The Sao Tome and Principe authorities would like to express their appreciation to Management and staff for the swift response to their request for emergency financial support under the Rapid Credit Facility (RCF) to help mitigate the social and economic impact of COVID-19 pandemic.
The performance under the current Extended Credit Facility (ECF) program, approved in October 2019, has been broadly positive, with significant achievements in fiscal consolidation and implementation of some structural reforms, including the adoption of the VAT Law. Preliminary data attests that all end-December 2019 performance criteria (PCs) were met and most structural benchmarks (SBs) were implemented, except one related to the state-owned utility company (EMAE).
Like any small and fragile island State facing the global health crisis, the economy of Sao Tome and Principe came to a standstill amid mandatory shutdowns. As a result, economic activity is falling drastically, and significant financing gaps are emerging. Against this backdrop, the authorities are requesting an emergency financing under the RCF in the amount of SDR 9.028 million, representing 61 percent of Sao Tome and Principe’s quota, to cover the exceptional balance of payments and fiscal needs. They are convinced that the Fund assistance will help support the budget, enhance international reserves and hence pave the way for a quick economic recovery in key sectors when the pandemic fades out. The IMF disbursement will also play a catalytical role in mobilizing assistance from other development partners.
Our authorities remain strongly committed to the program supported by the ECF arrangement. They will continue to work closely with the IMF to maintain broad macroeconomic stability during the pandemic.