1.1. Centralized economy period

11. After winning national independence on July 12, 1975, São Tomé and Príncipe kept the colonial productive structure inherited from the Portuguese with almost no alterations until 1987. The economy was based on a cocoa monoculture, which came to be run by state farms after the Roças nationalizations of September 30, 1975. The state became the principal producer, with a concentration of over 90 percent of the country’s agricultural land. Similarly, health and all other sectors, both social and economic, were centralized under the government of São Tomé.

12. From the early 1908s, the decapitalization of state farms and the extremely low living standards of agricultural workers in all social spheres (housing with no decent amenities for cohabitation, hence overcrowding, no basic sanitation, no sanitation services to state farm outbuildings), combined with low wages, led to an irreversible rural exodus.

13. Wage earners (whole families in some cases) abandoned the state farms in numbers that would accelerate the process of disorganized urbanization of the second half of the 1980s and the beginning of the 1990s. The result was a compounding of rural poverty with urban and suburban poverty.

1.2. Economic liberalization

14. The liberalization of the economy started in 1985. In 1987, the first structural adjustment program was officially launched with financing from the World Bank in the amount of US$17 million. A similar agreement was reached with the IMF (June 1989) for a loan of SDR 2.8 million.

15. Agriculture was one of the first sectors of the economy to benefit from WB credit. All in all, the results fell far short of the objectives targeted. An ambitious program to privatize agricultural and non-agricultural public enterprises was introduced, leading to the partial or total liquidation or privatization of the vast majority of public enterprises. Between 1988 and 1997, real GDP growth was positive but remained below population growth, thus the process of real impoverishment continued, though the GDP growth rate finally caught up with population growth in 1998.

16. Despite positive trends in some macroeconomic indicators, the country’s external debt situation more or less deprived it of any external negotiating capacity. In 1992–1999, the debt increased at a fast rate, moving from US$172 to US$294 million, of which US$168.1 million was multilateral debt and US$125.9 million was bilateral debt, as shown in the table below:

Table 1.

Development of São Tomé

Source: First National Seminar on External Debt Analysis and Strategy (October 19–31, 2000)

Table 1.

Development of São Tomé

Period under review	1992	1993	1994	1995	1996	1997	1998	1999
External debt stock	172.0	185.4	205.5	238.0	229.5	238.3	275.7	294.0
Multilateral	111.1	122.4	142.9	159.3	162.3	162.9	162.3	168.1
Bilateral	60.9	63.0	62.6	78.7	67.2	75.4	113.4	125.9

Source: First National Seminar on External Debt Analysis and Strategy (October 19–31, 2000)

View Table

Table 1.

Development of São Tomé

Period under review	1992	1993	1994	1995	1996	1997	1998	1999
External debt stock	172.0	185.4	205.5	238.0	229.5	238.3	275.7	294.0
Multilateral	111.1	122.4	142.9	159.3	162.3	162.9	162.3	168.1
Bilateral	60.9	63.0	62.6	78.7	67.2	75.4	113.4	125.9

Source: First National Seminar on External Debt Analysis and Strategy (October 19–31, 2000)

17. In 2000, the economic situation of São Tomé and Príncipe continued to be very difficult. There was a huge fiscal deficit, the burden of the external debt and its service became increasingly heavy, export revenue declined owing to a fall in prices on the international market. The primary balance ratios of the state budget shrank progressively from 1996 to 2000 and continue to be negative, making it difficult for the government to take any meaningful action in the social area and on behalf of the poor using its own resources. Interest on the debt also trended upward, thereby aggravating the government’s financial situation.

18. However, the government’s efforts produced encouraging results in some important indicators: i) the inflation rate dropped sharply to 9.6 percent (from 80.5 percent in 1997); ii) the exchange rate to the dollar (US$) stabilized (with a parallel market differential of less than 5 percent). Based on the results obtained in terms of economic and financial rehabilitation, the country was able to secure the conditions for negotiating the issue of the external debt and debt sustainability with its bilateral and multilateral partners and reached the decision point of the HIPC Initiative in December 2000.

19. Thus, from 2001, the country has been benefiting from the financial resources released from payment of the debt, which have been used to finance projects and actions in the social sector (health and education) and in infrastructure. It should be noted that, besides the rural sector, these are the sectors hardest hit by poverty in São Tomé and Príncipe.

1.3. General characteristics of poverty

20. The first attempts to measure poverty in the country date back to the late 1980s and the first half of the 1990s. Indeed, the “Report on the Poverty Line” (1987–1990) funded by UNDP and published in January 1991 and the “Poverty Line in São Tomé and Príncipe” (1991–1994) published in March 1995 provided the first elements of poverty analysis. Both studies used the cost of basic needs (CBN) method. A number of estimates were made in the absence of more reliable data, which compromised the reliability and compatibility of the statistics with later studies. Nevertheless, the worsening of the situation is noticeable in the external manifestations of poverty (“street children” phenomenon, abandonment of minors, decline in the gross enrolment rate at the basic education level, etc.).

21. The survey of household living conditions, which was the basis for defining the “Profile of Poverty in São Tomé and Príncipe” (November 2000 to February 2001) used the average returns (AR) method, and determined that the poverty line in São Tomé and Príncipe was Dbs. 2,.638,618 per year (around US$294/year). This amount covers the barest minimum—daily meals and some nonfood expenses (clothing, housing, fuel for preparing meals).

22. Thus, the income available for other basic expenditure, especially education and health of the household, are practically nonexistent.

23. In the case of housing, three important factors must be stressed (a): -i) the fact that the share of the poor’s resources allocated to this basic need diminished during the period 1991–1994 from 6.3 percent to 2.7 percent; -ii) property ownership arrangements-the poor are merely tenants, with very tenuous property relationships, as the parties normally have an honor commitment with nothing in writing, much less a contract, making it possible for landlords to demand that tenants vacate the property within three weeks; and, -iii) there are no recent comparison factors, as a result of which developments in the situation of the poor with regard to housing over the last seven years are unknown.

1.3.1. Developments in monetary poverty and living conditions

24. The “Report on the Poverty Line” (1987–1990), funded by UNDP and published in January 1991, reported that the situation in the health services had worsened considerably due to the lack of resources needed to import medicine and materials, and to improve the existing infrastructure. Diseases such as malaria and cholera, which had practically disappeared, re-emerged with a vengeance and became endemic, culminating in the cholera epidemic of 1989. Infant mortality had risen. Poverty began to be visible, affecting 41 percent of the total population in 1990, up from 36 percent in 1987.

