Economic growth in São Tomé and Príncipe boosted by Chinese investment

A cooperation agreement between China and São Tomé and Príncipe will soon be signed, launching a wave of Chinese investment in infrastructures which according to economic analysts should boost the country’s growth.


The prime minister of São Tomé and Príncipe, Patrice Trovoada, begins on 11 April a visit to China “during which cooperation protocols will be signed in the economic, cultural and scientific area”, indicates the official announcement.


The visit follows the reestablishment of diplomatic relations between China and São Tomé and Príncipe in December 2016 and that Portuguese-speaking African country’s membership in Forum Macau.


The announcement adds that the government will present a corrected budget to parliament this month, due to the “additional measures” meant to “correct currently recorded deficits” and which conform to recommendations from the International Monetary Fund (IMF).


The press release on the latest visit to the island country by an IMF mission headed by Xiangming Li, issued last week, stresses the acceleration of economic growth this year, by nearly one percentage point vis-à-vis the 4.1 percent in 2016, though also indicating concern about the pressure faced by public finances.


“Faster growth was constrained, in part, by delays in external disbursements, which impacted negatively on the execution of externally-financed investment projects. (…) Economic prospects are favourable, with growth expected to be around 5 percent in 2017, boosted by anticipated robust activity in the construction sector and tourism industry, and supported by higher inflows of foreign direct investment,” the IMF states.


Among the concerns expressed by the IMF are the higher budget deficit and the pressure on public accounts manifested by the increase of delayed payments and in internal credit to the central government.


As indicated by the São Tomean prime minister in an interview in the most recent edition of the English-language magazine Macao, the negotiation of agreements to be signed during the visit is meant to safeguard concerns about the financial stability of infrastructure investments, especially the port and airport, beyond the impact on indicators such as inflation.


With the infrastructures, the island country’s authorities also hope to attract Chinese companies to a logistics platform able to distribute products throughout the Gulf of Guinea region, inhabited by nearly 350 million people.


“The impact of these projects will be large and position the People’s Republic of China as the country’s number one partner and especially a partner vital for the structural transformation of the São Tomean economy,” he added. (Macauhub)