The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
This Selected Issues paper for the Democratic Republic of São Tomé and Príncipe (STP) underlies the recent upward trend in inflation that was heavily influenced by external factors. The policy mix to achieve price stability requires effective control of money supply and fiscal restraint. As in other developing countries, operational targets for monetary policy need to be considered, taking into account STP's specific circumstances. Weak financial intermediation limits the effectiveness of some monetary instruments such as short-term interest rates.