IMF Executive Board Concludes Third Review of Extended Credit Facility for São Tomé and Príncipe

0
  • The decision of the IMF Executive Board authorizes an immediate disbursement of approximately US $ 2.70 million to São Tomé and Príncipe to help meet the country’s financing needs, support social spending and post-pandemic recovery.
  • Exceptional international support and the rapid actions of the authorities are helping to cope with the health and socio-economic impacts of the COVID-19 pandemic.
  • Macroeconomic stability has been maintained and the performance of the Extended Credit Facility (ECF) program has been stable, although the pandemic has delayed some structural reforms.
  • Washington, DC: On August 27, 2021, the Executive Board of the International Monetary Fund (IMF) completed the third review of the Extended Credit Facility (ECF) arrangement for São Tomé and Príncipe. The Council’s decision allows for the immediate disbursement of SDR 1.90 million (approximately US $ 2.70 million). This brings São Tomé and Príncipe’s total disbursements under the arrangement to SDR 9.09 million (approximately US $ 12.91 million).

    São Tomé and Príncipe’s 40-month FEC agreement was approved on October 2, 2019 for an amount of SDR 13.32 million (approximately $ 18.15 million, or approximately 90% of the country’s quota) (see press release n ° 19/363). [1] The program aims to support the government’s economic reform program to restore macroeconomic stability, reduce debt vulnerability, ease pressures on the balance of payments and create the foundations for stronger and more inclusive growth.

    The second review was completed in February 2021, with a disbursement of approximately $ 2.73 million. The first review was completed in July 2020, with a disbursement of approximately $ 2.67 million, and at the same time, an increase in the ECF arrangement of $ 2.08 million was approved by the IMF Executive Board (see press release 20/272). In April 2020, the Executive Board also approved emergency financing of US $ 12 million for São Tomé and Príncipe under the Rapid Credit Facility (CRF) and IMF debt service relief. under the Containment and Disaster Assistance Trust Fund (CCRT) to meet external financing needs arising from the COVID-19 pandemic (see press release 20/179).

    Board assessment [2]

    Following the Board discussion, Mr. Bo Li, Deputy General Manager and Acting Chairman, made the following statement:

    “The rapid actions of the authorities and the international support have helped São Tomé and Príncipe to mitigate the impact of the crisis linked to the pandemic. However, uncertainties remain high and consistent and continuous program implementation and structural reforms as well as adequate immunization are essential to ensure more resilient, sustained and inclusive green growth.

    “The performance of the authorities’ program remains favorable, despite the difficult pandemic environment. Meeting immediate social and economic needs and implementing gradual fiscal consolidation are essential to support economic recovery and preserve debt sustainability. In this context, the introduction of VAT in 2021, the control of the dynamics of expenditure, in particular on staff, and the continued use of grants and highly concessional loans are essential.

    “The authorities’ efforts to promote greater transparency are welcome. Revising public procurement legislation to allow collection and publication of information on beneficial owners is an important step towards improving transparency, as well as completing COVID-related expenditure audit reports -19.

    “Monetary policy should support the exchange rate peg and the recovery. In this context, continued active liquidity management and efforts to strengthen the capacity to manage financial sector risks and vulnerabilities are important. A new legal framework for the central bank and the financial sector should also allow essential modernization.

    “In view of the recent electricity shortages, accelerating reforms in the energy sector would help provide a reliable and low-cost electricity supply, support the country’s development and growth potential, and reduce pressures on the country. public debt and foreign exchange reserves. The pursuit of large-scale structural reforms should also facilitate private investment, assist in the development of the tourism sector and promote more resilient and inclusive growth.

    Table 1. São Tomé and Príncipe: Main economic indicators, 2017-26

    (Annual percentage change, unless otherwise indicated)

    2017

    2018

    2019

    2020

    2021

    2022

    2023

    2024

    2025

    2026

    Second Rev.

    Proj.

    Second Rev.

    Proj.

    Proj.

    Proj.

    Proj.

    Proj.

    Proj.

