Sao Tome’s inflation exceeds projection for whole year

12 May 2006

Sao Tome, Sao Tome and Principe, 12 May – Sao Tome’s inflation rate has already exceeded the 13 percent mark, which was the government projection for the whole of 2006, the country’s Finance Minister, Maria Tebus Torres has said.

The country’s elections, Torres told local daily Tela Non, made “people stop working during the campaign,” leading to “a lack of some products,” and thus, “the little that there was increased in price.”

To make the situation worse, she added, during the electoral period there was an abnormal entry into circulation of US dollars, used in the campaigns of several political parties.

“The previous Government agreed a year-end inflation rate of 13 percent with the International Monetary Fund (IMF) (…) and at this moment we stand at more than 13 percent,” said the deputy prime minister and minister for planning and finance..

The situation may worsen over the next few months as local, regional and presidential elections are due to be held.

Meanwhile, Torres said, the government had received a fuel price increase proposal from state fuel company Empresa Nacional de Combustíveis (ENCO), which she called “drastic.”

The proposal will now be negotiated with ENCO in order, Torres said, “to make it as gentle as possible on the population.”

Wednesday Torres said that the archipelago’s debt pardon from the World Bank and the IMF was in doubt due to the “careless” financial management of the previous government.

The pardon was expected to take effect next month when Sao tome entered the final phase of the Highly Indebted Poor Countries (HIPC) program, but so far this objective “is 99 percent spoiled,” she said. (macauhub)