Sao Tome’s foreign debt pardon depends on Angola

15 June 2006

Sao Tome, Sao Tome and Principe, 15 June – Sao Tome and Principe is depending on Angola to conclude the World Bank and International Monetary Fund (IMF) program to support management of foreign debt, and achieve a total or partial debt pardon.

According to Sao Tome’s Finance Minister, Maria Tebus Torres, who is visiting Luanda this week to discuss the issue with her Angolan counterpart, the conclusion of the program depends on whether a US$5 million loan from Angola agreed with the previous Sao Tome government can be adapted to the criteria for the Highly Indebted Poor Countries (HIPC) program.

“It is not an easy issue, considering that a part of the debt,” within the HIPC program, “would have to be seen as a donation and grace periods, payment period and interest rates, would need to be reduced,” said Tebus Torres.

“We believe that we can get that concession from Angola,” before the deadline for concluding the program, in September, the minister said, quoted in Sao Tome newspaper Tela Non.

Tebus Torres added however that, so far, the reply from her counterpart on this issue had been inconclusive, and that the issue had to be decided on a Presidential level.

The Angolan visit follows a mission by the IMF to the archipelago last week, which concluded that Sao Tome was at an “advanced” stage of concluding its debt reduction program, and praised the plans made by the government.

Sao Tome’s current foreign debt is estimated to be US$300 million, making debt servicing on of the main expenditures in the State Budget.

Capital expenses, which include foreign debt amortization, annually absorb 65 percent of funds available to the government.

According to recent figures from the World Bank, Sao Tome is the most indebted Portuguese-speaking nation, with foreign debt equivalent to 1,665 percent of its annual exports of goods and services, taking into account an average for between 2002 and 2004. (macauhub)