25. A second study financed by the same institution (UNDP) “The Poverty Line in São Tomé and Príncipe” (1991–1994), published in March 1995, confirmed the trend. In fact, the index rose to 48 percent in 1992.

26. This report identified the socioeconomic groups most vulnerable to poverty, namely:

1. agricultural workers;

2. low-level civil servants;

3. fishermen and vendors;

4. female heads of household; and

5. senior citizens living alone (over 60 years old).

27. More recently, the study on the “Profile of Poverty in São Tomé and Príncipe” (November 2000-February 2001), conducted with the technical support of the ILO and funding from UNDP and AfDB, published in May 2001, confirmed the rural exodus and the resulting accelerated urbanization. Thus, the urban population, estimated at 44 percent of the total population in 1992, rose to 54.5 percent in 2001, according to the third RGPH. Close to 1/3 of Sãotomean families are headed by women. Families with 4–7 members make up 57 percent of the total population while bigger families (with 8 or more members) total 26.7 percent.

28. According to the same study, 53.8 percent of the total population in the country lives in poverty, more so households headed by women (55.7 percent) than those headed by men (53 percent). 15.1 percent of São Tomé’s population lives in extreme poverty. The average size of a household is inversely proportional to its income; thus the average household with 6.43 persons is extremely poor, while families with 3.78 members are considered not poor.

29. Regarding the poverty of basic living conditions (access to education, health, drinking water, environmental sanitation, and housing), the study concluded that 11.8 percent of the population had never been to school. It was also found that illiteracy increases with the degree of poverty; 9.6 percent of the nonpoor population is illiterate in comparison with 12.9 percent of poor people and 15.9 percent of the extremely poor. In the area of health, the study observed that health care increases with income levels. Thus, 23.2 percent of nonpoor sick people visited a doctor in a private clinic, as opposed to just 8.7 percent of poor sick people, and only 2 percent of the extremely poor. There situation of pipe-borne water nationwide is disastrous; only 19.6 percent of the total population has access to pipe-borne water. 9.2 percent of extremely poor households have pipe-borne water in comparison with 13 percent of poor households, and 25.5 percent of nonpoor households. Environmental sanitation is also in a lamentable state. A mere 16 percent of households in São Tomé have septic tanks connected to a public sewer system. 69 percent of the people relieve themselves in the open air.

30. Combining the results of the last two surveys of household living conditions yields the following results:

Table 2.

Structure of Poverty Line Expenditure in São Tomé and Príncipe

(in percent)

Sources: Data for 1991–1994 taken from “The Poverty Line in São Tomé and Principe (1991–1994)” data for 2000/2001 taken from “Profile of Poverty in São Tomé and Principe” (November 2000 to February 2001) AfDB, May 2001.

Table 2.

Structure of Poverty Line Expenditure in São Tomé and Príncipe

(in percent)

Type of Expenditure	1991	1992	1993	1994	2000/2001
					Extremely Poor	Poor	NonPoor
Food	73,0	74,6	75,0	84,1	81,7	79,1	66,17
Education	0,8	1,9	2,0	1,2	1,2	1,6	2,09
Health	3,1	3,9	4,3	3,1	3,2	3,5	5,33
Housing (renting a home)	6,3	5,7	5,4	2,7	____	____	____
Other expenses	16,8	13,9	13,3	8,9	13,9	15,7	26,41
TOTAL	100	100	100	100	100	100	100

Sources: Data for 1991–1994 taken from “The Poverty Line in São Tomé and Principe (1991–1994)” data for 2000/2001 taken from “Profile of Poverty in São Tomé and Principe” (November 2000 to February 2001) AfDB, May 2001.

View Table

Table 2.

Structure of Poverty Line Expenditure in São Tomé and Príncipe

(in percent)

Type of Expenditure	1991	1992	1993	1994	2000/2001
					Extremely Poor	Poor	NonPoor
Food	73,0	74,6	75,0	84,1	81,7	79,1	66,17
Education	0,8	1,9	2,0	1,2	1,2	1,6	2,09
Health	3,1	3,9	4,3	3,1	3,2	3,5	5,33
Housing (renting a home)	6,3	5,7	5,4	2,7	____	____	____
Other expenses	16,8	13,9	13,3	8,9	13,9	15,7	26,41
TOTAL	100	100	100	100	100	100	100

Sources: Data for 1991–1994 taken from “The Poverty Line in São Tomé and Principe (1991–1994)” data for 2000/2001 taken from “Profile of Poverty in São Tomé and Principe” (November 2000 to February 2001) AfDB, May 2001.

1.4. Determinants of poverty

1.4.2. Socially

53. In recent years, education and training have received considerable amounts of funding from both international cooperation partners and from domestic sources. During the period 1990–1995, external assistance represented 12.5 percent of the resources for education and 14.5 percent for training.

54. In the 2000–2001 school year, 22,270 students were enrolled in primary school—11,577 boys and 10,689 girls.

55. The percentages reflecting the distribution of the school population by district in the country are high for the districts of Água Grande and Mé Zóchi (39 percent and 40 percent in 2000–2001), but are still at the 7- and 4-percent levels for Lembá and the autonomous region of Príncipe, respectively.

Source: Preliminary Study of the School Map, 2000

District	1999–2000 School Year	2000–2001 School Year
Água Grande	39 percent	40 percent
Mé-Zóchi	26 percent	25 percent
Cantagalo	9 percent	9 percent
Caué	4 percent	4 percent
Lobata	10 percent	11 percent
Lembá	7 percent	7 percent
Príncipe	4 percent	4 percent

Source: Preliminary Study of the School Map, 2000

View Table

District	1999–2000 School Year	2000–2001 School Year
Água Grande	39 percent	40 percent
Mé-Zóchi	26 percent	25 percent
Cantagalo	9 percent	9 percent
Caué	4 percent	4 percent
Lobata	10 percent	11 percent
Lembá	7 percent	7 percent
Príncipe	4 percent	4 percent

Source: Preliminary Study of the School Map, 2000

56. The existence of secondary schools in all the districts of the country does not mean that they are easily accessible to the entire school-age population at that level of education. Geographic dispersal, poor accessibility, the scarcity and high cost of transportation, are factors that determine access to education.

57. All school facilities are overcrowded, and the state has been unable to ensure that buildings are repaired and that more are constructed to meet the growing demand.

58. Teachers at almost all levels of education have a relatively low level of academic qualifications overall, and have practically no teacher training.

59. Virtually nonexistent public transportation and the sometimes considerable distances that children have to travel are conditions that affect their attendance at classes and are at the root of the high proportion of school dropouts.

