Government of São Tomé and Príncipe has to increase tax collection, IMF says

São Tomé and Príncipe’s government has to ensure that large taxpayers and state-owned enterprises comply with their tax obligations for the remainder of 2017, as revenue by the end of August was less than expected, the International Monetary Fund (IMF) said.

The IMF, in a statement released on Thursday in Washington with the conclusions of the two-week mission to São Tomé, noted that the fall in tax revenue was due to a drop in taxes related to international trade.

“Given the fall in tax collection, the drop in external budget support and the fact that public debt remains high, the State Budget for 2018 must include expenditure restraint measures to ensure sufficient resources to finance the priority sectors, such as health and education,” the report said.

The statement added that the team led by Xiangming Li reached an agreement with the archipelago’s government on the key parameters on which the 2018 State Budget should be based in order to balance macro-economic needs with social needs.

The performance of the three-year economic programme based on the Extended Credit Facility (ECF) in the first half of 2017 was generally positive, the statement said, recalling that the government, having failed to meet fiscal targets for 2016, has already adopted corrective measures this year to ensure the execution of the State Budget.

“The targets for the end of June 2017 for the primary budget deficit (before interest payments), net international reserves and net banking financing were all respected,” said the document.

The team headed by Xiangming Li said that economic growth remains stable, with the archipelago’s gross domestic product expected to grow at a rate of 4.0% this year.

The medium-term outlook is positive and points to GDP growth of between 5.0% and 6.0%, supported by the construction, agricultural and tourism sectors. (macauhub)