IMF advises Sao Tome government to pay closer attention to banking system

21 March 2013

The International Monetary Fund (IMF) has advised the Sao Tome and Principe central bank to pay closer attention to the country’s banking system, according to the report from a mission that visited the archipelago from 8 to 20 March, published Wednesday in Washington.

“The mission found that retail banks posted no profits in 2012, that bank loans had come to an almost total standstill and that loan defaults are increasing,” the statement said adding that the central bank should inspect the banks and demand that their shareholders quickly put in place plans to replace capital.

The IMF mission, headed up by Ricardo Velloso, recognised the efforts made by the Sao Tome and Principe government to solve the deficiencies of the system to combat money laundering and called for a proposed law to introduce the necessary changes to be approved by the country’s parliament.

The extended credit agreement approved for the archipelago in July 2012 is worth US$4 million.

The mission concluded that by the end of last year execution of the programme had been positive, and that the government had achieved all the performance criteria and progress required for structural reform.

The mission recommended that the Sao Tome government make efforts to increase public revenue, by improving tax and customs administration and expanding the taxpayer base, in order to use the revenue to build infrastructure and for social welfare. (macauhub)