60. In the area of health, the main problems arise in prevention of such diseases as malaria, acute respiratory ailments, and dysentery, which are the main causes of mortality and morbidity in the population.

61. Malnutrition is also one of the primary causes of death among children under 5 years old, estimated at around 15 percent.

62. Nutritional anemias—iron deficiency—resulting in low hemoglobin levels have been detected in more than 60 percent of the population surveyed. The index of premature births (low birth weight) stands at 15.2 (MICS/2000).

63. Furthermore, the supply of drugs in São Tomé and Príncipe is flawed and unstable. The drug supply system is affected by a number of deficiencies within the health system.

64. Up until 1960, 60.9 percent of the population of São Tomé was in the 15–59 age group. This trend was reversed in 1970, with the result that 46.9 percent of the population was in the 0–14 age group in 1991 and 42.1 percent in 2001.

65. This proportion of youth in the population added to the over-65 population (4.4 percent in 1991 and 4.3 percent in 2001) led to a high dependency rate (51.3 percent in 1991). A young population also implies greater demand for infrastructure and social services and heavy pressure on the labor market.

66. The urbanization process is observable mostly in the Água Grande district, followed by Mé-Zóchi. The Água Grande population grew from 15 percent of the total population in 1960 to 36.5 percent in 1991 and 37.7 percent in 2001. According to the last census, the populations of Água Grande and Mé-Zóchi combined represent 63.2 percent of the total population.

2.1. Strategic vision in the short, medium, and long terms

81. Taking into account the main determinants of poverty and based on an optimistic scenario derived from national long-term perspective studies, the strategy seeks to significantly reduce poverty by the horizon of 2015, through optimal use of the country’s human, natural, and physical resource potential, as well as bilateral and multilateral cooperation.

2.2. Overall medium-and long-term objectives

82. By implementing the actions established in each of its pillars, the strategy should achieve the following overall medium- and long-term objectives:

• - Reduce the percentage of the São Tomé population (53.8 percent) living in poverty to half by 2010 and to less than 1/3 by 2015;

• - Provide access to basic social services for the entire population by 2015 and promote improvement in the quality of life;

• - Considerably reduce the social and gender gaps between the districts in São Tomé and between these and the autonomous region of Príncipe.

5. The actions under the different pillars of the strategy are responsive to the targets set in pursuit of the Millennium Development Goals (MDGs), provided that the government is committed to the process of reaching these targets.

2.3. Basic pillars of the strategy

83. Besides recognizing that economic growth is key to poverty reduction, given the effect it has of creating employment and income that can be invested in sectors which directly or indirectly help improve the living conditions of the poor, the promotion of a policy of good governance was selected as an absolute priority.

84. This strategic option seeks to respond to the need to consolidate the democratic rule of law and defend human rights, customize and build the capacity of institutions and public administration agencies, strengthen mechanisms for accountability and reporting, and promote a culture of participation by citizens in making decisions to solve their problems.

85. This choice of priorities seeks to ensure that the conditions are present for a viable commitment to the poverty reduction strategy and to making any adjustments required as the socioeconomic situation and levels of poverty in the country change.

6. Thus, a poverty reduction strategy in São Tomé and Príncipe revolves around the following five basic pillars:

• - Reforming public institutions, capacity building and promotion of a policy of good governance

• - Accelerated and redistributive growth

• - Creating opportunities to increase and diversify income

• - Developing human resources and access to basic social services

• - Mechanisms for monitoring, assessing, and updating the strategy

2.4. Risks of the strategy

95. First, it requires political stability and the normal functioning of institutions, which are also intrinsic components of the strategy itself. It is important that, in the short term, the causes of the institutional conflicts that occurred in the past be removed.

96. Secondly, to attain the objectives of this strategy, there must be involvement and commitment on the part of all the organs of sovereignty, as well as the principal agents of development, both public and private, to creating the momentum for implementation of the various stages of the strategy, in a participatory, coherent, and organized framework, without losing sight of the need for systematic control, which is difficult to achieve in situations where confidence in and among members of the executive branch has been eroded.

97. The participation/commitment of bilateral and multilateral partners is also of paramount importance, as they must make available the necessary resources and other support for funding and implementation at each stage.

98. And, finally, in view of the fact that initiatives in the area of oil are ongoing, there is the risk of conflict with certain actions taken under the new guidelines for governance, which are incompatible with the strategic vision advocated for poverty reduction within the established time frame.

99. These risks may still be overcome, as long as the political will for implementation remains firm, and provided that efforts at consensus building among various social agents are revived in order to reach a consensus on priority actions in each successive stage.

3.1. Consolidation of the democratic rule of law

100. Prerequisites of consolidation of the democratic rule of law are:

• - Broad consensus on constitutional review, in order to clarify ambiguous provisions, namely those concerning the separation of powers and functions of each organ of sovereignty, and to remove potential sources of conflict among institutions;

• - Restoration of the authority of the government by building capacity for law enforcement and maintenance of public order in a democratic society, and through initiatives to inform the public and raise awareness about standards of civic and moral conduct;

• - Reorganization of the National Assembly based on acceptance by consensus of the need for it to be commensurate with the size of the country and to guarantee effective representation in accordance with the most realistic political/administrative divisions. In that connection, serious thought needs to be given to defining the job profile of a deputy, in order to guarantee more balanced representation of the various constituencies or electoral districts.

• - A respectable and proportionally representative number of women should be encouraged and become the norm. Furthermore, this position should be strengthened with training initiatives to ensure that parliamentarians are qualified in the different areas that require their intervention within the framework of the National Assembly’s specific missions, including those of its various commissions.

• - Design and establishment by law of the composition of government, basing the demands of central government on economic, social, and cultural realities and on the human and financial resources available for its effective operation. With this in mind, the key ministries that must be part of the composition of any government should be determined.

• - Strengthening of the judicial system and structures, with a view to promoting their effectiveness, closer contact with vulnerable and unprotected citizens, and public confidence in the independence of the judiciary. For this purpose, it is imperative that the justice system be treated with the dignity it deserves, as well as its magistrates, administrative, or technical personnel. Administration of justice in the context of strategic poverty reduction should not only give precedence to the protection of basic human rights and guarantee safety, but it should also help promote the equality of citizens before the law, combat gender discrimination, violence against women, and corruption.

101. This brings to mind the military and paramilitary forces in particular. The problems they pose in the context of a small, insular country should be given special attention and should be the subject of an exchange of views among the diverse actors in the country’s political, social, and economic life.

