Journal Issue

Democratic Republic Of São Tomé and Príncipe: Staff Report For the 2011 Article IV Consultation—Informational Annex

International Monetary Fund
Published Date:
February 2012
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(As of November 30, 2011)

Membership Status

Joined: September 30, 1977; Article XIV

General Resources Account:

SDR Million% Quota
Fund holdings of currency (exchange rate)7.40100.05
Reserve tranche position0.000.00

SDR Department:

SDR Million% Allocation
Net cumulative allocation7.10100.00

Outstanding Purchases and Loans:

SDR Million% Quota
ECF Arrangements3.2143.37

Latest Financial Arrangements:

TypeDate of ArrangementExpiration DateAmount Approved

(SDR Million)

(SDR Million)

Formerly PRGF.

Formerly PRGF.

Projected Payments to Fund 1

(SDR Million; based on existing use of resources and present holdings of SDRs):


When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

Implementation of HIPC Initiative:

Enhanced Framework
Commitment of HIPC assistance
Decision point dateDecember 2000
Assistance committed
by all creditors (US$ Million) 1124.30
Of which: IMF assistance (US$ million)1.24
(SDR equivalent in millions)0.82
Completion point dateMarch 2007
Disbursement of IMF assistance (SDR Million)
Assistance disbursed to the member0.82
Interim assistance
Completion point balance0.82
Additional disbursement of interest income 20.04
Total disbursements0.87

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made corresponding to interest income earned on the amount of HIPC assistance committed but not disbursed.

Assistance committed under the original framework is expressed in net present value (NPV) terms at the completion point, and assistance committed under the enhanced framework is expressed in NPV terms at the decision point. Hence these two amounts cannot be added.

Under the enhanced framework, an additional disbursement is made corresponding to interest income earned on the amount of HIPC assistance committed but not disbursed.

Implementation of Multilateral Debt Relief Initiative (MDRI):

MDRI-eligible debt (SDR Million) 11.43
Financed by: MDRI Trust1.05
Remaining HIPC resources0.38
Debt Relief by Facility (SDR Million)
Eligible Debt

March 2007N/A1.051.05
December 2007N/A0.380.38

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

The MDRI provides 100 percent debt relief to eligible member countries that qualified for the assistance. Grant assistance from the MDRI Trust and HIPC resources provide debt relief to cover the full stock of debt owed to the Fund as of end-2004 that remains outstanding at the time the member qualifies for such debt relief.

Safeguards Assessments:

An update safeguards assessment of the Central Bank of São Tomé and Príncipe (BCSTP) was finalized in November 2009. The assessment concluded that the overall governance structure and oversight should be strengthened to mitigate the control risks associated with the capacity constraints at the bank. The BCSTP continues to be audited by reputable audit firms and the 2009 audited financial statements were published. However, the financial reporting framework and the internal audit practices did not yet adhere to international standards.

Exchange Arrangements:

Since January 2010 São Tomé and Príncipe’s has pegged the Dobra to the euro at a rate of Dobra 24,500 per euro. Commercial banks buy foreign exchange directly from the central bank, which can charge up to 1.5 percent commission on all foreign exchange transactions. Any foreign exchange commission that banks may decide to charge cannot exceed two percent for transactions in Euro and 4 percent for transactions in other currencies. The new exchange rate system has eliminated the multiple currency practice related to the existence of numerous exchange rate markets with differing effective exchange rates for spot transactions that existed in previous years.

São Tomé and Príncipe continues to avail itself of the transitional arrangements under Article XIV, but does not maintain restrictions under Article XIV. However, it maintains one measure subject to Fund approval under Article VIII: an exchange restriction arising from Article 3(i) and Article 10.1(b) of the Investment Code (Law No. 7/2008) regarding limitations on the transferability of net income from investment. The restriction results from the requirement that taxes and other obligations to the government have to be paid/fulfilled as a condition for transfer, to the extent the requirement includes the payment of taxes and the fulfillment of obligations unrelated to the net income to be transferred.

Article IV Consultation:

The Executive Board concluded the last Article IV consultation with São Tomé and Príncipe on June 18, 2008.

