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Sao Tomé and Príncipe

Author(s):
International Monetary Fund
Published Date:
September 1997
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I. Recent Economic and Financial Developments

A. Structure of the Economy

1. São Tomé and Príncipe is a small island country with some 130,000 inhabitants; its resources are limited and its GDP per capita is estimated at about US$340. The economy is heavily dependent on cocoa, which accounts for 96 percent of export of goods. Upon achieving independence in 1975, the government consolidated the 45 colonial cocoa plantations into 15 enterprises, nationalized them, and implemented a centrally planned system. These measures, combined with significant Portuguese divestiture and human capital exodus, as well as a sharp decline in the price of cocoa, led to a collapse in cocoa production and export earnings. In order to remedy the situation, in 1987, São Tomé and Príncipe launched an adjustment program, supported by a structural adjustment credit and a cocoa rehabilitation project of the World Bank. And since the beginning of the 1990s, it has liberalized the economy and reduced the role of government in all productive activities. Significant structural reforms were implemented, including (1) the privatization of the agricultural public estates; (2) the introduction of a two-tier banking system, with the separation of commercial bank functions from the former state bank and the establishment of a private international bank in 1993; (3) price liberalization; and (4) the introduction of a floating exchange rate at the end of 1994. However, the supply response has been disappointing so far and major macroeconomic imbalances have developed as political commitment has hindered reforms in the fiscal area.

2. On the political front, there has been significant liberalization, with presidential elections in 1991 and 1996, and parliamentary elections in 1994. However, the period has been marked by political tensions, including an aborted military coup in mid-1995, and a protracted period of uncertainty following the dissolution of the coalition government in mid-September 1996 and before a new government was installed at end-November 1996.

3. Most of the population earns a living through agriculture-related activities. The agriculture sector contributes 22 percent of GDP, a share that has remained fairly constant since 1992 (Tables 1 and 2). The country is still heavily dependent on cocoa, which accounts for more than 90 percent of merchandise exports, although production in recent years has only been at a third of the levels recorded in the early 1970s (Figure 1). Secondary sector activities depend largely on foreign-financed construction projects. The rudimentary industrial base consists mostly of a few public manufacturing and energy enterprises, which account for about 5 percent of GDP. Commerce and transportation (which include a few newly established private companies), the financial system (composed of three commercial banks), and tourism together contribute another 35 percent, a share that has not increased despite attempts to encourage private sector development. Public administration remains important, contributing 22 percent of GDP.

FIGURE 1SAO TOME AND PRINCIPE: PRICES AND PRODUCTION OF COCOA, 1970-96

Sources: Data provided by the São Tome and Príncipe authorities; and staff estimates.

4. Real economic growth rates have averaged less than 1.5 percent per annum since 1991 (Tables 1 and 3), despite substantial investment, mostly financed by foreign lenders and donors (external assistance averaged US$144 per capita over 1991-96). As a result, income per capita has deteriorated steadily, and São Tomé and Príncipe has become a country with one of the heaviest debt burdens in the world (at end-1996, the present value of the debt was estimated to be about 3 times GDP and almost 15 times exports of goods and services, and external payments arrears amounted to some US$470 per capita).

5. Major macroeconomic imbalances, fueled by expansionary fiscal and monetary policies, have led to a spiral of inflation and currency depreciation. In the external sector, the current account was negative in the 1991-96 period, with a deficit (after grants) averaging some 40 percent of GDP that was mostly financed by external loans (project loans in particular) and a build up of external arrears.

6. The quality of statistical data remains very weak, despite recent improvements in the compilation of monetary statistics and the consumer price index.1

B. Developments in 1995 and 1996

7. Financial performance, after improving in 1995, deteriorated again in 1996, while production continued to stagnate. In 1995, the authorities adopted policies aimed at stabilizing the economy, which led to a significant improvement in the fiscal position; the strengthening of control over monetary expansion made possible a reduction of end-of-period inflation to 37 percent, from 75 percent in 1994. In 1996, however, fiscal slippages and the consequent monetary financing of the budget deficits resulted in a resurgence of inflation and currency depreciation. Recent balance of payments developments reflected mainly a sharp increase in available foreign financing in 1995 and reduced disbursements in 1996, as well as lower debt-service obligations.

Production, demand, and prices

8. Real growth, which had remained below the 2.5 percent rate of growth of the population, declined further from 2.2 percent in 1994 to 2 percent in 1995 and 1.5 percent in 1996 (Tables 1 and 3). Indications are that the contraction was due to stagnation in agriculture, as the slight recovery in cocoa production in 1995 was offset by a deterioration in other crops (copra, bananas, and maize) (Table 6), to the absence of any significant new activity in the secondary and tertiary sectors, and possibly to the liquidation or temporary closure of a few public enterprises.2 In 1996, the decline also reflected the impact of unfavorable weather conditions on agriculture and a slowdown in foreign-financed projects.

9. In 1995, gross domestic expenditure increased by 5 percent in real terms, but contracted by 3 percent in 1996, reflecting the evolution of public consumption and investment (Table 3). Given the exceptionally large weight of foreign-financed expenditure in investment and social programs, public sector demand is, to a large extent, determined by the availability of foreign assistance. In 1995, a surge in projects financed from abroad caused a sharp increase in both consumption and investment, determining a corresponding decline in domestic savings (Table 19).3 In 1996, a slowdown in foreign disbursements induced an improvement in domestic savings. Excluding expenditures on projects financed by foreign donors, however, current public expenditure followed opposite directions: it declined by some 8 percentage points of GDP in 1995, reflecting significant fiscal adjustment, and increased again by 3 percentage points of GDP in 1996. Information on private investment and consumption is almost nonexistent, and time inconsistencies in data coverage on the public sector obscure further the analysis of private absorption.

10. Regarding external accounts, the resource balance deteriorated in 1995, as the contraction of imports of goods and services was insufficient to compensate for a sharp drop in exports of both goods and services (Table 3 and Table 26). In 1996, however, the resource balance improved again, driven by a recovery of exports of services. The current account deficit also worsened in 1995, reflecting the increase in the availability of foreign loans to finance investment and better data coverage of technical assistance imports, and improved again in 1996, as foreign disbursements declined.

11. Until 1996, the official consumer price index (CPI) was grossly underestimating inflation (Tables 12 and 13). A new consumer survey was conducted in 1995, with the technical assistance of UNDP and the World Bank, and the methodology used to calculate the CPI was revised, leading to the compilation of a new series starting in 1996 (Table 14). The new data indicate that inflation increased in 1996, reaching 52 percent on an end-of-year basis (compared with 25 percent as of end-1995 according to previous official data, or some 37 percent as estimated by the staff). The rise in prices was particularly strong for housing and energy, and transport and communication (their prices more than doubled).4

12. The terms of trade, which had deteriorated between 1988 and 1992, have been rising since 1993 (with the exception of 1995)—reflecting an improvement in both the world price for cocoa and the quality of the beans produced—and, by 1997, they recovered to their 1988 level (Table 31; and Figure 3).

FIGURE 2SAO TOME AND PRINCIPE: OUTPUT, PRICES, SAVING, AND INVESTMENT, 1990-96

Sources: Data provided by the Sao Tome and Principe authorities; and staff estimates.

FIGURE 3SAO TOME AND PRINCIPE: EXCHANGE RATES AND TERMS OF TRADE

Sources: Data provided by the Sao Tome and Principe authorities; WEO; and staff estimates.

Fiscal developments

13. In 1995, the authorities were able to eliminate the primary deficit (excluding grants and foreign-financed capital expenditure), which had been deteriorating since 1992, reaching 9.9 percent of GDP in 1994 (Tables 15 and 18). The authorities were successful in increasing revenue by 3.2 percentage points, to 16.5 percent of GDP, and in reducing domestically financed primary expenditure from 23.1 percent of GDP to 16.5 percent. Overall revenue performance in 1995, however, masked a continued erosion in tax collection at customs and low transfers from public enterprises, while revenue from privatization increased to 2.5 percent of GDP because of the sale of the Rosema brewery. On the expenditure side, most of the adjustment took place in personnel costs, which were reduced from 7 percent to 4.3 percent of total expenditure. However, this result was obtained without progress in the implementation of the public administration reform.

14. In 1996, adverse fiscal developments largely eliminated the gains obtained in 1995. The primary balance turned negative again, with a deficit equivalent to 4.7 percent of GDP. This deterioration reflected a decline in total revenue from 16.5 percent of GDP (including revenue from privatization) in 1995 to 13.4 percent of GDP, and an increase in expenditure by 1.6 percentage points of GDP. On the revenue side, the principal problems remained: (1) a weak customs administration and lax control of exemptions (some 37 percent of imports are exempted), which resulted in revenue shortfalls for tax on imported goods; and (2) the absence of price adjustments for petroleum products after May 1996, even though import costs rose sharply with the depreciation of the dobra (Table 16). On the expenditure side, personnel costs increased by 1 percent of GDP, despite further postponement of administrative reforms, and as a result of large increases in travel expenses and important bonuses, which were granted in an environment of political uncertainty.5 Moreover, transfers to the electricity company (EMAE) amounted to 3 percent of GDP, and expenditure on goods and services and other current expenditure were inflated mostly by nonrecurrent costs relating to the same political factor (Table 17).

15. Domestically financed capital expenditure has consistently been lower than budgeted. In 1995, the Treasury’s inability to contribute its share resulted in the accumulation of domestic arrears, and in 1996, public financing of investment (excluding regularization of the 1995 arrears) dropped to only 0.4 percent of GDP (compared with 5.3 percent in 1991) (Table 19).

16. Some progress was made in 1995 and 1996 with regard to the privatization of nonagricultural public enterprises, although the pace of reforms fell behind schedule. After privatization or liquidation of 11 parastatals between 1988 and 1995, six additional public enterprises were supposed to be closed or privatized. In fact, since the privatization of the Rosema brewery in early 1995, only two companies have been privatized or liquidated (the hotel Miramar and the transportation company Transcolmar). Moreover, the situation of the two main public enterprises, the water and electricity company (EMAE) and the petroleum distribution company (ENCO), remained difficult: EMAE, which had been managed since 1989 by a private foreign company, continued to record low bill collection and important distribution losses and to require substantial subsidies, while ENCO’s profits (80 percent of which are to be transferred to the Treasury) were limited as prices of petroleum products were not adjusted in line with import costs.

Monetary developments

17. Monetary policy has been largely passive, accommodating government financing needs as well as the quasi-fiscal deficit of the central bank. In 1995, when credit to government was limited to 4 percent of the stock of broad money at the beginning of the year (after having increased by 60 percent of broad money in 1994), growth in broad money was reduced to 35 percent (from 127 percent in 1994), and the rates of inflation and currency depreciation declined to 37 percent and 48 percent, respectively (Tables 21 and 22). However, in 1996, when credit to government reached 59 percent of beginning-of-year broad money (excluding the monetization of central bank losses, estimated at 4.5 percent of broad money), broad money expanded by 90 percent; as a result, annual inflation, on an end-of-year basis, increased to more than 50 percent and the dobra depreciated by 61 percent against the U.S. dollar.

18. In contrast, credit to the private sector did not keep pace with inflation, owing to the cautious lending policy of the main commercial bank, and despite the extension by the Savings and Credit Bank (CNPC) of Db 1 billion worth of new credit in 1996, which was refinanced by the central bank.6

19. The net foreign asset position of the banking system improved to US$5.7 million in 1995 (from US$3.7 million in 1994) and to US$7.4 million in 1996, mostly as a result of the accumulation of foreign assets by the international bank (BISTP) (Table 24). Gross official reserves, however, remained almost constant in U.S. dollar terms; at end-1996, they were equivalent to one and a half months of the imports of goods and services projected for 1997.

20. In February 1995, the discount rate was raised from 32 percent to 50 percent and remained positive throughout the year. However, it was reduced to 35 percent in early 1996, and maintained at that level despite the large increase in inflation. Maximum lending rates and minimum deposit rates also became negative in real terms in 1996 (Table 25).

External sector developments

Balance of payments developments

21. After narrowing slightly in 1995, the trade deficit declined more sharply in 1996, reflecting lower foreign-financed imports,7 as well as depressed real income, owing in part to the sharp real depreciation of the dobra (Tables 26 and 28). Export performance in these two years remained disappointing, as land distribution reforms and substantial investment in the agriculture sector did not translate into higher cocoa crops (partly because of unfavorable climate conditions in 1996) or into an increase in nontraditional exports (Table 27). Consequently, the current account deficit (before official transfers) narrowed by 14 percent in dollar terms in 1996.8 Official transfers rose slightly both in 1995 and in 1996, with the fall in food aid being offset by the rise of “other” transfers, which mainly reflected the better data coverage since 1995. The medium- and long-term capital balance improved in 1995-96, because of lower scheduled amortization obligations, following the IDA-financed debt buyback operation in 1994 and the Portuguese rescheduling of 1995. Project loans, after peaking in 1995, declined markedly in 1996 as a consequence of a suspension of disbursements caused by a temporary accumulation of arrears to multilateral creditors. However, this decline was largely offset by the increase in nonproject loans. As a result of financial and political instability, there was a substantial short-term capital outflow in 1996. The reserve position of the central bank did not experience significant changes over the two-year period. The overall balance of payments deficit was financed through the accumulation of arrears to official bilateral creditors.

22. São Tomé and Príncipe’s external competitiveness indicators improved in 1995-96, thanks to a strengthening of the terms of trade and a further decline in the real effective exchange rate (Basic Data and Figure 3). However, the possible underestimation of inflation by the official data may be overstating the increase in competitiveness. Moreover, the lax fiscal and monetary policies have made these gains look fragile.

External debt

23. São Tomé and Príncipe’s external debt increased further in 1995 and 1996. The stock of medium- and long-term debt grew by 6 percent in 1995 and by 3 percent in 1996. The apparent slowdown in the rate of growth reflected the valuation effect of a more appreciated dollar, as well as lower disbursements by the African Development Bank Group in response to the temporary accumulation of arrears to it. The total outstanding stock of debt, including short-term debt, reached some US$266 million at end-1996, or almost six times the GDP level. The proportion of debt owed to multilateral creditors was more than 60 percent. The stock of arrears fell in 1995, as a result of the Portuguese bilateral agreement in March of that year, which restructured some US$28 million of debt with a grant element of 34 percent, but it increased in 1996 with the accumulation of new arrears. The present value of total external debt amounted to about US$154 million, implying an average grant element of 42 percent. In recent years most of the new loans were contracted on highly concessional terms from multilateral institutions. The present value of multilateral debt alone amounted to 635 percent of exports of goods and services.