102. This exercise in reflection should lead to the adoption of a country-specific strategy of national defense, which is compatible with poverty reduction efforts and facilitates the offering by consensus of a package of services that would effectively guarantee the sovereign rights of the nation of São Tomé.

3.2. Promotion of responsible, effective, and transparent management of public assets

103. Public asset management is one of the areas where results could determine whether intervention is targeted to the poorer or more vulnerable social groups.

104. But inefficient management of public assets and deficiencies in the functioning of the courts are usually cited among the problems facing the country.

105. Thus, for good economic governance consistent with the goals of poverty reduction, a national poverty reduction strategy must include the following measures:

– “Broadcast” through the media and other means of communication, the importance and need for responsibility, transparency, and accountability in the management of public assets;

– Strengthen the mechanisms for preparation, drafting, approval, and execution of the General State Budget, taking into consideration that budgetary choices must have an impact on strategic poverty reduction actions;

– Promote accountability and periodic reporting by government revenue collection departments;

– Accelerate the establishment and operation of the Court of Audit and provide it with the human and physical resources that would enable it to function independently, particularly in the areas of combating fraud and corruption;

– Proceed to inventory all public assets and allocate them to revenue collectors, who are responsible for regular accounting.

3.3. Adjust the decentralization process and reorganize local government

106. With a view to long-term decentralization, one must not lose sight of the size of the country, the number of inhabitants, or its economic potential, which should form the basis for mapping out the new political and administrative divisions, to avoid unnecessary costs associated with the proliferation of representation structures at the local level.

107. In this area as well, problem solving seems to be more affected by political will than the obstacles encountered in the laws regulating the existing local government structures and operations. Taking the current situation into account, the strategy considers the following actions pertinent:

• - Review and/or update legal instruments, the Constitution, and the law on political and administrative divisions, which govern the organization, structure, and functioning of the local government authorities;

• - Urgent need to create a local government inspection unit, which is essential for the government to exercise supervision under the law. This unit would have specific functions not covered by the existing Financial Inspectorate;

• - Create mechanisms for internal coordination within government in response to the need to work together in land and environmental development;

• - Study and establish procedures to execute the proposed deconcentration of basic social services for constituents in the districts, and make these services more accessible to the public;

• - Define support mechanisms at the Chambers’ request when they do not have their own resources to implement projects;

• - Plan, prepare, and organize elections at the regional and local government levels, with a view to reinstating regular democratic processes, respecting the will of the electorate;

• - Support the local governments so that, in conjunction with the private sector and organized civil society, they can play a fundamental role in the socioeconomic, cultural, and environmental development of the localities, taking into account the aspirations of the respective populations.

3.4. Resize and modernize public administration

108. Successive diagnostic studies of public administration in the country pointed to a number of institutional constraints, including ineffective human resource management, unsuitable or unapplied administrative processes, poor statistical information systems, and weak coordination of aid.

109. An effort to reorganize and modernize public administration should review in the short and medium terms:

• - Adjustment to the government’s new missions as it withdraws from the productive sphere;

• - Effective decentralization of services, to bring them closer to the public, taking into account capacity building to meet the needs of the population in reorganizing regional and local government services;

• - Precise guidelines on the mission and functioning of each institution to avoid overlapping;

• - Adequate staff development and training as needed for proper administration;

• - Acquisition of adequate physical resources and capital goods;

• - Institutionalization of mechanisms for regular reporting at every possible level;

• - Wage levels that are more compatible with the qualifications demanded, as a means of instilling discipline and efficiency and overcoming vulnerability to corruption, and to restore the dignity of the civil service;

• - Mandatory organization and periodic updating of statistical data on developments in the different sectors, with technical assistance and supervision from the National Statistics Institute.

3.5. Promotion of civil society and its active involvement

110. With a view to revitalizing organized civil society and fostering its involvement in promoting good governance, in partnership with the government and the private sector, the following must be taken into account:

• - Build the technical and organizational capacity of the representatives of civil society by providing concrete support, namely in the areas of social and cultural infrastructure (cultural and recreational centers, meeting halls, libraries, etc.), credit and professional training policies;

• - Development of a strategy for NGO intervention in response to poverty reduction strategy priorities;

• - Promote dialogue on questions requiring consensus;

• - Promote a public awareness and mobilization campaign that would have the advantage of enabling active involvement in all the issues concerning initiatives to improve the living conditions of the poor.

3.6. Development of mechanisms for access to information and communication and promotion of a culture of participation

111. The strategy of participation and communication regarding poverty reduction in São Tomé and Príncipe will require close coordination with information, education, and communication (IEC) campaigns. In that regard, the strategy must envisage:

• - Promoting an interactive campaign of advocacy and IEC that is broad in scope;

• - Increasing the access of poor communities to information so that they can participate in monitoring local activities;

• - Improving the quantity and quality of information that reaches the public;

• - Diversifying the media through the responsible contributions of private agencies;

• - Improving the operation of government agencies;

• - Normalizing the operation of the Superior Press Council;

• - Incentives to promote a love of reading in schools and communities;

• - Promoting the use of new information and communication technologies (NICT) in the localities (mobile telephones, Internet, etc.).

112. More so than for rest of the national anti-poverty strategy, the success of this pillar in particular is predicated on the promotion of a far-reaching and intensive literacy campaign, including education on health and cultural, moral, and ethical values throughout the country (civic education). This action, combined with an extensive information process, involving the media, will help improve the capacity for intervention by citizens and will enhance overall participation.

4.1. Stimulate private sector development

114. The main sections of the action plan that intersect with promoting the private sector are:

1. Deepening the reform of the legal and judicial framework for business, namely by revising labor law to adapt it to the new economy, revising the investment code, and implementing a set of measures to improve the environment for the private sector, such as improving domestic transportation infrastructure; diversification and safety of the means of communication with the outside world; finding ways to reduce factor costs; consolidating the banking and insurance sector; simplifying administrative procedures; or improving investment incentives;

2. Developing trade relations, leading to a policy of more open economic and financial cooperation, in particular with the countries of the subregion;

3. Continued tax reform to make taxation simpler and more flexible for enterprises;

4. Enhancing the jurisdiction of the regulatory authorities and its applicability to telecommunications; passing acts implementing the law on competition; and establishing market regulation mechanisms;

5. The government’s commitment to a firm policy in the main priority sectors, in particular agriculture, livestock, and tourism, with a view to augmenting growth, diversifying production, diversifying and increasing job opportunities and income by means of suitable labor-intensive policies.

4.2. Savings and investment

115. All aspects of the economic and financial context, such as market size, limited infrastructure, low levels of saving, and an ill-adapted credit system have discouraged economic operators from investment projects.