Financial Sector Assessment Program (FSAP), Reports on Observance of Standards and Codes (ROSCs), and Offshore Financial Center (OFC) Assessments:


Technical Assistance:

Date of DeliveryDepartment/Purpose
August 2011FAD mission on Public Accounting
June 2011MCM mission on Liquidity Management under Fixed Exchange Arrangement (follow up)
June 2011FAD mission on Public Accounting
February 2011MCM mission on Bank Resolution Framework
January 2011FAD mission on Public Accounting
September 2010MCM mission on Liquidity Management under Fixed Exchange Arrangement
August/September 2010STA mission on Monetary and Financial Statistics
December 2009MCM mission on banking supervision
August 2009MCM mission on banking supervision
June 2009FIN mission on safeguards assessment
May 2009FAD mission on public financial management
April 2009MCM mission on banking supervision
March 2009MCM mission on banking supervision
January 2009STA mission on national accounts
November 2008MCM mission on banking supervision
August 2008MCM mission on banking supervision
March 2008MCM mission on banking supervision
September 2007STA mission on government finance statistics
July 2007STA mission on monetary and financial statistics
July 2007MCM mission on banking supervision
March 2007FAD mission on public financial management
March 2007MCM mission on the foreign exchange market
March 2007STA mission on balance of payment statistics
February 2007LEG mission on tax laws
November/December 2006LEG mission on tax codes
November/December 2006MCM mission on banking supervision
November/December 2006MFD missions on foreign exchange market and monetary operations.
August 2006MFD mission on banking supervision
June 2006MFD mission to assess implementation of technical assistance
April/May 2006STA mission on monetary and financial statistics
February 2006MFD mission on monetary operations and liquidity management
January 2006MFD mission on the foreign exchange market
December 2005LEG/MFD mission on the exchange system
August/September 2005MFD mission on banking supervision and foreign exchange operations
February 2005STA technical assistance mission on national accounts statistics
January 2005MFD mission on monetary operations and liquidity management

Resident Representative:

The Fund has not had a Resident

Representative office in São Tomé and Príncipe

since October 2006.


Joint Managerial Action Plan (JMAP) for São Tomé and Príncipe

(As of November, 2011)

1. The IMF and World Bank São Tomé and Príncipe teams held meetings to discuss macro critical structural reforms for São Tomé and Príncipe and their respective work programs for the period 2011–12.

2. The World Bank’s work program is guided by the FY2011–FY2012 Interim Strategy Note that focuses on accelerating sustainable and broad-based economic growth and on strengthening governance, public institutions, and human capital. A Country Economic Memorandum, “Success Beyond Petroleum,” was delivered to the authorities for comments in March 2011 and will be published in December 2011. Preparation of a new programmatic budget support operation for FY2012–14 is underway. A new Debt Management and Performance Assessment (DeMPA) report was completed in October 2011, and an accompanying reform plan to improve debt management is expected to be completed in December 2011.

3. The IMF’s work program includes the conclusion of the 2011 Article IV consultation, missions to conduct reviews under the ECF-supported program, and assistance with capacity building in the areas of PFM, liquidity management, banking supervision, AML/CFT, and statistics.

4. The Bank and the Fund are providing complementary support to help São Tomé & Príncipe strengthen public financial management and make progress toward debt sustainability. Regarding the latter, the teams will prepare a Joint IMF-World Bank Debt Sustainability Analysis (DSA) in 2011. The teams will also prepare a Joint Staff Assessment Note (JSAN) on the government’s new National Poverty Reduction Strategy (NPRS) which is expected to be completed by January/February 2012.

TitleProductsProvisional timing

of missions
Expected delivery

A. Mutual information on relevant work programs
World Bank work program in the next 12 months
  • Country Economic Memorandum.

  • Budget support operation

  • DeMPA Report and Dissemination

Oct 2011.

Oct 2011, Nov 2011,

and March 2012.

Sept/Oct 2011, March



IMF work program in the next 12 months
  • 2011 Article IV consultation

  • ECF second and third reviews.

  • ECF fourth review

  • Technical Assistance from FAD:

    • PFM

    • Revenue Administration

  • Technical Assistance from MCM:

    • Liquidity Management

    • Banking Supervision

  • Technical Assistance from LEG:

    • AML/CFT

  • Technical Assistance from STA:

    • Money and Banking Statistics

    • Government Finance Statistics

    • Balance of Payments Statistics

August/September 2011

March 2012
January 2012

June 2012
B. Requests for work program inputs
Fund request to Bank (with summary justification)
  • Information on Bank budget support operations and disbursement schedule

To support the 2012

fiscal program
March 2012
Bank request to Fund (with summary justification)
  • Safeguard Assessment.

  • Macroeconomic framework

November 2011.
C. Agreement on joint products
Joint products in next 12 months
  • Debt Sustainability Analysis

  • JSAN.