24. Scheduled debt-service obligations in 1996 amounted to US$7.8 million, or 74 percent of exports of goods and services, with more than one-third of the obligations owed to multilateral creditors. The low ratio of debt service due to debt stock (3 percent) reflects both the high degree of concessionality of the debt and the large stock of arrears. While total debt service due fell in 1996, as a result of the Portuguese rescheduling and of the profile of the remaining official bilateral debt, the multilateral debt service increased from 17 percent of exports to 27 percent, as grace periods for some of the loans expired.

Exchange and trade system.

25. The nominal exchange rate depreciation slowed down from 94 percent in 1995 to 55 percent in 1996, reflecting the implementation of stabilization policies in 1995. However, as fiscal policy slippages reemerged in 1996 and inflation grew, the depreciation has accelerated rapidly since the second half of 1996. The liberalization of the exchange market, which started in 1995, 9 resulted in a narrowing of the spread between the official and parallel market rates from 23 percent to 7 percent. However, the spread did not narrow further in 1996; moreover, commercial banks have been obliged to maintain their exchange rates within a margin of no more than 1.25 percentage points from the rate offered by the central bank, thereby leaving the parallel market as the only channel where foreign exchange may be freely purchased.

26. There have been no major changes with respect to the trade system since the abolition of the annual import plan in 1995. While import licenses can be obtained routinely, an amount of foreign exchange is made available by the central bank at the official exchange rate through the Chamber of Commerce to those traders who submit the lowest prices for a list of products identified as “critical imports.” In April of 1996, foreign exchange surrender requirements were lowered from 70 percent to 50 percent for exporters who could prove that these funds were essential for continued production of exportable goods.

II. AGRICULTURE

A. The Land Reform Program

27. Agriculture, which represents about 22 percent of São Tomé and Príncipe’s GDP, is not diversified. Cocoa, still the main crop, accounts for 96 percent of the country’s exports. The authorities started to reform the agricultural state enterprises in the late 1980s, in order to stimulate production of cocoa and other crops and increase the quality of output.10 During 1987-88, 4 of the 15 public enterprises were brought under private management contracts and lease contracts were signed for 3 others. However, management contracts offered few incentives for firms to decrease operational costs, since the responsibility of the management was limited to the technical implementation of the rehabilitation program, and the terms of the leasing contracts were not long enough to encourage commitment by the leasing companies.

28. Consequently, as a complement to these measures, the authorities initiated in 1992 an ambitious land reform program to promote further private sector development in agriculture, with the assistance of several external donors. Under the program, almost all the land initially under public control was either to be distributed as small family farms or to be placed under the control of private investors and rehabilitated. In this context, in 1994, the management contracts of two state enterprises (Uba Budo and Bela Vista) were converted into long-term leasing contracts11 (with a French investor for Uba Budo, and a Portuguese investor for Bela Vista), and the leasing contracts with two other enterprises were renewed (with a domestic company in Agostinho Neto, and with a Portuguese firm in Diogo Vaz). Recently, a leasing contract was also signed with an Angolan investor in Porto Alegre. The management contracts previously established in Santa Margarida and Monte Cafe, however, were simply renewed (Table 4).

29. In total, the area cultivated by all state enterprises was reduced by 22,000 hectares (or by 65 percent), and the remaining public land is now almost entirely under leasing and management contracts. Reportedly, the state enterprises under leasing and management contracts with private companies have kept most of the best land, while the marginal land, taken mainly from the estates still under public management, has been divided into small and medium-sized farms. The area that has been effectively distributed to some 3,300 families totals 14,600 hectares (including about 2,000 hectares that had previously been distributed and were reconfirmed). The rest of the land has been set aside for conservation, tourism, general infrastructure, or as common herding ground. By end-1997, all the land still under public management will have been distributed (Table 8).

30. Large investments were made in support of the land reform. Since 1992, investments in agriculture, realized through the public investment program, have amounted to about US$40 million, of which US$35 million was financed from abroad, and represented 16 percent of GDP a year on average (Table 19). The World Bank lent US$9 million to support the land privatization process and to build infrastructure aimed at small farm promotion, while the African Development Bank provided an equivalent amount almost exclusively to rehabilitate state farms. France also contributed US$13 million to rehabilitate state farms, promote alternative crops, and support family farms, and other donors, some US$4 million. These investments included the rehabilitation of aging cocoa and coffee plants and new planting, a number of drying facilities, as well as general infrastructure, road rehabilitation, training programs, and environmental studies.

31. The land reform has affected the relative shares of crops only marginally. Among large public enterprises, cocoa cultivation has increased slightly, mostly at the expense of other crops such as coconut palms and palm oil. Land under coffee cultivation (in Monte Cafe, located at a higher altitude) and copra (almost exclusively in Porto Alegre) has remained fairly constant (Table 5). Detailed information on the use of land on private farms is not available, although it appears that cocoa remains important, with small farmers having produced at least 1,450 tons in 1996 (Table 7).

B. Support Services Provided to Smallholders

32. Two private companies were given the responsibility of managing the drying facilities and marketing the production of newly created family farms, and providing them with agricultural inputs. SODEAP (with 66 percent Portuguese participation), in the North, has since 1994 supervised activities in Milagrosa and Ponta Figo, while AGRICOM, a national company established in the second half of 1996, deals with the southern part of the country, including Agua Ize, Colonia Acoreana, Porto Real and Sundy. However, the larger state enterprises, as well as smaller, newly established private marketing enterprises, are also competing to purchase cocoa from small producers. In fact, some of the largest plantations seem to have focused their activities on the provision of diverse services such as processing, marketing, as well as distribution of inputs and credit. There are three export companies: CGI, a national company representing foreign traders in São Tomé, and MANTERO, a Portuguese company, purchase dried cocoa directly from drying facilities, while SODECI exports its own production from Santa Margarida.

C. Evaluation

33. So far, the results of the land reform have been disappointing. Despite substantial investment, mostly financed through loans, cocoa yields have been estimated to be low (only 150 kg of dried seeds per hectare on average in 1996), although it is reported to be substantially higher for the estates under leasing contracts (Table 8). Overall, exports of cocoa have not increased, and production of coffee remains extremely low (Table 6). Moreover, efforts to diversify export crops have failed.

34. The reasons for this poor performance are many, but their examination points to a possible improvement in the coming years, provided that the reform continues. First, the trees planted since 1992 have not yet reached maturity, and yields are likely to increase substantially within the next five years. Second, extensive public involvement during the initial phase of rehabilitation may have limited private incentives. Third, small farmers’ initial lack of experience with market mechanisms was certainly a factor. Fourth, most small farmers and some large estates are still lacking long-term leasing contracts. Fifth, the remaining foreign exchange controls, in particular the high surrender requirement for export proceeds, constituted a burden on exporters. Finally, inadequate road infrastructure may have been a constraint in some parts of the country.

35. In 1997, one of the most urgent issues will be to complete privatization through the conversion of the management contracts of Santa Margarida and Monte Cafe into long-term leasing contracts, and the possible distribution of part of their land to small farmers. Equally important will be the transformation of the provisional leases held by smallholders into long-term leases to ensure security of tenure and to encourage investment.

III. Financial Sector Reform and Monetary Policy

A. Introduction

36. Until 1993, São Tomé and Príncipe’s financial sector was dominated by the National Bank of São Tomé and Príncipe (BNSTP), which served as the central bank and main commercial bank. The People’s Credit Institution (Caixa Popular de Crédito, CPC), until then the only other financial institution in the country, had been established in 1981, as an arm of the BNSTP, with the aim of mobilizing small-scale savings and financing small business development and housing construction.

37. There was no systematic supervision of the commercial banking and development lending activities of the BNSTP or the CPC. Standard accounting and administrative procedures were not observed, particularly at the CPC, and staff often lacked the training to discharge their functions properly. In such a context, nonperforming loans increased steadily.

38. The severity of the structural weaknesses led the government to embark on a reform of the banking sector beginning in 1990. Plans were drawn up to establish a central bank proper and a separate, privately managed commercial bank, involving the liquidation of the BNSTP and the restructuring of the CPC. At the same time, the government aimed at improving the banks’ deficient accounting systems in order to better implement monetary and credit policies. Accordingly, in late 1991, a new regulatory framework for the operation of commercial banks and financial institutions was promulgated, which, following a period of preparation, led to the overhaul of the banking system in March 1993.

B. The Reform of the Banking System in March 1993

39. At the core of the reformed financial system is the new Central Bank of São Tomé and Príncipe (BCSTP), which was established in August 1992 and began operations in early 1993. On March 3, 1993, the commercial banking and development lending departments of the BNSTP, along with the CDC, were placed under liquidation. A liquidation commission was established, and entrusted with the responsibility of distributing the assets and liabilities of the former financial entities by mid-1994. Simultaneously, two new financial institutions—the International Bank of São Tomé and Príncipe (BISTP) and the National Savings and Credit Institution (CNPC)—commenced operations, assuming many of the assets and liabilities of the old institutions.

40. The BISTP is a joint venture of the government of São Tomé and Príncipe and private Portuguese banks, which, as majority shareholders, manage the bank in accordance with a 1991 protocol. The BISTP assumed responsibility for most of the private sector’s dobra- and foreign-exchange-denominated deposits of the BNSTP, which amounted to some Db 2.6 billion. On the asset side, the BISTP was credited with a reserve position equal to the newly acquired deposits, allowing it to amply satisfy reserve requirements. Furthermore, the BISTP assumed many of the BNSTP’s performing private sector loans.

41. The CNPC is wholly owned and managed by the government. About half of the CPC’s Db 200 million loan portfolio was transferred to the CNPC, as the loans were secured by mortgages and therefore deemed recoverable. The other half was submitted for recovery by the liquidation commission. CNPC’s remaining assets were in the form of reserve deposits with the new central bank. Regarding liabilities, the CNPC assumed the deposits of the CPC (some Db 500 million), and, more importantly, assumed BNSTP’s deposit liabilities to the private sector and the government, amounting to Db 2.9 billion.

42. The scheme described above left the BCSTP with very large commercial bank reserve liabilities. The BCSTP liabilities also included Db 7.1 billion in nonbudgetary counterpart fund deposits from the BNSTP, which had resulted from earlier balance of payments support loans. On the asset side, the BCSTP received some Db 11 billion in loans, mostly nonperforming claims on public enterprises, which by end-1996 had been assumed by the government and transformed into central bank credit to government. Since its inception, BCSTP’s major activity has been to finance large government deficits through unremunerated facilities. Together with high operating expenses (reflecting inter alia the overstating of the bank), this has resulted in losses, which in 1996 amounted to Db 0.8 billion.

C. Operational Policies of the Financial Institutions

43. Central to the restructuring of the financial sector was the development of commercial banking. The operations of the BISTP have been characterized by high levels of liquidity and foreign exchange intermediation, while the small pool of creditworthy borrowers has limited its credit portfolio primarily to private sector short-term trade operations in local currency. At end-1996, the BISTP’s domestic assets amounted to less than 30 percent of its domestic liabilities.

44. Thus, the intermediation of foreign exchange has been the principal source of profit for the BISTP. Since March 1993, a foreign exchange surrender requirement has been in place for export proceeds,12 with the exporters permitted to hold the remainder as foreign currency deposits at the BISTP. At end-1996, foreign currency deposits (mainly in dollars) represented about half of total deposits with the BISTP, indicating a high dollarization of the economy. The BISTP, in turn, has to deposit part of those funds with the central bank to comply with the reserve requirement on deposits in foreign exchange (which was lowered from 50 percent to 30 percent in May 1996). Since September 1993, the BISTP has also bought and sold foreign exchange, for which it has set its own rate. The growth of sight deposits and the net purchases of foreign currency have allowed the BISTP to build a highly liquid position abroad, a policy pursued deliberately in order to ensure full cover for foreign-currency-denominated deposit liabilities, in light of problems experienced in reclaiming foreign exchange reserves from the BCSTP.

45. In contrast to the BISTP, the CNPC initially engaged only in domestic currency activities and pursued an active policy of credit to the private sector, with many of the loans granted at rates of interest that were negative in real terms to support agricultural production in “priority areas.” As a result of this active lending policy, credit expanded much faster than warranted, and the CNPC rapidly accumulated nonperforming loans. In 1995, the government decided to halt the lending operations of the CNPC, and to privatize or liquidate the bank. However, the authorities appointed a new administration for the bank in 1996, which engaged in foreign exchange and lending operations (mostly short-term trade credit), financed by new deposits as well as central bank credit; the bank accumulated new losses in 1996, while attempts to privatize it were not conclusive.

46. A new private commercial bank, the Banco Comercial de Equator (BCE), started operating in December 1995. Owned by local shareholders, it has provided credit to small and medium-sized cocoa producers and, like the BISTP, it has engaged actively in foreign exchange operations in order to build a positive position in foreign exchange. At end-1996, the BCE held 15 percent of total deposits denominated in domestic currency and 10 percent of the foreign holdings of the commercial banks; its outstanding credit to the private sector amounted to Db 0.7 billion (8 percent of total credit to the private sector).

47. Recently, in the restructured financial system, the accounting system and the provision of monetary and credit data have improved significantly. However, protracted delays in the reporting of the banks’ balance sheets persist. The liquidation process of the old financial institutions was finally completed in 1996 with technical assistance of the Fund.

48. In the context of the 1993 reform, the authorities have been relying in principle on three instruments to influence lending: reserve requirements, credit ceilings, and the central bank discount rate. However, the setting of quarterly credit ceilings by the BCSTP, which proved ineffective, was discontinued in 1996; and reserve requirements (currently at 15 percent on domestic currency deposits and 30 percent on foreign currency deposits) have not been used actively. The discount rate has been changed several times, but the increases have tended to lag in periods of rising inflation, resulting in a negative discount rate in real terms. In particular, the discount rate, which was lowered to 35 percent in May 1996 in response to a decrease in inflation in 1995, has been maintained at that level despite the sharp increase in inflation in 1996. Because commercial banks look at the discount rate as the reference rate, lending rates also became negative in real terms. Despite these deficiencies in the central bank’s monetary policy, the private commercial banks maintained a cautious lending policy; in contrast, the CNPC, which was supposed to have ceased its operations, resumed its credit activity in 1996, having received refinancing from the central bank.