116. Thus the government, in conjunction with civil society, will take action to create an environment conducive to private investment and domestic saving.

4.3. Sectoral strategies of the key traditional economic sectors and subsectors^(I)

4.4. Macroeconomic framework

146. The recent economic history of São Tomé e Príncipe reflects the importance the authorities have placed on a stable macroeconomic framework for economic growth. In early 1998, a series of macroeconomic policy and adjustment measures were implemented, which contributed to fiscal consolidation, reduced inflation, advanced the process of liberalization of the economy, and lowered the differential between the exchange rates on the official and parallel markets.

147. Despite the progress made, the external vulnerability of the economy continues to be a concern. The burden of the public external debt is high and per capita income is very low, in addition to which, structural problems continue to pose problems for economic growth and private investment.

148. Under the strategy, poverty reduction will only be possible through real GDP growth, for which the participation of all sectors of the society, particularly those that can generate income and employment opportunities for the poor is vital. Access to credit and productive assets is also extremely important.

149. The economic growth strategy is based on expansion of the private sector and diversification of production. The public sector is still dominant and accounts for almost 70 percent of national production. The challenge is to create conditions that would enable the private sector to be the engine of growth and employment creation. For that purpose, a broad-based privatization program has already been put in place, a new investment code has been prepared, and more extensive and business-friendly fiscal reform is about to be concluded.

150. With a view to increasing export revenue and creating new employment opportunities for the poor in the rural areas, the government prepared sectoral strategies for the agriculture, infrastructure, and tourism sectors.

151. To facilitate accelerated economic growth, the government will make its policies within a macroeconomic equilibrium framework derived from structural reforms that target private sector development and economic diversification. The medium-term macroeconomic framework (2003–2005) sets the GDP growth rate at 5 percent for the period and projects a reduction in inflation from 9.2 percent in 2002 to 8 percent in 2003 and 4 percent in 2005. The nominal exchange rate will continue to be market-determined. By adopting these objectives, the government will create a favorable environment for the NPRS and will reach decision point under the HIPC Initiative more easily.

152. The government will give the highest priority to ensuring that the primary deficit is in line with the macroeconomic framework. This objective, which guarantees fiscal discipline, diminishes the threat of inflation resulting from the scarcity of financial resources in the country and the limited capacity to absorb expenditure, and also creates an environment conducive to the development of private sector activity.

153. For the period 2003-05, fiscal policy will be conducted with a view to maintaining the primary deficit, including the HIPC Initiative, at 7 percent of GDP. To attain this goal, the government will continue its efforts to raise revenue from oil-related activities and will adequately control primary expenditure. As regards revenue, the tax system is to be simplified and tax and customs exemptions will be limited. Financial and customs inspection and audit units will be strengthened to better combat fraud and corruption. On the expenditure side, the government will prioritize programs related to poverty while current expenditure, exclusive of interest, shall be set at 10 percent of GDP for the period 2003-05. Wage bill expenditure will be set at 9 percent of GDP.

154. The reduction in inflation, which most heavily penalizes the poor, will be backed by the central bank, which will control the growth of domestic assets by sterilizing a large proportion of the resources coming from the oil sector. Credit to the private sector is expected to increase in line with the economic growth estimated in the Poverty Reduction Strategy and also by means of open market operations to be started in 2003. In this way, broad money would increase at a rate consistent with the maintenance of gross international reserves equivalent to four months of imports. To that end, banking supervision will be enhanced.

155. The structural reforms prepared with the assistance of the IMF and WB, include a wide range of measures to make public policy more efficient and transparent. These include, notably: privatization of public enterprises; continuous adjustment of the prices of oil derivatives, as well as water and energy, to reflect production costs while protecting the most vulnerable groups; and various reforms to strengthen the education and health services.

156. The São Tomé and Príncipe economy could be dominated by oil-related investments. The government estimates that the licensing round for oil exploration in the joint exploration zone with Nigeria could take place in 2003; investments in oil exploration will be stepped up in 2003-06 and exploration will begin in 2006. During that period, the current account deficit (excluding official transfers) may be four times greater than GDP with massive flows of foreign direct investment. As offshore oil exploration and funds go into a special account, the inflationary pressure will be minimized and the dobra, in real effective terms, might even appreciate slightly.

157. The government is determined to distribute the wealth derived from oil exploration equitably between this generation and future ones. Considering that oil reserves are limited, the government has firmly decided to conserve this wealth for future generations as well. To that end, there will be transparent management of the fund in which all income from oil exploration will be deposited and the results of the periodic audits will be published. Basically, the government intends to ensure the efficient, transparent, and effective management of these resources, which contribute to reducing poverty, improving living conditions for citizens, and guaranteeing saving, within the framework of action envisaged for sustainable and lasting human development.

158. In the short and medium terms, São Tomé and Príncipe will continue to depend on external assistance and concessional credit to finance its external account deficits, which are clearly manifested in the wide gap between imports and exports. Overall, the export diversification strategy could improve the trade balance. There are already some promising results, for example, in the production of beer, palm oil, flowers, fish, taro, coconuts, and tropical fruit, in addition to small ruminants. As long as the situation continues to be delicate, São Tomé and Príncipe will need the support of the international community to finance the balance of payments deficit. The required flows of assistance are estimated at US$5.1 million for 2003, US$4.8 million in 2004 and US$4 million in 2005. These inflows of capital will be supplemented by direct foreign investment.

5.1. Increased and diversified production

160. The rural world is the greatest employer (over 50 percent) and virtually the sole producer of export revenue, but it also has the highest incidence of poverty. As a result, the government is stepping up a number of measures in partnership with the local governments and nongovernmental organizations (NGOs) in each district with a view to:

• - Fostering economic activities that generate employment, self-employment, income, promoting the emergence and development of microenterprises in agricultural, livestock, and forestry production, industrial processing, cottage industry, trade, and services;

• - Helping to improve the population’s diet by increasing productive activity, technical-occupational training, education, and health;

• - Reducing the socioeconomic disparities between the two islands and the various districts, seeking to adopt a plan of physical land management in which spaces in the national territory will be used, to the extent possible, in accordance with their environmental advantages, natural suitability, and socioeconomic infrastructure;

• - Creating four poles of socioeconomic development in accordance with the national physical development plan and the natural and human potential of each district, namely in the capital, in Lembá, in Portalegre and in the autonomous region of Príncipe;

• - Supporting policies on urban and environmental development, and restructuring of rural areas;

• - Developing ferry services;

• - Acquiring the proper equipment to supply the necessary energy for each stage of general and agroindustrial development;

• - Implementing an irrigation program that includes the construction of reservoirs (micro-dams) for use when rainfall is low and in periods of prolonged drought, taking steps to prevent the possible negative effects on public health, such as the proliferation of mosquitoes, which are vectors of malaria;

• - Supporting small farmers in gaining access to factors of production;

• - Regulating the ownership rights of small farmers who received plots of land;

• - Providing incentives, credit, support with agricultural implements, and extension;

• - Furthering customs, fiscal, financial, and agrarian reform;

• - Laying the foundations of a new model of infrastructure management, in particular in the water, energy, and communications sectors;

• - Implementing free zones;

• - Rehabilitating the social and economic infrastructure (highways, rural roads, water, energy, sewage, research and survey stations);

• - Exploring the country’s natural resources in a balanced and rational manner;

• - Reviving and making profitable the former training centers that still exist (CATAP, Água Izé, Uba Budo, Polytechnic Center, and others).

