Portugal and Sao Tome to sign financial cooperation agreement

28 July 2009

Lisbon, Portugal, 28 July – Portuguese Finance Minister, Fernando Teixeira dos Santos will this week sign, along with the government of Sao Tome and Principe, an economic cooperation agreement and a credit line to boost the financial and macro-economic stability of Sao Tome, writes Portuguese news agency, Lusa.

The agreement will establish exchange rate parity between the Sao Tomean dobra and the Euro and this measure is expected to come into force in January 2010.

The exchange rate parity agreement will be supported by a credit line of up to 25 million Euros for Sao Tome and Principe provided by the Portuguese government, in accordance with the recommendation of the European Commission.

A similar agreement was signed between Portugal and Cape Verde on 21 December 1998, which allowed the Cape Verdean escudo to be pegged to the Euro at a fixed rate of parity after being indexed to the Portuguese escudo.

The adoption of a fixed exchange rate regime, according to BPI bank’s chief economist, Cristina Casalinho, would bring stability to Sao Tome as well as recognition from other countries, which would be conducive to attracting direct foreign investment. (macauhub)