São Tomé & Príncipe and the AfDB
Since its first operations in 1978, the Bank provided significant support to the country’s development. As of May 2013, the Bank financed 30 operations (15 projects, five studies and seven multi-sector activities projects) valued at US $156 million. These interventions in São Tomé and Príncipe (STP) cut across all sectors: agriculture, 45%; multi-sector, 37%;and social, 18%.
To date, the Bank’s active portfolio in STP consisted of eight ongoing operations with a total net commitment of US $31 million. The portfolio is exclusively comprised of public sector operations financed by ADF loans and grants totaling US $26.41 million, US $3.7 million from the Fragile States Facility (FSF) Pillar III, and US $0.3 million co-financing project with the African Legal Support Facility (ALSF).
The STP economy is highly vulnerable to external shock and dependent on external aid. The latter will finance over 93% of capital expenditures under as indicated in the 2013 State budget. The macroeconomic framework for fiscal policy is guided by a new three-year Extended Credit Facility (ECF) 2012–2015 signed with the International Monetary Fund (IMF) that brings the additional challenge to the authorities to continue to implement sound macroeconomic policies and avoid unnecessary distortions in expenditures that will create further pressure on domestic revenue mobilization. In March 2013, the IMF first rated the country’s macroeconomic performance as satisfactory. In 2012, the Real GDP grew by 4%, representing a slight decrease when compared to 4.9% in 2011, driven mainly by the financial, construction, consumer and retails sectors. In the medium term, the economy is expected to grow by 5.2% in 2013, on account of an increase in FDI, investment in the oil sector and inception of major infrastructure projects, notably deep sea port and airport. Being a member of different regional communities, among others, the Community of Portuguese Speaking Countries (CPLP), the country is benefiting from the assistance of the Government of Angola towards the implementation of its major infrastructure project, notably, improvement of airport infrastructure.
The Bank’s current intervention in STP is driven by the Country Strategy Paper (2012–2016) approved in July 2012 and anchored around a single pillar of Capacity Building and Institutional Strengthening, with the objective to prepare the country for the upcoming oil production expected in 2016. The strategy builds on the Government of STP Vision 2012–2016, known as Estrategia Nacional da Reducao da Pobreza II (National Poverty Reduction Strategy II), which focuses on: (i) reform of public institutions and promotion of good governance; (ii) long-term sustained and redistributive economic growth; (iii) human resource development and improvement in basic social services; and (iv) strengthened social cohesion and promotion of sustained and integrated human development.