5.2. Political measures

173. Of the multiplicity of actions to be taken by the state and private sectors, special emphasis should be placed on the following:

• - Alternative market studies to guarantee better use of the external market;

• - Negotiations between the STP government and other governments of arrangements for the free movement of persons and goods between countries, with a view to regional and international integration;

• - Drafting of legislation to regulate and provide a legal framework for commercial activity and to protect the rights of the consumer;

• - Tailoring a policy mainly to supporting small business, in partnership with the Chamber of Commerce, Industry, Agriculture and Services, and the private sector in general, as key partners in the development process.

5.3. Policies to Promote Microfinancing and Microenterprises

174. The government will form partnerships with economic operators individually or in groups, to:

• - consolidate the rural savings and loan associations that already exist in rural communities;

• - create credit unions of merchants, farmers, craftspeople, and fishermen;

• - set up teams of local professionals trained in the methodology and techniques of microfinancing, to support and monitor the growth of microfinance funds;

• - implement a national microcredit program;

• - strengthen existing associations and production and marketing cooperatives;

• - promote activities that create employment and self-employment;

• - develop occupational training in the areas of agriculture, livestock, fishing, trade, agroindustrial construction, integrated into the general school curricula;

• - conduct a study aimed at assessing basic needs in terms of occupational training in the sectors under reference;

• - draft a framework law, which defines the role and different types of partners in occupational training activities;

• - draft a national policy and action plan for occupational training, covering the capital and other localities.

5.4. Safety nets for the poorest and most vulnerable

175. The incidence of poverty in STP (1 in every 2 Sãotomean lives below the poverty line) and its severity (15.1 percent of the population lives in conditions of extreme poverty) has had a more marked effect on the most vulnerable groups.

176. This fact further justifies the implementation for a relatively long period (up to 10 years) of specific policies and programs to protect the most vulnerable populations. The government’s strategy in this area should have two facets: (i) the general, meaning food security, and (ii) the specific, namely combating social marginalization in urban areas.

177. The elderly, who make up almost 5 percent of the country’s total population, are almost always systematically left out of all processes in the country, with the exception of election campaigns. There is the need to design, draft, and implement a National Policy for Senior Citizens, to provide them the support needed for their proper integration into society and validation as social beings.

6.1. Education, Literacy, Training

6.2. Health, Nutrition, and Population

6.3. Water

187. A large portion of the population, mainly in rural areas, still does not have access to drinking water and uses river water or water from existing springs without any protection or control.

188. The strategy here seeks to increase the rate of access to water supply systems for the public and to improve the quality of water supplied to both urban and rural areas.

6.4. Sewage

189. There are still serious problems with environmental sanitation that are a major threat to public health and have had the following effects, among others:

• - high morbidity and mortality rates related to water-borne diseases;

• - proliferation of vectors of malaria and other diseases:

• - threat of epidemics related to unhealthy conditions;

• - environmental pollution caused by trash and human waste having a serious impact on health and the economy.

190. In light of this, the following objectives have been established in accordance with the National Environmental Plan for Sustainable Development:

• - raise to 100 percent the rate of coverage of solid waste collection and transportation in urban and peri-urban areas;

• - provide sanitary facilities to 100 percent of houses nationwide;

• - properly inventory all swamp areas in São Tomé and Príncipe so that a coherent policy on such areas can be defined;

• - rehabilitate old drainage systems for disposing of rainwater in the city of São Tomé and construct new systems;

• - promote a campaign of healthy habits and lifestyles.

7.1. Mechanisms for monitoring, evaluation, and updating

191. The NPRS is an ambitious project, notwithstanding its relevance and the urgent need for its implementation. However, its execution touches almost all sectors of life in the country and poses a challenge for coordination between the state, the private sector, and organized civil society, taking into account current institutional weaknesses and volume of resources required for the task. A general coordination unit is needed to make the connections and have an overview of all the actions to be taken.

7.2. Poverty Monitoring and Evaluation System

192. The design, preparation, and definition of indicators needed to monitor poverty depends first of all on the information requirements stipulated, in light of the specific objectives of the policy to combat poverty in the country.

193. It is therefore highly advisable to create an adjustable and flexible structure, which can evolve over time to better respond to the demands of the stages ahead, and designed to take on projects and studies on a regular and ongoing basis. It should also be able to act as the institution that monitors, coordinates, assesses, and periodically updates the strategy (NPRS), in cooperation and partnership with other national, regional, and international institutions, as it would be responsible for setting up and coordinating the Poverty Monitoring and Evaluation System in the country.

194. However, given the country’s current constraints, particularly as regards financial, and logistical difficulties and weaknesses linked to the reporting of statistical data, it might be advisable to use the existing capacity in the Economic Planning Directorate of the Ministry of Planning and Finance initially, and to organize a team to install Poverty Monitoring and Evaluation System units throughout the country. These would evolve into an autonomous structure with its own authority, responsive to the duties and functions for which it was created.

7.3. Measurement of poverty and the different data needed to assess its development in the country

195. The type of information needed on monetary poverty, living conditions, and potential is based on a certain number of indicators that reflect income and consumption levels, the food situation, education, health and sanitation, housing, and other basic needs.

196. Thus, in order to scrupulously meet the medium- and long-term objectives of the strategy (NPRS) Quantitative Objectives for Reducing Poverty in the country were developed (see Annex 2) for measuring, monitoring, and assessing the problem in São Tomé and Príncipe. Naturally, this is only one basis for the work, to which the missing data will have to be added and improvements made in areas where they are needed.

