Sao Tome and Principe close to letting deadline for debt pardon slip

27 September 2006

Sao Tome, Sao Tome and Principe, 27 Sept – Sao Tome and Principe is close to letting the deadline go by for obtaining a pardon for its foreign debt, valued at US$300 million, and may be forced to pay it in January, the country’s deputy prime minister said.

Maria Tebus Torres said that the government had not been able to fulfil the conditions agreed with the International Monetary Fund and the World Bank, due to delays in approving legislation and which, in a best case scenario, the debt will be approved in December.

“Without that the debt pardon will not be announced and Sao Tome will ose the right to a pardon this year. The process will end which means that as of January it will be chaos,” she told daily newspaper, Tela Non.

The government has not managed to approve on time the creation of an Court of Arbitration, demanded by the Bretton Woods organizations, and the diploma for which is still waiting for a date to be presented at the National Assembly.

“For the announcement of the debt pardon in December, we have to have the law of the Court of Arbitration approved, have the office inaugurated and then there has to be 45 days for the World Bank to assess the process,” Torres said.

“As of January we will have to pay all the debts. And if we want to obtain a pardon we will have to start the process from the beginning. But it will mean many years of tightening our belts. That is not what we want to give to the people of Sao Tome,” she said.

The only piece of good news that Sao Tome brought from the latest meeting of the IMF and the World Bank in Singapore, was the renegotiation of the inflation target for this year, which changed from 18 to 23 percent.

Currently inflation on the archipelago stands at 21 percent, which the Finance Minister said was due to the elections held this year. (macauhub)