Pending new PRSP in January/February 2012.December 2011.

March 2012


(As of October 31, 2011)

1. São Tomé and Príncipe became a member of the African Development Bank Group (AfDB) in 1976. To date, the Bank Group has financed 28 operations in the country. This includes 22 projects, including institutional support, and 5 studies, for total net commitments of UA 100 million under the African Development Fund (ADF) (98.9%), as well as one special support operation of UA 1 million under the Nigeria Trust Fund (NTF). Ninety-four percent (94%) of these funds were in the form of loans and only 6% were in grants. At October 1 2011, the total amounts disbursed for the entire portfolio stood at UA 84.29 million, or 84.6% of net commitments. Agriculture has been the most important sector, receiving (24%) of the total assistance followed by (23%) for infrastructure/transport; (22%) for multi-sector interventions; (20%) for social sector; (9%) for energy, water, and sanitation; and (2%) for telecommunications. These operations have helped build and rehabilitate basic economic and social infrastructure (roads, airport, electricity, water, schools, and health centers) and have strengthened São Tomé and Príncipe’s economic and institutional capacities. The AfDB has a national program office since 1995.

2. The AfDB has only three active projects—which started in 2005, 2006 and 2011—in human resource development, agriculture (the second phase of the livestock development project) and Infrastructure Rehabilitation for Food Security (PRIASA). These projects, in accordance with the PRSP, focus on the main factors affecting poverty.

The second phase of the livestock development project, financed with ADF-X resources (UA 4 million), was approved in May 2006 and signed in July 2006 – the mid-term review of the project took place in September 2010, aiming at restructuring the project for improved achievements. The human resource development project, financed with ADF-IX resources (UA 4 million) was signed in June 2003 and began in March 2005. This project tackles cross-sectoral capacity-building by providing training in literacy, information, and community organization, as well as specialized vocational training adapted to specific demands, particularly in the oil and tourist sectors. While the PRISA project, approved in November 2010 and signed in February 2011, aims at addressing the food security challenges in the country.

3. The AfDB Group assistance for São Tomé & Príncipe (Country Strategy Paper 2005–09) rested on two pillars: Pillar I-Poverty Reduction in Rural area; and Pillar II-Promotion of Good Governance in Public Finance Management. The country allocation of ADF-X resources (2005–07) was UA 5.15 million in the form of grants. The first pillar helped promote and diversify the country’s economic base, especially the agricultural and rural sector, and reinforce operations in the social sectors. The second pillar supported macroeconomic reforms and governance, through an institutional support project on governance and a technical assistance on the PRSP process, which helped improve public finance management and institutional capacity building to prepare the country for the forthcoming oil era. The UA 300.000 TA on PRSP process was approved in 2008 and proved very much effective in setting-up the PRSP follow-up mechanisms. The UA 1 million grant as an AfDB response to São Tomé & Príncipe food crisis, was approved by the AfDB Board in April 2009, and disbursed in a single tranche in August 2009. The mission for the completion of the AfDB Country Assistance for 2005–09 took place in August 2009, together with the Country Portfolio Performance Review (CPPR).

4. In 2009 the AfDB updated a study on São Tomé & Príncipe’s governance profile and has finalized the study on the costs of insularity in June 2010. Conclusions of this important report was presented and discussed with government officials, donors, and civil society, in São Tomé, November 10, 2010. The study on the regional capacity building initiatives, within CEMAC, ECCAS, the African Portuguese-speaking countries and the small insular countries, was postponed. Programming of other Economic and Sector Work studies is underway.

5. Decision has been made not to prepare an AfDB Country Assistance for 2010–14, as initially planned, but to finalize an Interim 2010–11 Strategy (approved by the AfDB Board on November 16, 2010) in the absence of a current PRSP, and in alignment with other development partners position. This interim strategy financed only one project (under the ADF XI allocation, UA 5 million) in the agriculture sector, i.e. a consolidated rural infrastructure project in support of food security (Pillar II)—the main objective of this Interim Strategy being on targeting capacity building activities in view of preparing the new PRSP (pillar I), by accessing the AfDB Fragile State Facility.