8.1. Prior Issues

199. This chapter addresses the budgetary framework for the resources needed to implement the Action Plan. Budget projections were made for the period 2003–2010 (8 years). However, the analysis of the budgetary implications of the NPRS was restricted to the period 2003–2005.

200. The principal limitations and factors determining projections are as follows:

• 1. Exogenous factors: The degree of uncertainty of the macroeconomic projections to 2015, taking into account the world economic outlook and its impact on the availability of resources for development assistance and tourism flows;

  2. Endogenous factors: The impact of the inclusion of oil resources in the economic and social matrix, as regards economic growth and redistribution of national income. The most optimistic scenarios point to a radical change in the structure of macroeconomic indicators starting in 2006, which makes it impossible to construct homogenous and consistent statistical series for more than two to three years ahead. This limitation highlights the pressing need for cyclical indicators and economic monitoring;

  3. The spread of HIV and other endemic diseases could be a factor that belies population projections and resource allocation;

  4. Changes in attitudes and behaviors as regards the individual motives of citizens and the ruling class in terms of consumption patterns, understandings on equity, equality, opportunities, etc.

  5. One must still take account of the conceptual limitations of the indicators used, namely the concept of per capita GDP, which does not reflect the changes in income redistribution in the NPRS target groups.

  6. Even taking into account these limitations, the budgetary impact of the strategy, as measured by the weight of the priority sectors in the PIP and OGE 2002, is an adequate indicator confirming the importance the government places on the poverty reduction strategy in its policy mix.

8.2. Priority Action Areas

201. Education, health, infrastructure (roads, energy, and water), agriculture and rural development, good governance and economic and financial policies were defined as strategic sectors of the NPRS and warranted more detailed budgeting for the following reasons:

1. The initiatives and actions of citizens and institutions require that the administration take the appropriate measures, which would necessitate a change in behaviors. This is particularly true for action in the areas of good governance, drafting legislation, and access to justice. Deconcentration and decentralization involve the enhancement of local authority, which promotes greater interaction between populations and institutions in the fight against poverty through socioeconomic development.

2. Financial and macroeconomic policies are fundamental for ensuring better allocation of domestic resources, and transparency in the preparation and implementation of the budget and the PIP. The efficiency of the fiscal machinery is an important factor of the policies for redistributing the wealth generated by productive process in which the poorest segments of the population contribute the most.

3. Human resource development is the main contributing factor in the identifying specific actions to be implemented by economic agents and institutions. Education and health are vital components of the behaviors and skills that foster efficiency in work, increased production of goods and services, and their distribution. In connection with education, basic education and literacy, in addition to technical-occupational training, are important in the NPRS.

4. The availability of infrastructure, in particular roads, energy, and water is the determining factor in implementation. It facilitates the mobility of factors of production, improves the productive process, expands the market, mostly access to basic health and sanitation services. Tourism, which is of crucial importance to development, was also considered vital to the NPRS owing to the high gross value added it generates and the natural environment the country offers. It is also assumed that economic growth driven by the private sector is a prerequisite of poverty reduction. At the same time, if poverty reduction policies are properly implemented, they contribute decisively to economic growth.

5. Taking into account that the majority of the poor population lives in rural areas, in addition to giving priority to the income generation component (agriculture, livestock, forestry), living conditions can only be improved by human development and the creation of community infrastructure.

202. The selection and ranking of priority actions was based on the following criteria:

(i) the recognition, coming out of the consultative process undertaken with beneficiaries and civil society, that the action contributes to well-being;

(ii) ability to generate sustainable economic growth and vital importance to sectoral strategies;

(iii) economic, financial, and institutional viability—the actions promote a sound social and political climate and macroeconomic stability.

8.3. Impact of the oil economy

203. In the short term, revenue from “leasing blocks” cannot have a direct impact on the real economy and consequently on GDP growth. In the initial years (2003–2006), as there will be no prospects for export production, the impact will be felt only on domestic demand and investment variables. As a result of the excess liquidity in the economy, the prices of essential items could soar in the absence of sufficient internal production capacity. This scenario may create pockets of poverty with a higher incidence among rural populations, urban dwellers with low levels of education, senior citizens, and women.

204. The most optimistic scenario is based on the hypothesis that resources from the oil sector are injected into the national economy primarily for: (i) development of human capital (basic education, training, health); (ii) strengthening the rural economy through community infrastructure, ensuring that population distribution is balanced, and avoiding imports of goods that are produced locally at lower prices and that have a strong impact on the formation of gross value added; (iii) acquisition and construction of basic equipment that promotes productivity and an “economic base” that is balanced and diversified—energy, support services for the oil economy (light metal mechanics, repairs, transportation), agricultural techniques, the hospitality industry; and finally (iv) development of innovation and management capacity in business and institutions.

8.4. Required resources

205. Taking into account the principles and criteria stated above, actions under the NPRS were allocated the following resources by objectives (PILLARS):

Programming by Objectives and Priority Sectors

(value in thousands of US$)

Programming by Objectives and Priority Sectors

(value in thousands of US$)

PILLARS/SECTORS	TOTAL 2003–2010	percent	PERIOD 2003–2005	percent
1–Institutional Reform, Capacity Building, and Good Governance incl.: Justice	2,109.4 919.4	1.1 0.5	948.0 262.0	1.5 0.4
2–Economic and Redistributive Growth incl.: Energy Water and Sanitation	45,165.4 29,252.0 11,226.8	22.3 14.4 5.5	20,025.7 7,488.0 9,480.0	31.8 12.0 15.1
3–Income-Generation Opportunities incl.: Agriculture, livestock, fishing, forestry Infrastructure	106,999.4 52,921.2 54,078.2	52.8 26.1 26.7	20,804.9 12,222.1 8,582.7	33.1 19.4 13.6
4—Access to Basic Social Services incl.: Education Health, Nutrition, and Population Employment, Training, and Solidarity	46,280.9 22,836.7 19,851.2 3,593.0	22.8 11.3 9.8 1.8	19,631.1 7,876.5 10,491.6 1,263.0	31.2 12.5 16.7 2.0
5– Analysis, Monitoring, and Assessment	2,035.6	1.0	1,472.1	2.4
TOTAL	202,590.7	100	62,881.8	100
Percentage of total			31.0
Per capita investment (US$)

View Table

Programming by Objectives and Priority Sectors

(value in thousands of US$)

