IMF Executive Board Completes First Review of the Extended Credit Facility Agreement for the Democratic Republic of São Tomé and Príncipe
IMF Executive Board Completes First Review of the Extended Credit Facility Agreement for the Democratic Republic of SÃ£o TomÃ© and PrÃncipe
July 27, 2020
- Continued efforts to alleviate the heavy toll of the COVID-19 pandemic on the economy of SÃ£o TomÃ© and PrÃncipe remain essential.
- Program implementation got off to a good start at the end of 2019 and it will be essential to resume fiscal consolidation once the crisis is over.
- Intensifying structural reforms, especially for the energy sector and revenue mobilization, is essential for fiscal sustainability.
The Executive Board of the International Monetary Fund (IMF) today completed the first review of the Extended Credit Facility (ECF) arrangement for SÃ£o TomÃ© and PrÃncipe. The Council’s decision allows for the immediate disbursement of SDR 1.90 million (approximately US $ 2.67 million). The Council also today approved an increase in the ECF arrangement of SDR 1.48 million (approximately US $ 2.08 million or 10 percent of the country’s quota) to be disbursed immediately as well. This brings SÃ£o TomÃ© and PrÃncipe’s total disbursements under the arrangement to 5.29 million SDRs (approximately US $ 7.35 million).
The ECF agreement in the amount of SDR 13.32 million (approximately $ 18.15 million at the time or 90% of the country’s quota) was approved on October 2, 2019 (see press release n Â° 19/363) to support the government’s economic reform program. for stronger and more inclusive growth.
In April 2020, the Executive Board also approved emergency financing of US $ 12 million for SÃ£o TomÃ© and PrÃncipe under the Rapid Credit Facility (CRF) and IMF debt service relief. under the Containment and Disaster Relief Trust Fund (CCRT) to meet the external financing needs arising from the crisis. COVID-19 pandemic (see press release n Â° 20/179).
After the Council’s discussion, Mr. Tao Zhang, Deputy General Manager and Acting Chairman, made the following statement:
âThe performance of the FEC-supported program got off to a good start at the end of 2019. However, the COVID-19 pandemic has hit SÃ£o TomÃ© and PrÃncipe hard. The authorities responded by increasing health spending and providing targeted and temporary support to the households and sectors most affected. This temporarily increased the budget deficit.
âThe authorities are committed to resuming fiscal consolidation once the crisis has subsided in order to improve internal and external balances. In this context, it is essential to control the wage bill and complete the switch to VAT by mid-2021 to increase revenue and create space for social spending and public investment. The authorities also pledged to improve public financial management by publishing public contracts and a monthly report on COVID-19-related spending, as well as regularizing external arrears.
âIt will be important to continue financial sector reform, including the implementation of the recommendations of the Safeguards Assessment and the Asset Quality Review. It will also be crucial to redouble efforts to reform the energy sector in order to reduce debt vulnerabilities, strengthen energy security and support economic growth. It is also important to step up efforts to implement the recently adopted national strategy on gender equality, continue to adapt to climate change and develop a plan to remove the country from the blacklist of the world. EU in aviation safety.
IMF Lending Tracker (request for emergency financing approved by the IMF Executive Board)
IMF Executive Board Calendar