6. Since the I-CSP 2010–11 will expire at the end of 2011; based on the authorities information that the strategic thrust of the new PRSP II will remain as of the PRSP I, the Bank has started the preparation of its new strategy for São Tomé & Príncipe, CSP 2012–16. The overarching goal of the Bank’s proposed CSP 2012–16 is to strengthening São Tomé & Príncipe’s public sector capacity, notably in the area of PFM, consistent with pillar I of the I-CSP 2010–11. To that end, the proposed CSP 2012–16 is articulated around a single pillar, capacity building and institutional strengthening, to be financed under the ADF-XII.

7. In addition, as São Tomé & Príncipe reached decision and completion point respectively in 2000 and 2007. In reaching the HIPC decision point, São Tomé & Príncipe became eligible to MDRI and the debt service under the MDRI was estimated at $99.56 million. The AfDB total assistance under HIPC and MDRI amounted to $187.92. At the end of December 2008, the AfDB provided $13.33 million under HIPC and $99 million under MDRI.

Table 1.AfDB Ongoing Projects(Millions of UA)
Title of ProjectsWindowCommitmentDisbursement

Rate (percent)
Support for human resource developmentADF Loan3.5014.16
Livestock Development Project – Phase IIADF Grant4.021.25
Total13.019.54 t



1. Although economic data are broadly adequate for surveillance, serious financial, human, and technological resource constraints have slowed down efforts to strengthen the statistical system.

2. The country has participated in the Fund’s General Data Dissemination System (GDDS) since April 20, 2004. The metadata and plans for improvement have not been updated since the original metadata were posted on the DSBB. Over the period 2003–09, the country has benefited from technical assistance from STA and other providers, largely under the GDDS project for Lusophone Africa.

National accounts

3. Statistics on GDP/GNP are compiled on a yearly basis and provided at the time of the Article IV consultation and program review missions. STA provided technical assistance in national accounts to the National Statistics Institute in 2005, 2006, 2008 and 2009. Low response rates and/or insufficient rigor of the responses to the business surveys, including those from important enterprises, continue to affect the quality of the business data compiled.

4. A new GDP series for the period 2007–10 with base year 2001 became available in mid-2011. The new estimates cover: (i) GDP by production approach at current and constant prices; and (ii) cross-classification tables by industry sectors. The revised series reflect more accurately recent economic developments. Based on the most recent population census, corporation census, and living conditions survey, higher weights are now attributed to the sectors that experienced faster growth, such as trade, transportation and communication, and services.. While the revision of the GDP series is a significant improvement, a number of shortcomings remain. Further improvements would require input from a new household expenditure survey (rather than living conditions survey), using producer prices, and better estimates for agricultural production. The National Institute of Statistics (INE) is moving toward using a new system to better capture survey and market information and to include estimates of the informal sector and is currently compiling data from a household survey undertaken at the end of 2010.

Consumer prices

5. Since 1997 the CPI weights have been based on a three-month household survey conducted in 1995. Data from the recent household expenditure survey need to be compiled to update the weights. Current price surveys only cover the capital, although there are plans to implement regional surveys.

Government finance statistics

6. Detailed revenue and expenditure data are compiled and reported to AFR. The main areas that need to be strengthened are (i) monitoring of expenditures on projects financed by donors; and (ii) financing operations. All project loans financed by donors are programmed in the budget, but some are executed independently. The government has requested development partners to help in recording all external financing in the budget. The recording of financing operations and stocks is expected to improve since the debt data management capacity is expected to be strengthened.

7. An October 2004 government finance statistics (GFS) mission helped the Ministry of Finance to compile and disseminate GFS for the general government in accordance with the Government Finance Statistics Manual 2001 (GFSM 2001). The mission prepared bridge tables between national budget classification and GFSM 2001 classifications to be used to compile GFS for reporting to STA and AFR, as well as in MOF policy work. Given the importance of oil-related revenues, the mission also reviewed the classification of oil revenues under the Oil Revenue Management Law and made recommendations on classification of such transactions. A September 2007 follow-up mission found some progress with regard to the recommendations made by the 2004 mission. In particular, in January 2007 a new budget law was approved that significantly improved national budget classifications. Notwithstanding these efforts, faster statistical progress is hampered by an inadequate accounting system.

Monetary and financial statistics

8. STA missions provided technical assistance on monetary statistics in December 2004, April/May 2006, June 2007 and September 2010. As a result, the accuracy and timeliness of the monetary data reported in the standardized report forms (SRF) for the central bank and the other depository corporations data have improved.

9. The previous missions found that the BCSTP monthly trial balance sheets were broadly adequate to compile monetary statistics in line with the Monetary and Financial Statistics Manual (MFSM).

