World Bank and IMF study debt pardon for Sao Tome and Principe

10 November 2006

Sao Tome, Sao Tome and Principe, 10 Nov – A delegation from the World Bank and the International Monetary Fund (IMF) is currently in Sao Tome and Principe to study the country’s compliance with the conditions set out for the archipelago’s debt pardon, officials said.

Sao Tome and Principe’s foreign debt, valued at over US$300 million, was to have been dropped in September but was maintained due to the country’s failure to carry out taxation reforms and create a court of arbitration.

These demands were only recently fulfilled after the local government was threatened with exclusion from the program for Highly Indebted Poor Countries (HIPC).

Aken Kouwennaar, head of the World Bank and IMF delegation that is to remain on the islands for two weeks for official talks, said that Sao Tome and Principe “is the victim” of external factors that lead to abrupt rises in inflation with negative consequences for the population.

“We are going to analyze the impact of budgetary and monetary measures that have been taken, and if they gave satisfactory results in 2006. Inflation and price rises increase poverty. People’s income falls significantly and that is why measures are needed to reduce inflation,” he noted.

He added that the Government’s point of view was in line with that of the IMF and World Bank in terms of the measures needed to reduce inflation.

The deputy prime minister and minister of planning of Sao Tome and Principe, Maria Torres, said at the end of a meeting with the delegation that, “the debt pardon will not make the lives of the people of Sao Tome easier; they will have to continue tightening their belts.”

“It will, however, free-up resources which, as they will no longer be used to pay the debt, will then be invested in order to generate wealth,” she said. (macauhub)