facility arrangement. 
“The team expresses its deep appreciation to the authorities for their cooperation and policy dialogue.”
 Extended Credit Facility arrangement is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems. An 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 ) and expired at end-2018.
Distributed by APO Group on behalf of International Monetary Fund (IMF).