São Tomé and Principe to receive loan of US$21 million

29 September 2015

The World Bank and the International Monetary Fund (IMF) will grant São Tomé and Príncipe a loan of about US$21 million, to be paid out over three years, the country’s Minister of Finance and Public Administration said Saturday in São Tomé.

Minister Américo Ramos said this loan came in addition to one already pledged by the IMF (US$6.1 million) and a new World Bank support package (US$14.7 million), with the agreement to unlock the first US$4.95 million signed “in the coming days.”

Negotiations began in 2014 with the government of Gabriel Costa and have now been taken over by Patrice Trovoada’s government. Part of the loan is earmarked to support the energy sector, with the remaining portion to support the state budget, reduce state debt and boost economic growth.

São Tomé and Príncipe is classified as a high risk country in terms of debt payments and delays in state payments is a serious problem for the current government.

The government owes a debt to national fuel company Empresa Nacional de Combustíveis e Óleo (ENCO) around 80 percent owned by Angolan state oil company Sonangol, because of fuel price subsidies, in addition to debt taken on by water and electricity company Empresa de Água e Electricidade from ENCO.

The debt owed by Empresa de Água e Electricidade to ENCO is estimated to total US$40 million, and the total debt owed by the government of São Tomé and Príncipe to that company is over US$70 million.

The visit by the IMF mission to assess the economic and financial situation of the archipelago comes at a time when the government is preparing the State Budget for 2016 and the international conference of donors and investors, scheduled for 14 and 15 October next in London . (macauhub/ST)