IV. Social Sectors

A. Social Impact of the Land Reform

49. With the land reform, more than 10 percent of the population benefitted from land distribution. In order to maximize the social impact, the land distribution program was accompanied by significant efforts to provide new farmers with training, access to inputs, as well as commercial and financial services.13 Many private companies with a leasing contract provided short-term credits to farmers to finance the purchase of inputs, and new savings and loans institutions started accepting deposits.14 Moreover, the provision of social services, part of which had previously been the responsibility of the large public estates, was reorganized. Besides public services provided by the government, leasing companies in charge of the largest plantations and marketing enterprises have started to offer social services (such as supply of pharmaceutical and child care facilities) in order to induce small farmers to select them as their marketing agency.

B. Health and Education Services

50. The availability of foreign assistance in health and education is another factor with an important impact on living standards. São Tomé and Príncipe’s social indicators are in general above average compared with other countries in sub-Saharan Africa: life expectancy is estimated at about 68 years (versus 52 for the region), infant mortality at about 84 per thousand (compared with 104 per thousand in the region) and the adult illiteracy rate at some 43 percent (Basic Data). Large expenditure in the social sectors probably has contributed to these favorable indicators. However, the provision of health and education services is highly dependent on foreign financing, and the sectors are characterized by an excessive share of investment spending relative to recurrent costs, and a relatively low proportion of resources allocated to basic services.

51. During the public expenditure review conducted in December 1996 with the support of the World Bank, expenditure in the health sector was estimated at some US$10 million a year (about US$80 per capita), including current expenditure recorded by the Treasury, expenditure within the public investment program (PIP), and other foreign-financed and foreign-managed projects. The government contribution accounts for only a small share of total expenditure in the sector (14 percent in 1994 and 9 percent in 1995). The PIP contributes about 35 percent of expenditure in the sector, while other foreign-financed projects (mostly technical assistance provided by some 30 foreign doctors) account for the remainder. Since 1991, the share of health projects in the PIP (including expenditure on water supply and sewage system) increased sharply, from 7 percent to 20 percent, with the main donors being the European Community, mainly with a water supply project in the first half of the decade, and the World Bank, in particular with an anti-malaria project in the second half of the decade. Investment accounts for more than 90 percent of expenditure in the sector, while current outlays on primary and secondary health services are estimated to account for only 3 percent of health expenditure.

52. PIP expenditure on education has also been growing significantly since 1991: in 1995, it amounted to US$5.6 million (about 20 percent of total PIP expenditure), compared with 3 percent in 1991.15 However, as in the health sector, only a small proportion of expenditure goes to basic services. In 1995, rehabilitation of school buildings, financed mostly by the African Development Bank, accounted for 90 percent of expenditure, leaving only 10 percent to finance school material and the training of teachers. Moreover, the institute for higher education (Institut Supérieur Polytechnique) and scholarships for foreign studies account for an important share of current expenditure financed by the government outside of the PIP. As a result, school materials are lacking, teacher training is insufficient, and the teacher/pupil ratio is low.

C. The Role of the Informal Sector

53. Recent studies conducted by the World Bank and the International Labor Organization (ILO) estimated that the format sector employed only 23 percent of the labor force in 1993 (indicating the importance of the informal sector in São Tomé), that the majority of microenterprises do not hire any employees, and that most occupations in the informal sector are of a temporary nature. It would therefore be unrealistic to expect these small cottage industries and service providers to graduate into small businesses of the formal sector in the near future. However, with the closure of a number of industrial public enterprises and the reorganization of the cocoa plantations, and with the pending implementation of administrative reforms, the informal sector may still play an important social role in the transition toward a more market-oriented economy.

D. Administrative Reforms

54. Between 1991 and 1994, the government took steps to increase public administrative capacity and efficiency: some 370 public servants were retrenched and the number of ministries was reduced. In 1995 and 1996, however, the pace of reform slowed down while public wages eroded in real terms. Nevertheless, with UNDP support, progress was made in the compilation of a database: the collection and recording of information such as age, qualification, position, and salary on each public employee is about to be concluded. According to the latest estimates, in 1996 there were 4,035 civil servants, including temporary employees. The overall number of redundant employees was estimated at about 1,000, and this number was adopted as an objective to be pursued in the reduction in personnel. Also, the legal status of public servants was recently redefined, which specifies the rights and responsibilities of all public employees.

55. In recent years, the share of wages and salaries in personnel costs declined to 31 percent in 1996 (from 62 percent in 1993), while the share of other personnel expenditures (including bonuses) increased dramatically to 29 percent (from 9 percent in 1993); at the same time, travel-related spending increased to 37 percent in 1996.16 In order to correct these imbalances and with the objective of increasing efficiency in the public administration, a legislation was presented to the Parliament in 1996, which included a differentiated wage increase, with a substantial increase for a limited number of key positions, and a relatively important adjustment for employees in the health and education sectors. This proposal was voted down and therefore never implemented. In the circumstances, the government elaborated an alternative strategy and a law was adopted in April 1997 that aims at rationalizing wage relativities and streamlining public sector employment through (1) two grids of relative salaries (one for the general public administration, including public enterprises, the social security administration, and other autonomous public institutions, and one for “political” positions);17 (2) the nominal values for the minimum wage (that was tripled to US$10 per month) and for the salary of the president which, together with the coefficients defined in the salary grid, determine the wage of all employees in the administration; and (3) the mechanisms to retrench redundant public servants, namely, compulsory retirement (at 56 for men and 51 for women) and voluntary departure encouraged by a significant cash payment.

FIGURE 4SAO TOME AND PRINCIPE: PUBLIC SECTOR EXTERNAL DEBT, 1993-96

Sources: Data provided by the Sao Tome and Principe authorities; and staff estimates.

1/ Includes IMF.

2/ Includes arrears.

APPENDIX I
São Tomé and Príncipe: Summary of Tax System as of December 1996
TaxNature of TaxExemptions or DeductionsRates
1. Taxes on income, profit, and capital gains
1.1 Individual
1.1.1 Income tax (Imposto sobre salários) (Decree-Law 11/93 of March 5,1993)Levied on all domestically earned income, in cash and in kind. The tax is withheld at source and payable within the first eight days of the month after the income was paid. It is levied on all individuals, including nonresidents who earn income in the country.Earned annual income up to Db 60,000.



Salary supplements, up to 10 percent of the fixed monthly salary.



Expense allowances, per diem and representation allowances, up to the limits set for government employees. Income of clergy from exercise of their spiritual functions. Personnel of diplomatic and consular missions or in the service of international or foreign organizations.
Four rate brackets for monthly income of Db 5,001-25,000 with progressive rates from 5 percent to 12 percent; flat 15 percent rate thereafter. Each bracket has a specific deductible amount.
1.2 Corporate
1.2.1 Profit tax (Imposto sobre o rendimento’) (Decree-Law 9/93 of March 5,1993; Decree-Law 84/93 of December 31,1993; Decree-Law 46/93 of August 10, 1993; Decree-Law 40/96 of October 29,1996).Levied on all domestic income from any commercial, industrial, or agricultural business or independent profession, even if occasional or temporary.Profits from investment of dividends from mutual aid societies and nonprofit cooperatives.



50 percent of profits from agricultural activities.



Special exemptions granted in the context of the Investment Code.
For commercial, industrial and service businesses, flat 30 percent rate on taxable profit; an additional 15 percent rate on taxable profits in excess of Db 3 million.



For independent professionals, five-bracket schedule applicable to taxable profit, with:

a. Progressive rates from 7 percent to 28 percent for taxable profit from Db 60,001 to Db 3,000,000;

b. flat rate of 30 percent for taxable profit above Db 3,000,000, plus 15 percent surcharge on portion of taxable profit in excess of Db 3,000,000.

Revenue obtained from rental of urban property is taxed at a rate of 20 percent.
1.2.2. Minimum tax (Valor Minimo) (Decree-Law 58/95 of December 31,1995)This presumptive tax on profits, which replaces the Contribuição Industrial Fixa, must be paid during the first half of the year by all commercial, industrial and artisanal businesses as well as by the self-employed professional;



The minimum tax is deductible from the profit tax when the later is positive.
None.Six progressive taxes varying from Db 3,000 to Db 150,000.
2. Taxes on property
2.1 Urban property tax (Contribuiçáo predial urbana) (Legislative Act 450 of September8,1954; Decree-Law 57/81 of November 28,1981; Decree-Law 16/93 of March 5, 1993; and Decree-Law 45/93 of August 10,1993; Decree-Law 40/96 of October 29, 1996)Levied on all urban property, including:

a. Permanent buildings intended for housing, commercial, or industrial purposes other than exploitation of land, and the land on which the buildings are located;

b. Land for construction when declared as such by the owner or by law.
Central government properties.



For 2 years, permanent buildings for use as dwellings by owners or their families, including buildings replacing demolished buildings, provided the construction period does not exceed 24 months.



Owners of property whose total income does not exceed Db 2,000.



All property owned by religious entities pursuant to their purposes.
15 percent on registered value corrected according to the following factors:

a. Factor of 8 for property registered before Dec. 31,1970;

b. Factor of 4 for property registered between Jan. 1,1971 and Dec. 31, 1980;

c. Factor of 2 for property registered between Jan. 1,1981 and Dec. 31, 1990;

d. Factor of 1.5 for property registered between Jan. 1,1991 and Apr. 30, 1993; and

e. Factor of 1 for property registered after May 1,1993.
2.2 Motor vehicle tax (Imposto sobre veículos) (Decree-Law 13/93 of March 5,1993; Decree-Law of December 31,1993)Levied on motor vehicles equipped with engines larger than 50cc, either registered in the country or starting 180 days within entry into the country, which circulate or are parked in public thoroughfares or places.The central government and any of its agencies, organizations, or services, except state-owned and mixed enterprises.



Citizens of countries giving reciprocal treatment.



Personnel of diplomatic and consular missions, pursuant to agreements.



International or foreign organizations, pursuant to agreements.



Driver training vehicles.



Duly registered rental vehicles.



Duly registered boats used in artisanal fishing.



New vehicles purchased after October 31.



Farm tractors.



Motorcycles used for transporting freight
The taxes are reviewed annually, and vary according to the size and the age of the vehicle:

a. Vehicles over 50cc up to 500cc: Db 500 if less than 6 years old, Db 1,000 if more than 6 years old;

b. Vehicles over 500cc up to 1,300cc: Db 2,500 if less than 6 years old, Db 4,000 if more than 6 years old;

c. Vehicles over 1,300cc up to 1,900cc: Db 4,000 if less than 6 years old, Db 6,000 if more than 6 years old;

d. Vehicles over 1,900cc: Db 6,000 if less than 6 years old, Db 10,000 if more than 6 years old;

For recreational boats, tariffs are as follows:

e. Recreational boats up to 25hp: Db 500 if up to 6 years old, Db 1,000 if more than 6 years old; and

f. For each 10 hp or fraction over 25hp: additional Db 500 for boats up to 6 years old, Db 1,000 for boats more than 6 years old.
3. Domestic taxes on goods and services
3.1 Excise tax (Imposto sobre o consumo) (Decree-Law 20/76 of June 30,1976; Decree-Law 47/91 of October 17,1991; Decree-Law 14/93 of March 5,1993; Decree-Law 41/93 of July 27,1993; and Decree-Law 53/95 of November 17,1995)Levied on the value of goods listed in the schedules annexed to Decree-Laws 14/93 and 41/93, with the following valuation methods:

a. The factory gate selling price of locally produced goods not distributed by an associated or subsidiary enterprise;

b. The distributor’s selling price less 20 percent, if the producer is associated with the distributor or the subsidiary enterprise;

c. The domestic value, import taxes included, in the case of imports; and

d. If the producer sells his goods directly to consumers, the factory gate price cannot, for purposes of the excise tax, be less than the price charged to the consumer less 20 percent.

The tax is chargeable to:

a. The producer, in the case of locally produced goods;

b. The importer, in the case of imports.
Locally produced goods exported or re-exported directly from the industrial establishment.



Raw materials, equipment, and finished or semifinished products, whether locally produced or imported, for use in industrial, agricultural, or fishing activities, including artisanal fishing, or for incorporation into locally produced items.



Imported or locally produced materials for packaging of agricultural exports.



Alcohol needed in industrial processes. Gasoline for vehicles of diplomats, subject to reciprocity, and of officials of international organizations.



Gasoline for aviation equipment for public use.
General tax of 15 percent, with the following exceptions, as listed in the schedules annexed to Decree-Laws 14/93 and 41/93:

a. petroleum goods15-130%
b. motor vehicles15-50%
c. soft drinks10-15%
d. alcoholic drinks40-130%
e. tobacco100-200%
f. books, basic food, construction material, pharmaceuticals0%
4. Taxes on international trade and transactions
4.1 Transaction tax (Contribuição industrial variáve) (Legislative Act 2 of January 20,1925; Legislative Act 551 of July 30, 1949; Decree-Law 47/91 of October 17,1991; Decree-Law 6/95 of May 26,1995)Charged to entities and individuals covered by Schedule A annexed to the decree.Goods exempted from import duties.Single rate of 8 percent.
4.2 Import duty (Direitos de importaçào) (Legislative Act 739 of December 5,1966; Legislative Act 745 of December 24,1966; Decision 10/85 of April 22,1985; Decree-Law 6/95 of May 26, 1995; and Decree-Law 53/95 of November 17,1995)Levied on the custom value of imports determined on the assumption that:

a. The goods are delivered to the buyer at the port of entry;

b. The seller’s price is the c.i.f. price, that is, it includes all costs related to the sale of the good and its delivery at the port of entry;

c. The buyer pays the applicable duty and any other taxes, which are excluded from the base price;

d. If the goods being valued are manufactured under a patented process of registered design or mark, or bear a foreign trademark or brand name, or are imported to be sold under the same trademark even after additional finishing, the base price includes the royalty for use of the patent, registered design, trademark, or brand name;

e. Specific duties levied on the weight of goods are calculated on the basis of their gross, net, or actual weight, as stated in the tariff and its instructions.
Goods imported by official agencies as specified in Decree 41024 of March 23, 1957 are exempt Examples are as follows:

a. Aircraft and aircraft engines for use in civil aviation;

b. Equipment, machinery, and accessories for use in any public service;.

c. Fixed plant and rolling stock for railroads, hoists, and floating docks and cranes imported by the port and railroad agencies;

d. Electrical equipment for postal, telegraph, and telephone stations;

e. Construction materials and electrical equipment, machinery and apparatus imported by the government for use in water and electricity distribution system or sewer systems or by public works agencies for carrying out work on such systems or any other work required for the country’s development and the equipping of ports; and

f. Fertilizers and seeds imported by agricultural agencies.
A mix of ad valorem and specific rates depending on the nature of the product. Examples areas follows:

a. Wheat, rice, flour (exempt);

b. Meat (6 percent);

c. Live animals (3 percent);

d. Butter (10 percent);

e. Milk (exempt);

f. Oil (3 percent);

g. Salt and sugar (1 percent);

h. Fresh fruits (8 percent);

i. Coffee (10 percent);

j. Tea (5 percent);

k. Wine (6 percent);

l: Other alcoholic beverages(35-50 percent);

m. Tobacco (20-40 percent)

n. Pharmaceuticals (exempt);

o. Most mineral and chemical products (5-6 percent);

p. Gasoline (86 percent);Diesel (34 percent);Kerosene (14 percent);

q. Perfumes (45 percent);

r. Most textile products (5-30 percent);

s. Most metals (8-50 percent);

t. Electric equipment (3-20 percent);

u. Cars and buses (10-12 percent);
Enterprises engaged in the production of items included in the preceding list are exempt from duty as well. Also exempt are products for use by new industries of strategic economic interest.