10. A New Plan of Accounts of other depository corporations was introduced in January 2010. The September mission reviewed the new plan of accounts for the financial system, and found it adequate for a proper classification, sectorization, and valuation of financial instruments, and in line with the methodology of the MFSM. However, the mission detected serious shortcomings in the information reported by some banks, an inconsistent approach in the way banks report to the BCSTP, and the fact that one bank is still reporting using the old plan of accounts. The mission developed the bridge table that links the ODCs’ trial balances—based on the new plan of accounts—to the SRF for ODCs (form 2SR).

11. A September 2010 mission assisted the authorities in: (1) reconstructing the standardized report form (SRF) for other depository corporations (ODCs) following the introduction of the new plan of accounts; (2) assessing the quality of the data reported by ODCs after the migration to the new plan of accounts; (3) advancing work on the generation of the SRF for the central bank, based on the new plan of account; and (4) establishing an integrated monetary database (IMD) that automatically generates the data required for publication in International Financial Statistics (IFS), by the African Department (AFR) of the IMF for surveillance purposes, and by the BCSTP for analytical and dissemination purposes. For the integrated monetary database that meet the data needs of STA, AFR, and BCSTP, STA reconstructed the historical data starting from December 2001.

External sector statistics

12. There are significant weaknesses in the collection of source data related to merchandise trade. Some transactions, including certain imports related to investment, are not fully captured in the balance of payments (BOP). Monthly data on the main exports and imports are reported to AFR regularly but with some lags in recent months, and unit prices and volumes of exports are only occasionally included. AFR does not receive any data on São Tomé & Príncipe’s international investment position (IIP) as these data are not yet compiled by the BCSTP.

13. The GDDS Lusophone project has targeted a substantial improvement in the source data, including the response rate to the surveys, and in the methodology for compiling the BOP in line with the Fifth Edition of the Balance of Payments Manual. A June 2003 mission reviewed the shortcomings of reported current and financial account transactions and concluded that weaknesses were mainly due to under coverage, including of foreign direct investment and commercial bank reports on international transactions.

14. A June 2004 mission found that despite efforts to implement the previous recommendations, several measures, in particular those related to improving source data were at best partially implemented. As a result, inconsistencies in the classification of BOP operations persisted and certain components continued to be largely estimated. Resource constraints, particularly with regard to qualified staff, contribute to the lack of improvement in the response rate to surveys. The mission recommended improving coordination and data sharing among data-producing agencies, intensifying contacts with survey respondents, and using alternative sources to improve source data. A March 2007 mission found that little progress had been achieved in implementing recommendations of previous missions, primarily due to resource constraints in the BCSTP. The mission assisted the authorities in reconciling balance of payments data and outlined a set of recommendations and detailed work plan to improve compilation capacity. Resource constraints at the BCSTP have also hampered the development of IIP data.

15. The authorities have built on previous efforts to strengthen debt data management, and a unit was created in late 2003 within the Ministry of Finance. The authorities are reconciling debt records with creditors and the Commonwealth Secretariat debt recording and management system is being operationalized.

Common Indicators Required for Surveillance(As of December 15, 2011)
Date of





Data 6




Exchange ratesNov 2011Dec. 2011DDD
International reserve assets and reserve liabilities of the monetary authorities 1Oct 2011Nov 2011DDD
Reserve/base moneyOct 2011Nov 2011DDD
Broad moneySep 2011Nov 2011MMM
Central bank balance sheetOct 2011Nov 2011MMM
Consolidated balance sheet of the banking systemSep 2011Nov 2011MMM
Interest rates 2Sep 2011Nov 2011MMM
Consumer Price IndexOct 2011Dec 2011MMM
Revenue, expenditure, balance and composition of financing 3 - general government 4Jun 2011Aug 2011QQNA
Revenue, expenditure, balance and composition of financing 3- central governmentJun 2011Aug 2011QQNA
Stocks of central government and central government-guaranteed debt 5Sep 2011Sep 2011QIM
External current account balanceDec 2010Sep 2011AIA
Exports and imports of goodsSep 2011Nov 2011MIA
GDP/GNP2010Aug 2011AIA
Gross external debtSep 2011Sep 2011QIA

Includes reserve asset pledged or otherwise encumbered as well as net derivative positions.

Central bank’s reference rate.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra-budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); not available (NA).

Includes reserve asset pledged or otherwise encumbered as well as net derivative positions.

Central bank’s reference rate.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra-budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); not available (NA).

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