PILLARS/SECTORS	TOTAL 2003–2010	percent	PERIOD 2003–2005	percent
1–Institutional Reform, Capacity Building, and Good Governance incl.: Justice	2,109.4 919.4	1.1 0.5	948.0 262.0	1.5 0.4
2–Economic and Redistributive Growth incl.: Energy Water and Sanitation	45,165.4 29,252.0 11,226.8	22.3 14.4 5.5	20,025.7 7,488.0 9,480.0	31.8 12.0 15.1
3–Income-Generation Opportunities incl.: Agriculture, livestock, fishing, forestry Infrastructure	106,999.4 52,921.2 54,078.2	52.8 26.1 26.7	20,804.9 12,222.1 8,582.7	33.1 19.4 13.6
4—Access to Basic Social Services incl.: Education Health, Nutrition, and Population Employment, Training, and Solidarity	46,280.9 22,836.7 19,851.2 3,593.0	22.8 11.3 9.8 1.8	19,631.1 7,876.5 10,491.6 1,263.0	31.2 12.5 16.7 2.0
5– Analysis, Monitoring, and Assessment	2,035.6	1.0	1,472.1	2.4
TOTAL	202,590.7	100	62,881.8	100
Percentage of total			31.0
Per capita investment (US$)

206. In the short term (2003–2005), the actions that generate income, centered on basic infrastructure and primary sector activities, absorb 64.9 percent of the resources. Activities related to access to basic social services account for 31.2 percent of the total, with education and health having virtually the same weight.

207. Another important factor to recall is the change in the relative weight of expenditure on education and health, which represented, respectively, 9 percent and 7 percent of current expenditure in the OGE and are now estimated at 13 percent and 17 percent.

208. Noticeably, only 31.0 percent of the total cost of the actions planned is concentrated in the period 2003–2005, which is indicative of the difficulties with medium-to-long-term planning and the underlying limitations on execution capacity in the sectors in the initial stages of implementation of the strategy.

Programming by Objective (2003–2005)

Citation: IMF Staff Country Reports 2005, 332; 10.5089/9781451835069.002.A001

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Programming by Objective (2003–2005)

Citation: IMF Staff Country Reports 2005, 332; 10.5089/9781451835069.002.A001

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Programming by Objective (2003–2005)

Citation: IMF Staff Country Reports 2005, 332; 10.5089/9781451835069.002.A001

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• Download figure as PowerPoint slide

Programming by Type of Resources

(in thousands of US$)

Programming by Type of Resources

(in thousands of US$)

CATEGORIES OF EXPENDITURE	TOTAL 2003–2010	percent	PERIOD 2003–2005	percent
1–Civil Engineering	107,006.3	52.8	26,987.5	42.9
incl.:
Classrooms	12,056.2	6.0	2,131.2	3.4
Health Infrastructure	3,820.4	1.9	509.9	0.8
Road Infrastructure	49,308.7	24.3	6,124.2	9.7
Water and Sanitation	12,673.4	6.3	10,784.6	17.2
2–Goods	36,960.6	18.2	10,669.0	17.0
incl:
Plant Material	13,353.0	6.6	1,415.7	2.3
Foodstuffs	1,159.7	0.6	379.5	0.6
Textbooks and Education	1,030.5	0.5	397.0	0.6
Supplies	5,469.1	2.7	1,638.7	2.6
Medicine, Equipment, and Health Supplies
3– Services	26,323.8	13.0	11,548.9	18.4
incl.:
National Technical	15,318.0	7.6	3,244.5	5.2
Assistance	7,026.7	3.5	6,000.5	9.5
International Technical	1,539.6	0.8	1,146.6	1.8
Assistance	705.3	0.3	599.4	1.0
Studies	1,734.1	0.9	558.0	0.9
Legislation
Information Systems
4– Training	7,968.8	3.9	2,628.1	4.2
incl.:
Teacher Training	2,022.7	1.0	311.3	0.5
Occupational Training	5,703.8	2.8	2,169.4	3.5
5– Other resources, n.i.e.	24,331.2	12.0	11,048.3	17.5
TOTAL	202,590.7	100	62,881.8	100

View Table

Programming by Type of Resources

(in thousands of US$)

CATEGORIES OF EXPENDITURE	TOTAL 2003–2010	percent	PERIOD 2003–2005	percent
1–Civil Engineering	107,006.3	52.8	26,987.5	42.9
incl.:
Classrooms	12,056.2	6.0	2,131.2	3.4
Health Infrastructure	3,820.4	1.9	509.9	0.8
Road Infrastructure	49,308.7	24.3	6,124.2	9.7
Water and Sanitation	12,673.4	6.3	10,784.6	17.2
2–Goods	36,960.6	18.2	10,669.0	17.0
incl:
Plant Material	13,353.0	6.6	1,415.7	2.3
Foodstuffs	1,159.7	0.6	379.5	0.6
Textbooks and Education	1,030.5	0.5	397.0	0.6
Supplies	5,469.1	2.7	1,638.7	2.6
Medicine, Equipment, and Health Supplies
3– Services	26,323.8	13.0	11,548.9	18.4
incl.:
National Technical	15,318.0	7.6	3,244.5	5.2
Assistance	7,026.7	3.5	6,000.5	9.5
International Technical	1,539.6	0.8	1,146.6	1.8
Assistance	705.3	0.3	599.4	1.0
Studies	1,734.1	0.9	558.0	0.9
Legislation
Information Systems
4– Training	7,968.8	3.9	2,628.1	4.2
incl.:
Teacher Training	2,022.7	1.0	311.3	0.5
Occupational Training	5,703.8	2.8	2,169.4	3.5
5– Other resources, n.i.e.	24,331.2	12.0	11,048.3	17.5
TOTAL	202,590.7	100	62,881.8	100

8.5. Sources of Financing

209. The budget was broken down by sources of financing only in 2003. If this exercise is to be continued in subsequent years, the Medium-Term Expenditure Framework (MTEF) must be in place.

210. Implementation of the activities planned for 2003 will require raising US$22,519,727 with sources of financing divided as follows:

Sources of Financing	Amount in US$	Percent
Treasury	240,671	1.07
HIPC Funds	2,678,930	11.90
Guaranteed External Credits	4,712,655	20.93
Guaranteed Grants	10,013,282	44.46
Resources from Public Enterprises	151,000	0.67
Activities without financing—credits and grants to be mobilized	4,723,190	20.97
Total	22,519,728	100.00

View Table

Sources of Financing	Amount in US$	Percent
Treasury	240,671	1.07
HIPC Funds	2,678,930	11.90
Guaranteed External Credits	4,712,655	20.93
Guaranteed Grants	10,013,282	44.46
Resources from Public Enterprises	151,000	0.67
Activities without financing—credits and grants to be mobilized	4,723,190	20.97
Total	22,519,728	100.00