The government may exempt goods undertemporary import or re-import arrangements. There are many exemptions negotiated bilaterally in the context of the Investment Code.

Imports of immigrants may also be exempted.
v. Tractors (2 percent);

w. Motorcycles and trucks (5-10 percent).
4.3 Customs duty (Emolumentos gerais aduaneros) (Decree 31 883 of April 18,1942; Decree-Law 7/72 of June 22,1972; Decree-Law 6/95 of May 26,1995)Levied on imports.The government may exempt certain imports, such as capital goods and certain basic foodstuffs.Two rates of 3.5 percent and 5 percent.
4.4 Export tax (Imposto geral de exportado) (Decree-Law 17/93 of March 5,1993; Decree-Law 6/95 of May 26,1995)Levied on agricultural exports.Exports whose customs value does not exceed Db 20,000.Ad valorem rates:

a. Cocoa 8 percent;

b. Coffee 8 percent;

c. Copra 5 percent;

d. Palm kernels 5 percent;

e. Other 0 percent.
4.5 Lighthouse tax (Imposto de farolagem) (Legislative Act 25 of December 24,1933)Levied on all ships entering domestic harbors and used to defray the costs of lighthouses, lighted beacons, and light buoys.



The tax is administered by the National Port Enterprise (ENAPORT); its budgetary significance is virtually nil.
None.Rates range from Db 150 to Db 650 per ship, depending on nationality of ship and time of day.
4.6 Harbor tax (Taxas de porto) (Decree-Law 22/89 of December 19,1989)Levied for use of port facilities, and on material procured by the port authorities.Scientific missions, domestic ships, and fishing boats only pay 50 percent of the tax.



The following equipment is exempted:

a. Government and military boats;

b. Merchandise in transit;

c. Merchandise shipped between domestic harbors;

d. Passengers’ luggage;

e. Mail;

f. Exemptions are granted by ENAPORT on a case-by-case basis.
Mostly specific tariffs, which vary with the weight, volume, and quantity of merchandise, the type of service, and time of utilization of service.



For materials procured by the port authorities, a tax of 1 percent of the c.i.f. value, and an additional tax of 30 percent.
5. Other taxes
5.1 Inheritance and gift tax (Imposto sobre as sucessões e doacões) (Decree 22 of June 22, 1988; Decree-Law 42/93 of August 10,1993)Levied on all conveyance of movable, real estate property, value, or title. Chargeable to the recipient.Transfers of less than Db 5,000. Also exempt is the gratuitous conveyance of movable or real estate property to descendants or to nonprofit organizations.



The tax base is determined by the value of the conveyed goods or property, after deduction of the transferor’s debts and other costs set forth in the regulations.
Progressive rates between 7 percent and 25 percent, based on the value of the goods or property conveyed and the degree of kinship between the descendant and the heirs.
5.2 Real estate transfer tax (Sisa sobre a transmissão de imobiliários por título oneroso) (Decree 22 of June 22, 1988; Decree-Law 42/93 of August 10,1993)Levied on all onerous conveyances of real estate and chargeable to the purchaser.



Taxable transactions include specifically:



a. Sales or bartering of real property, subject to prior authorization of the Planning Minister under Article 1 of Decree-Law 48/75 of June 19, 1975;

b. Acquisitions of shares in companies other than business corporations which own real property, if through such acquisition one partner becomes the holder of at least 75 percent of the company’s capital or the number of partners is reduced to two and the two are husband and wife married with community property; and

c. Purchases of freehold of leaseholders and redemptions of property seized in tax enforcement proceedings. The tax base is the value of the conveyance or the assessed income from the property as shown in the real property register, whichever is higher, or determined through direct assessment.
The State;



Nonprofit organizations;



Recipients of real estates who are descendent, ascendent, husband, wife, brother or sister, for property valued at less than Db 30,000.
Rural property10 percent;
Urban property10 percent;
Barter deeds5 percent
5.3 Stamp tax (Imposto de selo) (Decree-Law 12/76 of April 19, 1976 and annexed schedule; Decree-Law 40/88 of December 20,1988; Decree-Law 15/93 of March 05,1993; Decree-Law 81/93 of December 31,1993; Decree-Law 12/96 of April 19,1996)Levied through:

a. Revenue stamps selos fiscais);

b. Stamped forms (papel selado);

c. Stamped bills (letras seladas);

d. Revenue stamps (selos de verba);

e. Collection advice stamps;

f. Customs stamps;

g. Check stamps;

h. Pharmaceutical stamps; and

i. Miscellaneous stamps.



The State has a claim on the stamp tax upon assessment and payment, when it is due on acts and contracts subject to it, and when products subject to it are exhibited or sold.
The State;



Religious institutions;



Some items in the schedule annexed to the Regulations.
Examples:

Stamped forms - Db 50;

Revenue stamps - Db 0.1 to Db 1,000.

Stamped bills - Db 1 to Db 500.

Check stamps - Db 3 for local payment and

Db 15 for payment abroad.
5.4 Special tax (Imposto especial) (Decree-Law 22793 of June 30, 1933)Surtax on the total amount of the following taxes, fees, and other government revenues;

a. Import tax;

b. Rural property tax;

c. Justice, port, and custom’s duties;

d. Enforced collection proceeds; and

e. Tax violation proceeds.
None.Single rate of 20 percent.
5.5 (Imposto do selo de assistência) (Decree-Law 44/T/75 of June 6, 1975; Decree-Law 11/86 of March 31,1986)Tax on custom clearance and receipts, licenses, and certificates.Same as stamp taxFor custom clearance and receipts, specific tax for low values, from Db 2 to Db 10; ad valorem rate of 0.15 percent for values above Db 10,000. Specific tax of Db 15 for licenses and Db 10 for certificates.
5.6 Military tax (Decree 17 695 of December 21,1929; Decree 29 115 of November 12, 1938; Decree 32 745 of April 10, 1943; Decree-Law 86/93 of December 31,1993)Due by all nationals who are not doing military service.Disabled nationals;



Students, until the end of their studies;



Anyone who is currently part of military or paramilitary services, or who served in the army for at least five years.
Db 750 or Db 1,000 depending on income levels.
5.7 Justice tax (Decree-Law 18/87 of August 31, 1987)Due on the value of settlement for fiscal cases.Single rate of 10 percent.
Source: Information provided by the São Tomé and Príncipe authorities.
Source: Information provided by the São Tomé and Príncipe authorities.
APPENDIX II: Exchange and Payments System

(Position as of December 31, 1996)

1. Exchange arrangement

The currency of São Tomé and Príncipe is the São Tomé and Príncipe dobra. The official exchange rate is determined daily as an average of exchange rates in the bureau de change, parallel market, and commercial banks.1 On December 31,1996, the exchange rate (middle rate) for the U.S. dollar, the intervention currency, was Db 2,833.21 per US$1. Rates for certain other currencies are determined on the basis of the exchange rates of the U.S. dollar for the currencies concerned.

Foreign exchange transactions are divided into three categories for the purpose of assessing charges on purchases and sales of foreign exchange, namely, import payments, transactions in foreign checks, and collection of export proceeds.

On import-related exchange transactions, the arrangements are as follows: when a letter of credit is opened, a quarterly charge of 0.5 percent of the import value, with a minimum of US$25 and a maximum of US$500, is payable with an additional commission of 0.5 percent to the Central Bank of São Tomé and Príncipe (BCSTP). A stamp duty of 0.25 percent is also payable, as well as a postage levy of US$2.

On foreign checks for collection, the commercial banks charge a postage levy of US$2 for each transaction. For collection of export proceeds, a commission of 0.125 percent is charged, with a minimum of US$25 and a maximum of US$300, when the letter of credit is opened, and a fee of 0.125 percent is charged when the funds are received. A postage levy of Db 39,000 is also charged.

There are no arrangements for forward cover against exchange rate risk operating in the official or the commercial banking sector.

2. Administration of control

All foreign exchange transactions are controlled by the BCSTP, which applies the exchange controls flexibly. All foreign exchange proceeds must be surrendered to the BCSTP, and all exchange payments must be made through the BCSTP, with the exception of earnings retained by producers-exporters for import payments. (See the section on Exports and Export Proceeds, below.)

Import and export licenses are automatically granted and recorded by the Directorate of External Commerce for statistical purposes.

Arrears are maintained with respect to external payments.

3. Prescription of currency

The BCSTP may prescribe the currency in which foreign exchange transactions are made.

No bilateral payment agreements exist. The agreement with Cape Verde was terminated, and the corresponding debt to Cape Verde, which amounted to US$1.65 million, was rescheduled on July 21, 1995, through an agreement between the Central Bank of Cape Verde and the BCSTP. The debt is being reimbursed in equal quarterly installments.

4. Imports and import payments

All registered importers (including productive entities) are permitted to engage in import activity. Fuels and lubricants are imported by the public fuel enterprise, and medicines by the public pharmaceutical enterprise and the private pharmaceutical sector. Import licenses are automatically granted by the Directorate of External Commerce. When importers open letters of credit, the BISTP requires them to lodge a deposit2 in domestic currency equivalent to 0 to 100 percent of the value of the letters of credit, depending on the creditworthiness of the operator. Prepayment for imports is permitted only through the opening of letters of credit or through anticipated transfer when agreed upon by the BCSTP. The BCSTP still allocates foreign exchange, which is sold at the official rate, through the Chamber of Commerce.

5. Payments for invisibles

Payments for invisibles related to authorized imports are not restricted. Payments for other invisibles are approved within limits established by the BCSTP. These limits, which allow for additional amounts in justifiable cases, include those on (1) transfers for medical treatment abroad when local facilities are inadequate; (2) transfers of remittances to students; (3) transfers of savings from earnings under technical cooperation agreements with the government; and (4) transfers for payment of fares, freight, and costs of communication with foreign countries. Purchases of foreign exchange by residents for purposes of tourism are limited, although air fares may be paid in domestic currency. Transfers of profits by foreign companies established in São Tomé and Príncipe before independence have been suspended. There are no limitations on remittances for subscriptions to periodicals and books or on payments of interest on external debt.

Foreign exchange allowances for medical purposes are flexible. Payments for technical assistance and other services in the national interest are allowed. At the beginning of the school year, a student is granted permission to transfer for expenses related to courses taken abroad an amount that has been approved by the Ministry of Education and Culture.

All payments related to invisibles are subject to a stamp tax of 0.5 percent. In addition, commercial banks charge a commission of US$2 for clients (and US$4 for non-clients).

6. Exports and export proceeds

For the purpose of collection of information, all exports require the completion of registration forms, as set out in Advance Export Registration Bulletins, which specify the quantity and c.i.f. or f.o.b. value of the export shipment. All export proceeds are subject to the mandatory surrender requirement to the BCSTP. Producers of exported goods may retain 30 percent of export proceeds in accounts with banks, including those abroad (if they are correspondent banks of the BCSTP), and may use the balances to meet their import requirements.3

7. Proceeds from invisibles

Travelers may bring in any amount of foreign exchange.

8. Capital

Inward foreign investments are governed by the Investment Code, which was implemented on October 15, 1992. Foreign capital investments, excluding the extraction of hydrocarbons and other mining industries, are permitted on the same basis as domestic investment. Repatriation of profits is permitted up to 15 percent a year of the value of the investment. Transfers are permitted for repayment of financing under agreements with the Government and for the amortization of private sector investments in activities considered to be in the national interest. Personnel under technical assistance programs are allowed to transfer their savings in accordance with the terms of their contracts.

9. Gold

Exports and imports of gold require special authorization from the BCSTP.

10. Changes during 1996

In May 1996, the export surrender requirement was lowered from 70 percent to 50 percent for producers of exported goods able to demonstrate the need for additional import requirements.

