Germany rights off bilateral debt of Sao Tome and Principe

22 August 2007

Sao Tome, Sao Tome and Principe, 22 Aug – Germany has decided to write off a bilateral debt totaling 4.6 million euros taken on as part of bilateral cooperation, the German ambassador, Bernhard Hans-Dietrich said in Sao Tome Tuesday.

The pardon of the total bilateral debt of Sao Tome was carried out through an agreement signed Tuesday in Sao Tome and Principe, with the director of the Public Treasury, Ana Silveira, signing for the archipelago and by Hans Dietrich for Germany in a ceremony attended by Foreign Minister, Carlos Gustavo.

Speaking to journalists, Hans Dietrich said that Germany’s decision was made within the framework of the actions of the Paris Club creditors that have set up a macroeconomic program for pardoning the external debt of Sao Tome and Principe.

The representative of the German government added that the amount of debt written off would be applied to projects for reducing poverty, which affects over 50 percent of the Sao Tome population.

Just over five months ago, the Paris Club, the institution that brings together 19 credit companies, wrote off almost 100 percent of the debt of Sao Tome and Principe totaling an estimated US$23.9 million calling for greater investment in education, health, infrastructures, drinking water and electricity as fundamental points for fighting poverty.

The debt pardon of the Paris Club followed another that was granted in March by the World Bank and the International Monetary Fund (IMF) of US$327 million, equivalent to 91 percent of the total debt owed by Sao Tome and Principe to international donors.

In the last few months, the government of Sao Tome and Principe has intensified bilateral negotiations with several cooperation partners that have not yet made a decision related to the debt pardoning process, in order to obtain a pardon for the total debt of the archipelago.

It is estimated that foreign loans cover 50 percent of the budgetary expenses of Sao Tome and Principe, where there are prospects for oil exploration, although cocoa continues to be the base of the economy with almost 27 percent of the country’s GDP structure.

Last May, the German authorities showed interest in cooperating with Sao Tome and Principe in the oil sector. (macauhub)