Press Release No. 23/58

IMF Staff Concludes Visit to São Tomé and Príncipe

March 2, 2023

• The IMF team had productive discussions with the authorities on economic policy and reform plans to be supported by the IMF.
• São Tomé and Príncipe’s economy is facing serious challenges and experiencing large imbalances, sluggish growth, and high inflation.
• The IMF team welcomes the authorities’ commitment to implement policies needed to restore macroeconomic stability and advance sustainable development. Virtual discussions will continue in the next few weeks on the appropriate policy package.

Washington, DC: An International Monetary Fund (IMF) team led by Mr. Slavi Slavov, Mission Chief for São Tomé and Príncipe, visited São Tomé during February 9 – 23, 2023, to discuss with the São Toméan authorities IMF support for their policy and reform plans.

At the end of the visit, Mr. Slavov issued the following statement:

“São Tomé and Principe’s economic conditions are challenging. Long-standing socio-economic vulnerabilities were further 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.

“The IMF team welcomes the government’s commitment to implement policies needed to restore macroeconomic stability, improve the living conditions of the population, foster the economic recovery, and promote sustainable and inclusive growth.

“Considerable progress was made during the visit on policy measures to address domestic and external imbalances. The authorities have committed to an ambitious and front-loaded fiscal adjustment, which is the key instrument for addressing the country’s high public debt and rebalancing the economy under a pegged exchange rate, complemented by an end to monetary financing of the budget and a tighter monetary policy. The 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.

“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. The mission expresses its deep appreciation to the authorities for their cooperation and constructive policy dialogue.”