APPENDIX III
Table 1.São Tomé and Príncipe: Gross Domestic Product and Expenditure at Current Prices, 1991-96(In millions of dobras, unless otherwise specified)
199119921993199419951996
Est.
Primary sector3,1703,8525,9139,24917,07024,583
Agriculture2,7603,3215,2508,22315,21021,688
Fisheries4105316631,0261,8602,895
Secondary sector1,9442,7213,8346,94712,07917,737
Manufacturing and energy6899331,3261,9432,6485,250
Construction1,2551,7882,5085,0049,43112,487
Tertiary sector6,3687,99210,72220,09935,46556,581
Commerce and transport3,0623,8014,6426,90612,15618,754
Public administration2,3412,9914,4148,08813,21121,788
Financial institutions0002,0414,5917,484
Other services9651,2001,6663,0645,5078,554
Gross domestic product11,48214,56520,46936,29564,61398,900
Consumption14,61818,59225,21542,84978,692118,122
Private11,28214,04118,64530,74250,96273,216
Public 1/3,3364,5516,57012,10627,73044,906
Gross fixed capital formation3,8245,7418,42214,90937,31349,513
Private1,0202,1173,8905,14210,93717,957
Public 1/2,8043,6254,5329,76626,37631,556
Change in inventory-221-107-105000
Gross domestic expenditure18,22124,22633,53257,758116,005167,635
Resource balance-6,739-9,664-13,063-21,459-51,392-68,735
Exports of goods and nonfactor services2,1753,3335,1178,59913,32223,449
Imports of goods and nonfactor services 1/-8,915-12,99718,180-30,058-64,715-92,184
Memorandum items:
Gross domestic savings-3,136-4,027-4,746-6,554-14,080-19,222
Private domestic savings-1,330-1,850-1,2741,1503,63112,938
Public domestic savings-1,8062,177-3,472-7,704-17,711-32,160
Gross national savings-1,939-1,753-1,5342,68511,09919,734
Private domestic savings-1,201-1,484-6293,6414,41213,120
Public domestic savings-738-269-905-9566,6876,615
GDP deflator (annual percentage change)37.526.039.073.574.550.8
Nominal GDP (annual percentage change)39.226.940.577.378.053.1
Real GDP (annual percentage change)1.20.71.12.22.01.5
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In 1995 and 1996, public consumption, public investment, and imports include technical assistance and other expenditure for projects managed directly by foreign donors, which amounted to US$9 million in 1995 and US$10 million in 1996. These data are not available for previous years.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In 1995 and 1996, public consumption, public investment, and imports include technical assistance and other expenditure for projects managed directly by foreign donors, which amounted to US$9 million in 1995 and US$10 million in 1996. These data are not available for previous years.

Table 2.São Tomé and Príncipe: Gross Domestic Product and Expenditure at Current Prices, 1991-96(In percent of GDP)
199119921993199419951996
Est.
Primary sector27.626.428.925.526.424.9
Agriculture24.022.825.622.723.521.9
Fisheries3.63.63.22.82.92.9
Secondary sector16.918.718.719.118.717.9
Manufacturing and energy6.06.46.55.44.15.3
Construction10.912.312.313.814.612.6
Tertiary sector55.554.952.455.454.957.2
Commerce and transport26.726.122.719.018.819.0
Public administration20.420.521.622.320.422.0
Other services8.48.28.114.115.616.2
Gross domestic product100.0100.0100.0100.0100.0100.0
Consumption127.3127.6123.2118.1121.8119.4
Private98.396.491.184.778.974.0
Public 1/29.131.232.133.442.945.4
Gross fixed capital formation33.439.441.141.157.750.1
Private8.914.519.014.216.918.2
Public 1/24.524.922.126.940.831.9
Change in inventory-1.9-0.7-0.50.00.00.0
Gross domestic expenditure158.7166.3163.8159.1179.5169.5
Resource balance-58.7-66.4-63.8-59.1-79.5-69.5
Exports of goods and nonfactor services18.922.925.023.720.623.7
Imports of goods and nonfactor services 1/-77.6-89.2-88.8-82.8-100.2-93.2
Memorandum items:
Gross domestic savings-27.3-27.6-23.2-18.1-21.8-19.4
Private domestic savings-11.6-12.7-6.23.25.613.1
Public domestic savings-15.7-14.9-17.0-21.2-27.4-32.5
Gross national savings-16.9-12.0-7.57.417.220.0
Private national savings-10.5-10.2-3.110.06.813.3
Public national savings-6.4-1.8-4.4-2.610.36.7
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In 1995 and 1996, public consumption, public investment, and imports include technical assistance and other expenditure for projects managed directly by foreign donors, which amounted to US$9 million in 1995 and US$10 million in 1996. These data are not available for previous years.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In 1995 and 1996, public consumption, public investment, and imports include technical assistance and other expenditure for projects managed directly by foreign donors, which amounted to US$9 million in 1995 and US$10 million in 1996. These data are not available for previous years.

Table 3.São Tomé and Príncipe: Gross Domestic Product and Expenditure at Constant Prices, 1991-96
199119921993199419951996
Est.
(In millions of 1991 dobras)
Gross domestic product11,48211,56211,69011,94712,18612,368
Consumption14,61813,75814,29714,55614,67614,743
Private11,28210,39110,57310,4019,5259,348
Public 1/3,3363,3673,7254,1545,1515,395
Gross fixed capital formation 1/3,8243,5284,2044,2215,0234,356
Change in inventory-221-66-52000
Gross domestic expenditure18,22117,22018,44918,77719,69919,099
Resource balance-6,739-5,658-6,759-6,830-7,513-6,731
Exports of goods and nonfactor services2,1752,3132,3031,6891,2301,303
Imports of goods and nonfactor services 1/-8,915-7,971-9,062-8,519-8,744-8,034
(Annual percentage change)
Gross domestic product0.71.12.22.01.5
Consumption-5.93.91.80.80.5
Private-7.91.8-1.6-8.4-1.9
Public 1/0.910.611.524.04.7
Gross fixed capital formation 1/-7.719.10.419.0-13.3
Gross domestic expenditure-5.57.11.84.9-3.0
Resource balance16.1-19.5-1.0-10.010.4
Exports of goods and nonfactor services6.4-0.4-26.7-27.15.9
Imports of goods and nonfactor services 1/10.6-13.76.0-2.68.1
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In 1995 and 1996, public consumption, public investment, and imports include technical assistance and other expenditure for projects managed directly by foreign donors, which amounted to US$9 million in 1995 and US$10 million in 1996. These data are not available for previous years.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In 1995 and 1996, public consumption, public investment, and imports include technical assistance and other expenditure for projects managed directly by foreign donors, which amounted to US$9 million in 1995 and US$10 million in 1996. These data are not available for previous years.

Table 4.São Tomé and Príncipe: Area of the Agricultural State Enterprises, 1991-96(In hectares)
199119921993199419951996
Total areaCultivated areaTotal areaCultivated areaTotal areaCultivated areaTotal areaCultivated areaTotal areaCultivated areaTotal areaCultivated area
Santa Catarina7,1061,9157,1061,9157,1061,9156,0328416,0328415,375789
Diogo Vaz 1/4,0481,7934,0481,7934,0481,5823,1376713,1376713,137671
Ponte Figo3,7792,3723,7792,3723,4242,0172,0836762,08367673097
Agostinho Neto 1/6,0243,7826,0243,7825,4873,2452,8856432,8856432,885643
Bela Vista 1/2,1572.1572,1572,1572,0921,8722,0921,8722,0921,8722,0921,872
Santa Margarida 2/1,8361,8361,8361,8361,8361,8361,8361,8361,7931,7931,5311,531
Monte Cafe 2/4,2291,6914,2291,6914,2291,6534,2291,0844,2291,0843,9291,084
Milagrosa1,4211,4211,4211,4211,0681,0681,0681.0680000
UbaBudo 1/2,9062,1002,9062.1002,7212,5052,7092,5052.7092,5052,7092,505
Agua Izé4,6844,4564,6844,4563,9163,6883,8923,6641,8361,60831991
Colonia Açoriana2,4071,6612,4071,6611,4947481,4947480000
Ribeira Pebre1,9681.6281,9681,6281,4701,1308400000
Porto Alegre 1/10,2162,15810,2162,15810,2162,15810,2162,15810,1102,05210,1102,052
Sundy3,9631,9273,9631,9273,5111,1482,9836202,7613982,761398
Porto Real8,6252,9248.6252,9248,2982,5977,4271,7266,53383200
Total65,36833,82165,36733,82160,91429,16252,16620,11246,19914,97535,57711,733
Sources: Data provided by the São Tomé and Príncipe authorities.

Under lease contract.

Under private management.

Sources: Data provided by the São Tomé and Príncipe authorities.

Under lease contract.

Under private management.

Table 5.São Tomé and Príncipe: Cultivated Area of the Agricultural State Enterprises, 1991-96(In hectares, unless otherwise specified)
199119921993199419951996
Est.
Area cultivated33,82133,82129,16220,11214,97511,733
Cocoa 1/21,95522,24320,51116,90111,2637,947
Coffee1,198932932932932932
Other10,6699,4507,7192,2792,7802,854
Coconut palms6,812
Oil palms3,857
Memorandum items:
Total area covered by the enterprises65,36765,36760,91452,16646,19935,577
Area cultivated (in percent of total area)51.751.747.938.632.433.0
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes bananas and breadfruit grown among cocoa trees for shade.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes bananas and breadfruit grown among cocoa trees for shade.

Table 6.São Tomé and Príncipe: Production of Principal Agricultural Crops, 1991-96(In metric tons)
199119921993199419951996
Est.
Export crops
Cocoa 1/3,6073,6884,3053,3923,8453,500
Copra 1/581679678572501507
Coffee111420222920
Food crops
Palm oil9231,5008757317201,179
Bananas10,00012,00013,00013,65012,68513,500
Breadfruit9221,4701,8001,5001,6001,800
Taro1,4786,0007,0008,5008,24510,000
Maize3,6004,0004,0004,3004,0004,500
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Fourth quarter 1996 production data for two major cocoa producers and two copra producers is not available and is therefore estimated.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Fourth quarter 1996 production data for two major cocoa producers and two copra producers is not available and is therefore estimated.

Table 7.São Tomé and Príncipe: Distribution of Agriculture Production in 1996
CocoaCopraCoffeeArea cultivated

with cocoa
(In metric tons)(In hectares)
Total production3,3994302022,550
State enterprises under leasing contract 1/1,304904,890
Diogo Vaz21060671
Agostinho Neto42530643
Bela Vista491001,735
Uba Budo’s own production 2/129001,841
Uba Budo’s purchase 2/5000
State enterprises under management contract 1/474177201,682
Santa Margarida 2/446001,531
Monte Café27020151
Porto Alegre 2/11770
State enterprises under public management 1/3/1672701,375
Agua Izé 2/3017091
Sundy4580398
Santa Catarina5500789
Ponta Figo372097
Production by small and medium-sized enterprises 4/1,4542170
Roca do Medio Porte81900
SAC Norte41900
Compra Mesquita7500
Compra Santana10820
Other332150
Monte Istoril2000
Media Empresas C. Açoriana500
Compra Fratemidade500
Milagrosa200
Ribeira Peixe12150
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes production by small and medium-sized private enterprises that is commercialized by state enterprises.

Data only available to September.

Will all be distributed by end-1997.

Excludes production by small and medium-sized private enterprises that is commercialized by state enterprises.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes production by small and medium-sized private enterprises that is commercialized by state enterprises.

Data only available to September.

Will all be distributed by end-1997.

Excludes production by small and medium-sized private enterprises that is commercialized by state enterprises.

Table 8.São Tomé and Príncipe: Indicators of Cocoa Production and Exports, 1991-96
199119921993199419951996
Est.
(In hectares)
Area under cultivation25,78826,07626,07626,07622,67822,550
Public enterprises under rehabilitation1032103210,23210,2326,8346,572
Other public enterprises11,72312,01110,2796,6694,4291,375
Private sector 1/3,8333,8335,5659,17511,41514,603
(In metric tons)
Production volume 2/3,6073,6884,3053,3923,8453,500
Public enterprises under rehabilitation2,3432,3412,4201,9391,9821,879
Other public enterprises519848794614513167
Private sector7455001,0918391,3501,454
(In kilograms per hectare)
Average yield11012212398170155
(In metric tons)
Export volume4,7594,3633,7253,7163,3623,170
(In U.S. dollars per kilogram)
Export unit value1.070.971.121.341.401.50
(In percent of total export earnings)
Export earnings84.680.380.684.492.496.4
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Some hectares distributed to the private sector may be used to produce other crops than cocoa.

Estimated on the basis of marketing data.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Some hectares distributed to the private sector may be used to produce other crops than cocoa.

Estimated on the basis of marketing data.

Table 9.São Tomé and Príncipe: Energy Production and Consumption, 1991-96
199119921993199419951996
Est.
(In thousands of kilowatt-hours)
Electricity production 1/19,11219,55120,18120,56418,66420,328
Hydroelectricity7,1646,2866,7684,8943,2635,056
Thermoelectricity11,94813,26513,41315,67015,40115,272
Electricity consumption11,46711,60712,45214,13511,931
Residential6,1925,5676,2266,7966,749
Industrial and other 2/5,2756,0406,2267,3395,182
(In millions of dobras)
Electricity production 1/448.4619.8925.61,029.3
Hydroelectricity225.1
Thermoelectricity394.7
Electricity consumption268.9544.9571.11,463.22,397.8
Residential145.3193.4217.0619.8994.8
Industrial and other 2/123.7351.5354.1843.51,402.9
(In dobras per kilowatt-hour)
Electricity production23.531.745.950.1
Hydroelectricity35.8
Thermoelectricity29.8
Electricity consumption23.546.945.9103.5201.0
Residential23.534.734.991.2147.4
industrial and other 2/23.558.256.9114.9270.8
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Production exceeds consumption owing to losses in distribution.

Including the government.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Production exceeds consumption owing to losses in distribution.

Including the government.

Table 10.São Tomé and Príncipe: Imports of Petroleum Products, 1991-96
199119921993199419951996
Est.
(In thousands of liters)
Volume of imports
Gasoline4,2194,0193,2983,4144,5424,610
Diesel8,5147,9207,2378,41010,2119,683
Jet/Kerosene 1/4,2634,0343,7532,2173,0474,609
(In millions of U.S. dollars)
Value of imports, c.i.f.2.42.72.32.22.63.8
Gasoline0.70.60.50.60.70.9
Diesel1.11.51.21.31.41.9
Jet/Kerosene 1/0.60.60.60.40.51.0
(In dobras per liter)
Average retail price
Gasoline1773003704347531,035
Diesel96168230286483734
Kerosene6897100109267402
Jet79143240200252402
(In U.S. dollars per liter)
Average retail price
Gasoline0.880.940.860.590.530.47
Diesel0.470.520.540.390.340.33
Kerosene0.330.300.230.150.190.18
Jet0.390.450.560.270.180.18
World price, c.i.f
Gasoline0.170.140.150.200.220.26
Diesel0.170.170.170.190.200.24
Jet/Kerosene0.180.180.180.200.220.26
Import price, c.i.f
Gasoline0.160.150.150.160.150.20
Diesel0.130.190.160.160.140.19
Jet/Kerosene0.150.150.160.160.160.22
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Excluding reexports of Jet A-1 fuel.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Excluding reexports of Jet A-1 fuel.

