São Tomé and Príncipe’s economic growth may reach 5.0% in the medium term

São Tomé and Príncipe’s macroeconomic forecast is positive and the economy is expected to grow at 4.0% this year, which will increase to 5.0% in the medium term, the International Monetary Fund (IMF) said in the conclusions of its consultations under Article IV.

According to the IMF, the forecast of acceleration of economic growth in the medium term is the result of the start of some projects benefiting from external financing, such as expansion of the country’s international airport, construction and repair of roads and the modernisation of the power production and distribution system.

The statement added that the inflation rate should be 6.0% this year, a prediction that depends on continued fiscal discipline and the introduction of economic reforms to increase tax collection, reduce the operating risks of water and electricity company EMAE and debt servicing.

The IMF warned that the risks to the country’s good economic performance include general elections this year and delays in solving banking system problems, such as large amounts of non-performing loans that limit credit and consequently economic growth.

The report also warns that delays in the provision of funding by development aid agencies may also be barriers to growth.

In this document the IMF once again noted the importance of reforming public enterprises, particularly EMAE, as improving the commercial viability of this company not only reduces fiscal risks but also strengthens the external position of the archipelago by reducing the fuel imports bill. (macauhub)