IMF Staff Country Reports

Democratic Republic of São Tomé and Príncipe: Selected Issues

Publication Date:

November 16, 2018

Electronic Access:

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Summary:

This Selected Issues paper focuses on the prospects of growth in São Tomé and Príncipe (STP). This case study seeks explanations for STP’s relative under-performance and draws lessons for the future. It compares past economic developments in the islands and recommends policies that could most effectively foster future growth in STP. Country-specific characteristics as well as weak institutions contributed to STP’s relative underperformance since independence. Initial conditions, particularly regarding human capital and natural resources, contributed to STP’s relative underperformance, especially in the first decade after independence. Experience in the four island-states suggests that fiscal discipline, revenue mobilization, and a more active private sector, particularly in the tourism sector, may be key to tap STP’s growth potential. Fiscal discipline is needed to contain the fiscal deficit and bring the debt to a sustainable level. Continuing to strengthen public financial management, including implementing multiannual fiscal framework as recommended by the IMF technical assistance, would help.

Series:

Country Report No. 2018/322

Subject:

Arrears Banking Economic sectors External debt Financial institutions Inflation Loans Nonperforming loans Prices Tourism