Table 11.São Tomé and Príncipe: Cost Structure of Petroleum Products, 1996
GasolineDieselKeroseneJet A-1
In percent

of c.i.f cost
Dobras per literIn percent

of c.i.f cost
Dobras per literIn percent

of c.i.f cost
Dobras per literIn percent

of c.i.f cost
Dobras per liter
Average import cost in 1996, c.i.f.1.004301.004461.004781.00478
Import duty0.863700.341520.14670.1467
Sales tax1.305590.602680.15720.1572
ENCO handling cost 1/0.341450.271220.02100.0210
ENCO’s wholesale margin0.17750.04200.03130.0313
Retail margin0.19830.10430.06280.0628
Other0.07320.05210.06290.0629
Profit transfer to the government-1.53-659-0.76-338-0.62-295-0.62-295
Average retail price in 19962.411,0351.657340.844020.84402
Memorandum items:
(In thousands of liters)
Total import in 1996 (excluding EMAE) 2/4,6105,0032,3042,304
(In millions of dobras)
EMAE’s consumption value0.002,41900
Profit transfer due to the budget-2,991-1,661-527-477
Import duty due1,7057591540
Consumption tax due2,5361,3161280
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

ENCO, the fuel importing company.

EMAE, the water and electricity company.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

ENCO, the fuel importing company.

EMAE, the water and electricity company.

Table 12.São Tomé and Príncipe: Official Consumer Price Index, 1991-95 1/(1990=100; end of period)
19911992199319941995
Food products179.1233.4272.8388.2474.2
Lodging and utilities134.1148.4140.8208.6269.5
Housing, transportation, communications187.4212.2300.3410.8588.0
Education and health173.7294.5415.3516.3630.8
Clothing and other135.2152.8187.4207.6255.5
General index173.3220.7268.8370.2461.1
Source: Data provided by the São Tomé and Príncipe authorities.

Until 1996, the official CPI was subject to serious deficiencies in measurement and coverage and should be interpreted with caution.

Source: Data provided by the São Tomé and Príncipe authorities.

Until 1996, the official CPI was subject to serious deficiencies in measurement and coverage and should be interpreted with caution.

Table 13.São Tomé and Príncipe: Monthly Movements in the Official Consumer Price Index, 1991-95 1/
19911992199319941995
(1990=100)
January112.1175.4225.5273.8383.9
February125.0178.6229.2278.5393.9
March141.1185.1232.8282.9401.5
April138.3186.3237.7285.6409.5
May143.8190.7240.3294.7420.7
June146.8194.6242.9300.4426.4
July149.1195.7247.6305.3429.0
August152.2197.3249.2318.6436.6
September154.9202.1254.7329.7444.7
October159.7208.6258.5343.3448.5
November161.3214.9263.1353.2453.7
December173.3220.7268.8370.2461.1
Annual average146.5195.8245.8311.3425.1
(Annual percentage change)
Rate of inflation
End of period52.727.321.837.724.6
Annual average46.533.725.526.636.8
Source: Data provided by the São Tomé and Príncipe authorities.

Until 1996, the official CPI was subject to serious deficiencies in measurement and coverage and should be interpreted with caution.

Source: Data provided by the São Tomé and Príncipe authorities.

Until 1996, the official CPI was subject to serious deficiencies in measurement and coverage and should be interpreted with caution.

Table 14.São Tomé and Príncipe: Official Consumer Price Index, 1995-96(1995=100)
Weight19951996
Dec.Jan.Feb.MarchAprilMayJuneJulyAug.Sept.Oct.Nov.Dec.
Food, beverages, and tobacco71.9111.0113.0114.4116.0116.9117.7119.2120.6122.2139.5158.5158.1161.8
Clothing5.3114.6115.8116.4117.4117.9118.2120.8121.9123.0123.2127.8133.5126.9
Housing and energy10.2111.2115.1122.7122.9123.9127.0133.1133.1135.2175.2177.6179.8218.6
Furniture, electrical equipment, other
housing equipment2.8114.6116.0117.4118.8122.0123.5125.0126.5129.0138.5143.2149.4195.1
Health services1.3119.2119.2119.2119.7124.6124.7126.3126.3126.3189.9124.6130.2133.2
Transport and communications6.4128.7129.1159.8160.2160.4212.4213.0213.0213.3207.7206.6246.3253.7
Entertainment and cultural activities0.7114.1115.2116.1120.8121.2121.6126.8127.4128.0113.5146.4150.3158.0
Education0.4108.3110.0110.7116.5121.0121.3123.7124.8126.5121.8122.8122.8127.1
Hotels and restaurants0.7115.3120.4122.8126.2127.5130.3135.6137.1140.6185.9114.6117.0154.0
Other0.5116.3118.8120.9122.4123.7124.9127.4128.7131.8138.4136.6136.9144.1
General index100.0112.6114.6118.5119.8120.8125.2127.2128.3129.9147.3160.4163.5170.9
Cumulative rate of inflation1.765.256.427.2811.1712.9713.9715.3630.8242.4345.1851.73
Average annual inflation35.54
Source: Data provided by 1he São Tomé and Príncipe authorities.
Source: Data provided by 1he São Tomé and Príncipe authorities.
Table 15.São Tomé and Príncipe: Financial Transactions of the Central Government, 1991-96(In millions of dobras)
199119921993199419951996
Total revenue and grants3,3954,2647,10211,18625,77736,547
Tax revenue1,1751,9462,6693,6266,3298,912
Consumption taxes4418151,0601,2721,8392,179
Import taxes4147559751,2751,9542,568
Export taxes7910166207616816
Other taxes2412755688721,9203,348
Nontax revenue6881,0011,0251,1914,3574,368
Of which Transfers from enterprises332573596415668534
Grants1,5321,3183,4086,36915,09123,268
Total expenditure and net lending7,81010,35013,98226,78749,97268,387
Current expenditure3,2134,4086,67311,28515,48026,796
Personnel costs8321,0471,0931,8792,1634,140
Of which Wages and salaries4795186808679271,295
Goods and services2344885231,3342,3223,443
Interest on external debt due1,2621,6012,3473,9827,7829,747
Transfers3825264938541,0156,018
Defense0004137171,225
Other current expenditures 1/4777002,1772,7451,2761,619
Redeployment fund26484179206604
Capital expenditure 2/4,5965,9427,30915,50234,56341,591
Recorded by the Treasury4446065641,0993,039893
Foreign-financed4,1535,3366,74514,40331,52440,698
Net lending0000-720
Overall fiscal balance
(commitment basis, after grants)-4,415-6,086-6,881-15,601-24,195-31,839
Change in aireáis (net; reduction -)4013522,0623,9555,4334,899
External arrears (net; reduction -)4013522,0083,0044,8006,981
Domestic arrears (net; reduction -)0054951633-2,083
Overall fiscal balance (cash basis)-4,014-5,733-4,819-11,646-18,763-26,941
Financing4,0145,7334,81911,64618,76326,941
External (net)2,4763,7224,2678,01618,61615,972
Disbursements (projects)2,6214,0194,3858,34518,90018,862
Amortization (net)-494-1,314-715-9,040-39,348-2,890
Scheduled-1,550-2,293-3,263-4,586-6,915-6,948
Net change in arrears (reduction -)1,0579782,547-4,453-32,4334,058
Debt relief3491,0185978,71139,0640
Domestic (net)1,5382,0115523,63014610,968
Banking credit8861,8465523,5865742,896
Use of counterpart funds651165044-4288,072
Financing gap000000
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes payments to embassies as well as recurrent costs of projects in agriculture and social sectors.

Includes outlays for technical assistance and other expenditures on social projects not associated with capital formation.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes payments to embassies as well as recurrent costs of projects in agriculture and social sectors.

Includes outlays for technical assistance and other expenditures on social projects not associated with capital formation.

Table 16.São Tomé and Príncipe: Central Government Revenue, 1991-96(In millions of dobras)
199119921993199419951996
Total revenue and grants3,3954,2647,10211,18625,77736,547
Tax revenue1,1751,9462,6693,6266,3298,912
Direct taxes1901973285171,5052,809
Profit taxes82631191488291,084
Income taxes64921283245941,490
Other4442814582235
Indirect taxes9851,7492,3413,1094,8236,102
Import taxes4147559751,2751,9542,568
Export taxes7910166207616816
Consumption taxes4418151,0601,2721,8392,179
On imported goods3416297151,1231,5692,178
On domestic goods1001863451492701
Other5178240355414539
Nontax revenue6881,0011,0251,1914,3574,368
Transfers from enterprises332573596415668534
Fishing royalties1422683385359742,121
Other213160912412,7161,713
Grants1,5321,3183,4086,36915,09123,268
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.
Table 17.São Tomé and Príncipe: Central Government Expenditure, 1991-96(In millions of dobras)
199119921993199419951996
Total expenditure and net lending7,81010,35013,98226,78749,97268,387
Current expenditure3,2134,4086,67311,28515,48026,796
Personnel costs8321,0471,0931,8792,1634,140
Wages and salaries4795186808679271,295
Travel1572462785195831,544
Family allowances322113
Other personnel expenditures 1/132244944435901,207
Social security payments623640496391
Goods and services2344885231,3342,3223,443
Durable goods15231835581,495
Nondurable goods124253227389575905
Petroleum products326168104157219
Other92192158285417686
Services962122789101,6891,043
Of which Electricity55754960054139
Transport and communications4084149141221190
Interest on external debt due1,2621,6012,3473,9827,7829,747
Transfers3825264938541,0156,018
Public entities621181722695361,309
Public enterprises20520113025503,070
Private sector237252112329529
Private institutions5868717
Individuals186447107322512
External931351382171501,109
Other current expenditures4777002,1773,1581,9942,844
Embassies6689145228240387
Defense0004137171,225
Extraordinary expenditures001,4501,72500
Other 2/4116115827921,0361,232
Redeployment fund26484179206604
Capital expenditure 3/4,5965,9427,30915,50234,56341,591
Recorded by the Treasury4446065641,0993,039893
Foreign-financed4,1535,3366,74514,40331,52440,698
Net lending0000-720
Memorandum item:
Total expenditure and net lending, excluding
foreign-financed capital expenditure3,6575,0147,23712,38418,44827,689
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes bonuses and allowances, except in 1993 and 1994, where they were recorded in wages and salaries.

Includes recurrent costs of projects in agriculture and social sectors, as well as defense expenditures for 1990 to 1993.

Includes outlays for technical assistance and other expenditures on social projects not associated with capital formation.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes bonuses and allowances, except in 1993 and 1994, where they were recorded in wages and salaries.

Includes recurrent costs of projects in agriculture and social sectors, as well as defense expenditures for 1990 to 1993.

Includes outlays for technical assistance and other expenditures on social projects not associated with capital formation.

Table 18.São Tomé and Príncipe: Fiscal Indicators, 1991-96
199119921993199419951996
(Annual percentage change)
Total revenue and grants40.125.666.557.5130.441.8
Tax revenue5265.637.235.974.540.8
Direct taxes25.23.566.258.0190.986.6
Indirect taxes58.577.633.932.855.126.5
Of which Import taxes65.282.129.330.753.331.4
Export taxes56.427.6-35.0215.8197.832.4
Nontax revenue3345.52.416.1266.00.3
Of which Transfers from enterprises21.872.34.0-30.460.9-20.0
Grants35.3-14.0158.786.9136.954.2
Total expenditure32.332.535.191.686.636.9
Current expenditure37.637.251.469.137.273.1
Of which Personnel costs21.325.74.471.915.191.4
Goods and services24.7108.67.2155.274.148.3
Interest on external debt due73.226.846.669.695.425.3
Capital expenditure28.829.323.0112.1123.020.3
(In percent of total revenue and grants)
Total revenue and grants100.0100.0100.0100.0100.0100.0
Tax revenue34.645.637.632.424.624.4
Direct taxes5.64.64.64.65.87.7
Indirect taxes29.041.033.027.818.716.7
Of which Import taxes12.217.713.711.47.67.0
Export taxes2.32.40.91.92.42.2
Nontax revenue20.323.514.410.616.912.0
Of which Transfers from enterprises9.813.48.43.72.61.5
Grants45.130.948.056.958.563.7
(In percent of total expenditure)
Total expenditure100.0100.0100.0100.0100.0100.0
Current expenditure41.142.647.742.131.039.2
Of which Personnel costs10.710.17.87.04.36.1
Goods and services3.04.73.75.04.65.0
Interest on external debt due16.215.516.814.915.614.3
Capital expenditure5.75.94.04.16.11.3
(In percent of GDP)
Total revenue and grants29.629.334.730.839.937.0
Tax revenue10.213.413.010.09.89.0
Total expenditure68.071.168.373.877.369.1
Current expenditure28.030.332.631.124.027.1
Capital expenditure40.040.835.742.753.542.1
Primary current balance 1/-27.5-30.8-22.1-32.0-25.4-22.5
Primary overall balance 2/-4.6-3.2-5.8-9.90.0-4.7
Overall balance-38.541.8-33.6-43.0-37.4-32.2
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Excluding interest obligations, including grants.

Excluding interest obligations, grants, and foreign-financed capital expenditures.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Excluding interest obligations, including grants.

Excluding interest obligations, grants, and foreign-financed capital expenditures.

Table 19.São Tomé and Príncipe: Public Investment Program, 1991-96
199119921993199419951996
(In millions of U.S. dollars)
Total investment22.918.117.321.224.418.9
Public administration1.40.60.20.71.10.5
Agriculture9.18.39.28.57.86.9
Water and sewage 1/0.20.20.91.31.10.8
Education0.60.81.64.15.62.3
Energy 1/00.32.21.34.13.5
Housing0.10.30.20.20.10.4
Fisheries0.10.20.20.30.50.6
Health1.50.40.60.62.33.0
Transport and telecommunications9.97.12.34.01.71.0
Financing22.918.117.321.224.418.9
Foreign19.816.315.719.722.218.5
Grants6.83.95.58.38.99.9
Loans13.012.410.211.413.38.6
Domestic3.01.81.61.52.20.4
Counterpart funds0.80.10.00.00.30.2
Budget2.21.71.61.51.90.2
(In percent of total investment)
Total investment100.0100.0100.0100.0100.0100.0
Public administration6.13.11.03.54.72.4
Agriculture39.745.852.940.232.036.4
Water and sewage 1/0.90.85.26.34.54.2
Education2.64.39.319.423.012.4
Energy 1/0.01.412.76.117.018.3
Housing0.41.51.11.00.42.2
Fisheries0.41.01.31.52.13.1
Health6.62.33.43.09.416.0
Transport and telecommunications43.239.113.119.07.05.0
Financing100.0100.0100.0100.0100.0100.0
Foreign86.590.090.5492.991.297.9
Grants29.721.631.739.136.552.4
Loans56.868.458.953.854.745.4
Domestic13.110.09.57.18.82.1
Counterpart funds3.50.60.20.01.21.2
Budget9.69.49.27.17.61.1
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Until 1992, the energy sector was included in the water and sewage sector.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Until 1992, the energy sector was included in the water and sewage sector.

Table 20.São Tomé and Príncipe: Status of Nonagricultural Public Enterprises, as of December 1996(In billions of dobras, unless otherwise specified)
1996
Government

ownership

(in percent of

total)
Total AssetsNumber of

Employees
Net ProfitsStatus as of

December 1996
Air São Tomé (national airline)2976Mixed enterprise
Africa Fishing SA47250To be privatized or liquidated in 1997.
EMAE (water and electricity)10029,434324254Strategic public enterprise.
ENCO (petroleum products)10034Strategic public enterprise
EMOLVE (edible oil)1001,3133363Strategic public enterprise
COMPENSADORA (insurance)1009817-740To be liquidated in 1997
Correios (postal services)100Strategic public enterprise
CST (telecommunications)4920,8061351,420Mixed enterprise.
Cunha Gomes, SA (retail)31,289677To be privatized or liquidated in 1997.
ENASA (air traffic security)100939101166Strategic public enterprise.
ENAPORT (ports)1001,243101466Strategic public enterprise.
ENCAR (meat distribution)100To be liquidated in 1997.
Agua Grande (textiles)3593To be liquidated in 1997.
ENAMED (pharmaceuticals)10017011-4To be liquidated in 1997.
Óptica Nacional

(eye glasses) 1/
100510To be liquidated in 1997
Pousada Boa Vista (hotel)421,39643-1,064To be liquidated in 1997
Source: Data provided by the São Tomé and Príncipe authorities.

Part of ENAMED.

Source: Data provided by the São Tomé and Príncipe authorities.

Part of ENAMED.

Table 21.São Tomé and Príncipe: Monetary Survey, 1992-96 1/
Old seriesNew series
19921993199419941995 2/1996
Est.
(In millions of dobras; end of period)
Net foreign assets-4,999-8,898-17,9364,3729,94620,929
Foreign assets4,0027,12517,31111,69921,14536,734
Foreign liabilities-9,001-16,023-35,247-7,32711,199-15,804
Net domestic assets9,47014,84031,4459,4268,72814,593
Net domestic credit10,55911,80818,52412,2759,75716,178
Net credit to government5,0815,6339,2206,7557,82918,562
Claims8,3478,65310,7508,55110,29028,743
Deposits-3,266-3,020-1,531-1,796-2,462-10,182
Counterpart funds-4,736-5,527-7,426-9,067-12,603-11,187
Credit to the economy10,21311,70216,73114,58714,5318,803
Public enterprises8,4558,3078,3077,8377,8370
Other1,7583,3958,4246,7506,6948,803
Other items (net)-1,0883,03212,921-2,849-1,029-1,585
Revaluation accounts5,9517,83019,526-2,7922,0184,825
Other-7,039-4,798-6,605-57-3,047-6,410
Money and quasi-money4,4725,94213,50913,79818,67435,522
Money4,2225,93413,5088,42012,62021,692
Currency in circulation1,3041,7403,2213,2644,7946,845
Demand deposits2,9184,19510,2875,1567,82614,847
Quasi-money250815,3786,05413,830
Time deposits (local currency)250819099745
Deposits in foreign exchange5,2885,95613,086
(Changes, in millions of dobras)
Net foreign assets 3/-641-2,0212,4761,2503,800
Net domestic assets2,2923,4915,0911,4388,738
Net domestic credit6761,2506,716-1,6476,693
Net credit to government 4/1,8465523,58657411,005
Counterpart funds-1,761-792-1,899-2,0851,416
Credit to the economy5911,4895,029-136-5,728
Other items (net) 3/1,6162,241-1,6253,0852,046
Money and quasi-money (M2)
Change in M2 stock 5/1,6511,4707,5674,87716,823
Adjusted M2 flow 3/2,68712,538
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

As of November 1994, central bank data reflect corrections and improvements to the basic accounts, in particular, a more accurate estimate of foreign assets and liabilities.

December 1995 stock data reflect regularization and liquidation of the outstanding operations of the former BNSTP, while flow data exclude these adjustments.

After foreign exchange valuation adjustment.

In 1996, excludes the budgetary use of counterpart funds (Db 8.1 billion), but includes the reclassification of public enterprise debt (Db 7.8 billion) as government debt.

Without foreign exchange valuation adjustment.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

As of November 1994, central bank data reflect corrections and improvements to the basic accounts, in particular, a more accurate estimate of foreign assets and liabilities.

December 1995 stock data reflect regularization and liquidation of the outstanding operations of the former BNSTP, while flow data exclude these adjustments.

After foreign exchange valuation adjustment.

In 1996, excludes the budgetary use of counterpart funds (Db 8.1 billion), but includes the reclassification of public enterprise debt (Db 7.8 billion) as government debt.

Without foreign exchange valuation adjustment.

Table 22.São Tomé and Príncipe: Variations in Monetary Aggregates, 1992-96 1/
Old seriesNew series
19921993199419941995 2/1996
Est.
(Changes in percent of opening broad money stock)
Net foreign assets 2/-22.7-45.241.79.120.3
Net domestic assets 2/81.378.185.710.446.8
Net domestic credit24.027.9113.0-11.935.8
Net credit to government 3/65.412.460.44.258.9
Counterpart funds (nonbudgetary)-62.4-17.7-32.0-15.17.6
Credit to the economy21.033.384.6-1.0-30.7
Other items (net) 2/57.350.1-27.322.411.0
Money and quasi-money (M2)
Change in M2 stock 4/58.532.9127.335.390.2
Adjusted M2 flow 2719.567.1
Valuation effect on broad money15.923.1
(Annual percentage changes)
Net foreign assets-13.7-40.427.883.6110.4
Net domestic assets31.956.734.313.067.2
Net domestic credit6.811.856.9-13.465.8
Net credit to government57.110.963.78.5137.1
Counterpart funds (nonbudgetary)-59.2-16.7-34.423.0-11.2
Credit to the economy6.114.643.0-0.9-39.4
Public enterprises0.0-100.0
Other-0.931.5
Other items (net)18.730.8-53.6100.754.0
Change in M2 stock 4/58.532.9127.335.390.2
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

As of November 1994, central bank data reflect corrections and improvements to the basic accounts, in particular, a more accurate estimate of foreign assets and liabilities.

After foreign exchange valuation adjustment.

In 1996, excludes the budgetary use of counterpart funds (Db 8.1 billion), but includes the reclassification of public enterprise debt (Db 7.8 billion) as government debt.

Without foreign exchange valuation adjustment.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

As of November 1994, central bank data reflect corrections and improvements to the basic accounts, in particular, a more accurate estimate of foreign assets and liabilities.

After foreign exchange valuation adjustment.

In 1996, excludes the budgetary use of counterpart funds (Db 8.1 billion), but includes the reclassification of public enterprise debt (Db 7.8 billion) as government debt.

Without foreign exchange valuation adjustment.

Table 23.National Bank/Central Bank of São Tomé and Príncipe: Summary Accounts, 1992-96 1/2/(In millions of dobras; end of period)
Old seriesNew series
19921993199419941995 2/1996
Est.
Net foreign assets-4,999-8,981-21,481-1,76081222
Foreign assets4,0023,1096,8755,7198,65513,854
Foreign liabilities-9,001-12,090-28,356-7,479-8,573-13,631
Net domestic assets8,91015,27425,94111,15010,38018,722
Net domestic credit10,05912,42313,50517,37410,25014,745
Net credit to government5,0817,65910,7508,55110,29021,875
Claims8,3478,65310,7508,55110,29028,743
Deposits-3,266-994000-6,868
Counterpart funds-4,736-5,477-7,426-8,933-10,333-9,091
Claims on nonfinancial public enterprises7,8888,1968,1967,8377,8370
Claims on private sector1,7582,0441,984080204
Claims on financial institutions67009,9192,3751,757
Other items, net-1,1482,85112,436-6,2231313,977
Revaluation accounts5,9517,83019,4521,5942,0185,432
Other-7,099-4,979-7,016-7,817-1,888-1,455
Money and quasi money3,912
Money 1/3,662
Currency in circulation1,333
Demand deposits2,329
Quasi money250
Base money 1/6,2934,4619,39010,46218,945
Currency liabilities1,9493,7603,7605,0157,562
Reserve deposits4,3447015,6315,44711,383
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In March 1993, the National Bank (BNSTP) divested itself of its commercial banking functions and began operations as the central bank (BCSTP). The 1995 data reflect regularization and liquidation of the BNSTP’s outstanding operations.

As of November 1994, data reflect corrections to and improvements in the basic accounts, in particular a more accurate estimate of foreign assets and liabilities.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In March 1993, the National Bank (BNSTP) divested itself of its commercial banking functions and began operations as the central bank (BCSTP). The 1995 data reflect regularization and liquidation of the BNSTP’s outstanding operations.

As of November 1994, data reflect corrections to and improvements in the basic accounts, in particular a more accurate estimate of foreign assets and liabilities.

Table 24.São Tomé and Príncipe: Summary Accounts of Credit Institutions, 1994-96(In millions of dobras)
199419951996
Est.Est.Est.
Net foreign assets6,8909,86520,707
Foreign assets7,33512,49122,880
Foreign liabilities-445-2,626-2,173
Net domestic assets3,6444,0707,970
Reserves4,7645,48812,730
Cash on hand496221716
Dobra deposits in the central bank7571,1986,623
Foreign exchange deposits in the central bank3,0444,0695,390
Deposits in other domestic financial institutions46600
Deposits of other financial institutions-655-1,106-1,991
Credit from the central bank0-250-1,150
Net domestic credit4,8203,5435,181
Net credit to government 1/-1,930-3,071-3,418
Credit to the economy6,7506,6148,599
Other items, net-5,285-3,105-6,801
Money10,53413,93528,677
Demand deposits5,1567,82614,847
Deposits in foreign exchange5,2886,01113,086
Time deposits (local currency)9099745
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Excluding nonbudgetary counterpart funds.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Excluding nonbudgetary counterpart funds.

Table 25.São Tomé and Príncipe: Structure of Interest Rates, 1991-96(In percent per annum; end of period)
199119921993 1/199419951996
Deposits
Sight deposits0.00.00.00.00.00.0
Term deposits
30-90 days30.030.030.0
90-180 days35.035.031.0
180-365 days39.039.033.0
Over 1 year36.0
Credits
Commercial and industrial credits
30-90 days37.037.037.030.052.038.0
90-180 days37.037.037.030.052.038.0
180-365 days40.040.040.030.052.040.0
Over 1 year44.044.044.030.052.042.0
Short-term crop credit36.036.036.030.0
Housing loans40.040.040.025.052.0
Medium-term investment credit
and other
Discount rate45.045.030.032.050.035.0
Memorandum items:
Deposits of 180-365 days’ maturity
(in real terms) 2/-9.09.2-12.3
Commercial and Industrial credits
of 180-365 days’ maturity
(in real terms) 2/-8.310.05.5-25.911.0-7.7
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Between November 12,1993 and May 1,1996, commercial banks were free to set their lending rates, subject to a 22 percent minimum. The lending and deposit rates indicated for 1996 are maximum and minimum rates, respectively.

Real interest rates calculated on the basis of end-of-period rates of inflation as estimated by staff.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Between November 12,1993 and May 1,1996, commercial banks were free to set their lending rates, subject to a 22 percent minimum. The lending and deposit rates indicated for 1996 are maximum and minimum rates, respectively.

Real interest rates calculated on the basis of end-of-period rates of inflation as estimated by staff.

Table 26.São Tomé and Príncipe: Balance of Payments, 1991-96(In millions of U.S. dollars)
199119921993199419951996
Est.
Trade balance-18.5-17.2-20.4-18.518.4-14.7
Exports, f.o.b.6.05.35.25.95.14.9
Cocoa5.l4.24.25.04.74.8
Other0.91.01.00.90.40.2
Imports, f.o.b.-24.5-22.5-25.5-24.3-23.5-19.6
Food-4.7-4.6-5.6-5.2-5.9-4.7
Capital goods-10.7-7.5-9.1-9.8-9.9-5.9
Petroleum products-1.9-2.2-1.8-1.8-2.1-3.0
Other-7.2-8.1-9.0-7.5-5.6-6.0
Services and income (net)-21.2-18.0-16.9-16.3-23.3-21.2
Exports of services4.85.05.45.94.35.7
Travel and tourism2.22.72.83.0
Other services3.13.21.52.7
Imports of nonfactor services-19.7-18.1-16.8-16.7-22.1-22.2
Freight and insurance-6.1-5.6-6.4-6.1-5.9-5.0
Technical assistance-6.4-5.53.8-4.6-10.2-9.5
Other-7.2-6.9-6.6-6.0-6.1-7.7
Interest due 1/-6.3-4.9-5.5-5.5-5.5-4.7
Private transfers (net)0.61.11.53.40.60.5
Current account balance before official transfers-39.1-34.1-35.8-31.4-41.1-35.4
Official transfers (net)11.610.911.514.722.721.6
For public investment projects6.83.95.58.38.99.9
Food aid3.73.73.54.03.70.5
EEC grants STABEX0.00.00.00.02.00.8
Other (net)1.13.32.42.58.110.3
Current account balance after official transfers-27.5-23.2-24.3-16.7-18.5-13.8
Medium- and long-term capital (net)11.213.18.87.010.811.8
Project loans13.012.410.211.413.38.6
Nonproject loans5.96.42.20.10.23.7
Direct foreign investment0.01.34.01.81.92.4
Amortization-7.7-7.0-7.6-6.3-4.6-2.9
Short-term capital and errors and omissions-3.21.00.22.00.3-2.8
Overall balance-19.4-11.1-15.3-7.7-7.4-4.8
Financing19.411.115.37.77.44.8
Net change in reserves (increase -)2.42.04.7-2.1-0.40.1
Medium- and long-term arrears (net; decrease -)7.24.17.26.6-21.95.0
Short-term arrears (net, decrease -)8.12.02.0-8.50.00.0
SAF (net)0.00.00.0-0.1-0.2-0.2
Debt relief1.73.11.411.929.90.0
Memorandum items:
Debt service ratio (before debt relief) 2/3/129.4116.1124.7101.0110.373.5
Debt service actually paid 2/4/28.826.823.816.624.426.6
Current account balance (in percent of GDP) 5/-51.3-51.1-51.1-33.7-40.6-30.8
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes late interest.

In percent of exports of goods and services.

Includes obligations to the IMF; excludes arrears.

Includes obligations to the IMF and cash settlement of arrears.

After grants.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes late interest.

In percent of exports of goods and services.

Includes obligations to the IMF; excludes arrears.

Includes obligations to the IMF and cash settlement of arrears.

After grants.

Table 27.São Tomé and Príncipe: Composition of Exports, 1991-96
199119921993199419951996
Est.
(In millions of U.S. dollars)
Value6.025.235.155.865.104.94
Cocoa5.094.234.154.974.714.76
Copra0.330.330.000.00 1/0.000.00
Coffee0.090.050.050.050.040.00 1/
Other0.510.620.950.840.360.18
(In metric tons)
Volume
Cocoa4,7594,3633,7253,7163,4003,170
Copra1,3501,35001400
Coffee4022
Other383785
(In U.S. dollars per kilogram)
Unit value
Cocoa1.070.971.121.341.401.50
Copra0.240.240.04
Coffee2.252.27
Other1.261.04
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Less than US$0.005 million.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Less than US$0.005 million.

Table 28.São Tomé and Príncipe: Composition of Imports, 1991-96
199119921993199419951996
Est.
(In millions of U.S. dollars)
Total imports, c.i.f.30.628.132.030.429.324.8
Foodstuffs5.95.87.16.57.45.9
Of which Grants3.73.73.54.03.70.5
Petroleum products2.42.82.22.22.63.8
Investment goods13.39.411.412.212.47.4 1/
Other9.010.111.39.47.07.6 1/
(In percent of total)
Total imports, c.i.f.100.0100.0100.0100.0100.0100.0
Foodstuffs19.320.622.121.525.123.8
Of which Grants12.113.111.113.112.62.0
Petroleum products7.810.06.97.28.715.4
Investment goods43.533.535.740.242.229.8 1/
Other29.436.035.431.023.930.7 1/
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Due to improved data classification between investment and “other” goods for 1996, these two categories are not comparable with those of previous years.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Due to improved data classification between investment and “other” goods for 1996, these two categories are not comparable with those of previous years.

Table 29.São Tomé and Príncipe: Destination of Exports, 1991-96
199119921993199419951996
Est.
(In millions of U.S. dollars)
Total exports, f.o.b.6.05.25.25.95.14.9
China, People’s Republic of0.10.20.00.00.00.0
Germany1.10.80.00.00.01.0
Netherlands3.91.84.35.13.63.2
Portugal0.10.10.0 1/0.0 1/0.10.1
Other0.82.30.90.81.40.6
(In percent of total)
Total exports, f.o.b.100.0100.0100.0100.0100.0100.0
China, People’s Republic of2.13.90.00.00.00.0
Germany18.815.40.00.00.020.9
Netherlands64.734.682.786.470.563.9
Portugal1.01.90.70.61.92.0
Other13.444.216.613.027.613.2
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Less than US$0.05 million.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Less than US$0.05 million.

Table 30.São Tomé and Príncipe: Origin of Imports, 1991-96
199119921993199419951996

Est.
(In millions of U. S. dollars)
Total imports, c.i.f.30.628.132.030.429.324.8
Angola3.01.32.31.51.33.3
Belgium1.51.22.12.31.92.5
China, People’s Republic of0.50.50.50.30.00.3
France1.91.92.03.14.92.0
Gabon0:90.92.00.60.20.1
Germany0.10.10.40.80.60.3
Italy0.10.11.70.52.10.7
Japan2.12.03.11.64.22.5
Netherlands0.91.00.30.70.80.2
Portugal10.910.911.38.611.27.2
Spain1.71.90.20.10.10.5
United Kingdom0.00.00.10.30.21.1
Russian Federation0.00.00.00.00.00.0
Other7.26.45.910.02.04.1
(In percent of total)
Total imports, c.i.f.100.0100.0100.0100.0100.0100.0
Angola9.84.57.34.84.413.3
Belgium4.84.26.57.66.610.1
China, People’s Republic of1.51.91.60.90.01.2
France6.36.76.310.116.88.1
Gabon2.93.26.41.80.80.4
Germany0.20.31.22.62.21.2
Italy0.30.25.31.77.12.8
Japan6.87.29.85.414.210.1
Netherlands2.93.51.02.42.60.8
Portugal35.638.735.428.338.229.0
Spain5.56.80.50.40.42.0
United Kingdom0.00.00.21.10.84.4
Russian Federation0.00.00.00.00.00.1
Other23.422.818.632.87.116.5
Source: Data provided by the São Tomé and Príncipe authorities.
Source: Data provided by the São Tomé and Príncipe authorities.
Table 31.São Tomé and Príncipe: Export and Import Unit Value, and Terms of Trade Indices, 1991-96 1/(1987=100)
199119921993199419951996
Export unit value index69.062.671.986.390.396.7
Import unit value index 2/113.2114.9109.4112.6122.0120.3
Terms of trade61.054.465.776.674.080.4
Annual percentage change-4.1-10.720.716.6-3.48.6
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In U.S. dollar terms.

Calculated using export unit value indices of partner countries.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

In U.S. dollar terms.

Calculated using export unit value indices of partner countries.

Table 32.São Tomé and Príncipe: Indicators of External Public Debt, 1991-96 1/
199119921993199419951996
Est.
(In millions of U.S. dollars)
Disbursed medium- and long-term debt outstanding,
end of period155.8178.5197.4214.1226.8234.0
Of which Arrears33.337.444.651.223.629.3
Short-term debt outstanding, end of period35.837.839.831.326.831.8
Of which Arrears35.837.839.831.326.8)31.8
Total external debt outstanding, end of period191.6216.3237.2245.4253.6265.8
Of which Arrears69.175.284.482.550.361.1
Debt service due on medium- and long-term debt14.011.913.111.810.37.9
Interest6.34.95.55.55.54.7
Amortization7.77.07.66.34.63.2
Debt relief 2/1.73.11.411.929.90.0
(In percent of exports of goods and services)
External debt service
Before debt relief129.4116.1124.7101.0110.373.5
After debt relief113.386.2111.498.599.373.5
Cash settlements 3/28.826.823.816.624.426.6
Present value of external debt1,5951,4591,4221,6161,446
(In percent of GDP)
Total external debt outstanding, end of period
(including arrears)496.2475.8498.1495.2557.4592.1
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes IMF.

Current maturities and arrears rescheduled, refinanced, or forgiven.

Includes arrears.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Includes IMF.

Current maturities and arrears rescheduled, refinanced, or forgiven.

Includes arrears.

Table 33.São Tomé and Príncipe: Outstanding External Medium- and Long-Term Public Debt, 1991-96 1/(In millions of U.S. dollars)
199119921993199419951996
Est.
Total 2/155.8178.5197.4214.1226.8234.0
Of which Arrears33.337.444.651.223.629.3
Multilateral creditors 2/89.0108.4122.4136.1155.2162.2
Of which Arrears3.10.11.12.45.0
World Bank27.232.038.346.755.359.5
African Development Bank Group 3/46.060.566.872.280.983.8
Arab Bank for Economic
Development of Africa8.48.58.68.68.48.5
Other 2/7.47.58.78.610.610.5
Official bilateral creditors37.039.342.844.171.671.7
Of which Arrears10.512.714.415.918.623.5
China, People’s Republic of5.35.35.46.05.75.7
France6.47.78.69.19.89.2
Germany10.511.012.212.78.98.9
Russian Federation8.18.68.99.010.611.1
Other 4/6.66.77.77.336.636.8
Financial institutions24.725.526.227.50.00.0
Of which Arrears14.619.223.126.50.00.0
Portugal24.525.326.227.50.00.0
Other0.20.20.00.00.00.0
Suppliers’ credits5.25.46.06.40.00.0
Of which Arrears5.15.46.06.40.00.0
Portugal1.01.11.31.30.00.0
Other4.24.34.85.00.00.0
Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Debt with maturity of more than one year.

Includes IMF.

Includes African Development Fund.

Includes debt to Portuguese financial institutions that was assumed by the Portuguese government and rescheduled in March 1995.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff estimates.

Debt with maturity of more than one year.

Includes IMF.

Includes African Development Fund.

Includes debt to Portuguese financial institutions that was assumed by the Portuguese government and rescheduled in March 1995.

Table 34.São Tomé and Príncipe: Exchange Rates, 1988-96
Nominal effective

exchange rate

index 1/

(1992 = 100)
Official rate,

Db/US$;

period average
Bureau de change rate,

Db/US$;

period average
BISTP rate,

Db/US$;

period average
BCE,

Db/US$;

period average
Parallel market rate,

Db/US$;

period average
Differential

between the

official and

parallel

market rates 2/
Annual
1988282.286.3188117.8
1989225.9124.718246.0
1990197.0143.320744.5
1991161.4201.625627.0
1992100.0320.43303.0
199391.9429.955529.1
199465.3732.6812.990423.4
199532.11,420.31,4441,3931,5307.7
199621.52,203.22,3162,2102,2502,3466.5
Quarterly
1988 Q1301.475.1207175.6
Q2305.675.8193154.6
Q3365.496.518793.8
Q4256.597.816568.7
1989 Q1239.1111.816749.4
Q2224.3125.017237.6
Q3229.4125.219757.4
Q4211.1137.019340.9
1990 Q1204.7140.719236.5
Q2197.8146.921244.3
Q3191.6145.921043.9
Q4194.0139.821553.8
1991 Q1199.4142.921550.5
Q2182.2173.823032.3
Q3152.1214.726724.4
Q4112.0275.031313.8
1992 Q1107.4291.83158.0
Q2103.0308.33152.2
Q394.3323.53250.5
Q495.2358.03631.4
1993 Q195.0389.346318.9
Q292.6406.255035.4
Q391.0446.860435.2
Q489.0477.2592.260125.9
1994 Q179.5585.4648.865712.2
Q275.0624.6749.879226.8
Q357.8788.5858.01,00026.8
Q449.0932.0994.91,16725.2
1995 Q133.91,337.61,3541,3131,4004.7
Q235.81,234.91,2721,2211,2904.5
Q333.81,365.91,4081,3431,55013.5
Q426.01,742.91,7421,6941,8817.9
1996 Q124.71,874.71,991.71,884.02,053.79.5
Q221.32,219.62,427.62,220.62,103.42,439.19.9
Q320.22,309.12,349.12,306.82,326.42,346.31.6
Q419.52,409.22,494.22,426.92,410.02,546.35.7
Sources: Data provided by the São Tomé and Príncipe authorities; and staff calculations.

Trade-weighted.

In percent of the official rate.

Sources: Data provided by the São Tomé and Príncipe authorities; and staff calculations.

Trade-weighted.

In percent of the official rate.

Because of these changes in data coverage, however, comparisons across years should be made with caution.

A brewery (Rosema) and a hotel (Miramar) were temporarily closed for restructuring and refurbishment in connection with.their privatization in 1995, a transportation company (Transcolmar Terrestre) was liquidated, and production at two other public enterprises, a meat producer (Encar) and a textile company (Agua Grande), was scaled down.

In 1995 and 1996, improvement in data coverage on projects managed directly by foreign donors, which amounted to US$9 million and US$10 million, respectively, also contributed to a strong increase in absorption and a resulting decline in domestic savings relative to previous years.

The price of petroleum products remained constant from May 1996 to the end of the year, in contradiction with a predetermined price structure formula (Table 11). Nevertheless, the average price in 1996 was higher by 37 percent in the case of gasoline, and 52 percent in the case of diesel and kerosene than the average price in 1995 (Table 10).

Following the reelection of President Trovoada in July 1996, the coalition government was dissolved in mid-September, leaving a void that lasted until a new coalition was finally installed at end-November.

In fact, the credit window of this bank, which had extended a large number of nonperforming loans in 1994, was supposed to have been closed since September 1995.

Import data as prepared by customs continued to be deficient in several respects. For example, 1996 data supplied by ENCO indicated that imports of petroleum products were more than twice as high as those recorded by customs.

The substantial increase in the current account deficit in 1995 was largely due to better coverage of imports of services.

In December 1994, the central bank allowed the official rate to float by tying it to an average of market rates. The official exchange rate is calculated daily, based on the weighted buying and selling rates in the parallel, bureau de change, and commercial bank markets of the previous day. Also, exchange taxes on invisibles and on trade related exchange transactions were reduced in 1995.

Concerns about quality reflected mainly the need to diversify export partners since changes in eastern Europe, because, in the past, cocoa had been exported almost exclusively towards East Germany.

Typically, leasing contracts are for at least 10 years; they extend in some cases to 20 years.

Set initially at 70 percent, it was selectively reduced to 50 percent in May 1996 for exporters who were able to demonstrate the need for additional foreign exchange.

Access to financial services (both saving and credit instruments) had been limited almost exclusively to the main cocoa exporters, state enterprises, and the organizations in charge of investment programs.

At end-1996, deposits collected by rural savings and loans institutions and lending made by them reportedly represented less than 1 percent of demand deposits and credit to the private sector, respectively.

The lower share observed in 1996 (US$2.3 million) is mostly due to delays in disbursements resulting from the temporary accumulation of external arrears.

The evolution of personnel costs recorded by the Treasury, however, only accounts for part of the changes, as some personnel costs are recorded incorrectly as transfers to public entities (including salaries paid to deputies at the National Assembly) and as defense expenditure.

There were 132 positions identified as “political” positions.

The weights are based on the recorded dollar value of the previous day’s transactions in the commercial and bureaux de change markets, and an estimate of the dollar value of transactions in the parallel market. According to the central bank data, the vast majority of foreign exchange transactions are effected through the commercial bank, while the market share of the bureaux de change is virtually nil.

Currently, the BISTP does not remunerate these deposits, but it also chooses not to remunerate any other type of deposits.

The mandatory export surrender requirement was reduced to 50 percent on May 1, 1996, for exporters able to demonstrate a need for additional foreign exchange to finance imported inputs.

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