    National income and prices

    GDP at constant prices

    3.9

    3.0

    2.2

    -6.5

    3.0

    3.0

    2.1

    2.9

    3.3

    3.5

    3.7

    4.0

    GDP deflator

    2.0

    2.6

    7.0

    4.0

    5.6

    4.0

    2.7

    2.0

    2.8

    2.9

    2.9

    3.9

    Consumer prices (End of period)

    7.7

    9.0

    7.7

    9.3

    9.4

    4.9

    8.4

    6.2

    5.0

    5.0

    5.0

    5.0

    Consumer price (average for the period)

    5.7

    7.9

    7.7

    9.9

    9.8

    5.6

    8.3

    7.8

    5.8

    5.2

    5.0

    4.4

    Trade

    Exports of goods and non-factor services

    -10.8

    13.9

    -1.9

    -47.3

    -46.3

    61.0

    18.4

    48.0

    23.4

    6.4

    9.0

    8.5

    Imports of goods and non-factor services

    5.5

    4.3

    -5.3

    -7.2

    -10.4

    8.5

    9.4

    2.9

    8.9

    4.5

    5.0

    5.8

    Exchange rate (new dobras per US $; end of period) 1

    20.7

    21.5

    22.0

    20.1

    Real effective exchange rate (period average, depreciation = -)

    4.9

    8.8

    5.3

    5.7

    Money and credit

    Basic money

    -9.6

    0.8

    -7.4

    22.6

    31.0

    -6.6

    -10.8

    1.3

    13.8

    Broad money (M3)

    -0.4

    14.3

    -2.2

    1.2

    10.9

    7.1

    7.5

    5.2

    6.3

    Credit to the economy

    2.5

    -1.6

    3.2

    1.9

    -1.6

    0.5

    0.4

    4.7

    5.5

    ….

    ….

    Speed ​​(GDP in broad money; end of period)

    3.1

    2.9

    3.0

    3.0

    2.8

    3.0

    3.0

    3.0

    3.0

    Central bank benchmark interest rate (%)

    9.0

    9.0

    9.0

    9.0

    Average bank loan rate (percentage)

    19.6

    19.9

    19.1

    19.1

    Public finances (as a percentage of GDP)

    Total revenues, subsidies and oil signing bonuses

    24.9

    24.1

    22.0

    28.2

    25.3

    21.5

    25.7

    24.8

    24.0

    23.9

    23.8

    23.5

    Of which: tax revenue

    12.7

    12.8

    12.3

    14.5

    13.1

    14.8

    13.3

    14.4

    14.9

    15.1

    15.5

    15.6

    Non-tax revenue

    1.7

    3.1

    3.3

    2.5

    2.4

    2.9

    2.5

    2.8

    2.5

    2.7

    2.8

    3.0

    Subsidies

    10.5

    8.3

    6.4

    11.2

    9.7

    3.8

    9.9

    7.6

    6.6

    6.1

    5.5

    5.0

    Total expenditure and net loans

    27.6

    26.0

    22.1

    25.0

    23.1

    23.5

    27.2

    24.2

    25.0

    24.4

    24.0

    23.8

    Personnel costs

    8.3

    9.3

    9.0

    10.9

    9.3

    11.1

    10.0

    9.8

    9.6

    9.5

    9.5

    9.5

    Interest due

    0.5

    0.4

    0.7

    0.5

    0.3

    0.4

    0.4

    0.4

    0.4

    0.3

    0.3

    0.2

    Current expenditure excluding salaries excluding interest

    6.9

    7.0

    7.5

    8.4

    7.2

    8.3

    7.4

    7.3

    7.2

    7.2

    7.3

    7.3

    Capital expenditure financed by the Treasury

    0.7

    1.4

    0.1

    0.3

    0.2

    0.3

    0.3

    0.4

    0.4

    0.4

    0.4

    0.7

    Capital expenditure financed by donors

    11.0

    7.8

    4.7

    1.3

    3.0

    1.4

    7.4

    6.1

    7.2

    6.7

    6.3

    5.9

    Capital expenditure linked to the HIPC Initiative

    0.2

    0.1

    0.1

    0.2

    0.1

    0.2

    0.2

    0.2

    0.2

    0.2

    0.2

    0.2

    COVID-19 Expenses

    3.5

    2.9

    1.7

    1.5

    Domestic primary balance 2

    -2.4

    -4.2

    -1.8

    -5.3

    -3.2

    -3.9

    -3.5

    -2.0

    -0.2

    0.3

    0.6

    0.6

    Net domestic borrowing

    1.8

    3.4

    -1.5

    -1.7

    -1.7

    4.3

    1.3

    -0.1

    -1.0

    -1.0

    -1.0

    -1.1

    Overall balance (commitment basis)

    -2.7

    -1.9

    -0.1

    3.2

    2.2

    -2.0

    -1.5

    -0.5

    -1.0

    -0.5

    -0.2

    -0.3

    Public debt 3

    81.1

    93.2

    99.9

    103.0

    87.4

    101.4

    87.9

    86.5

    84.3

    80.9

    76.8

    71.2

    Of which: EMAE debt to ENCO

    19.6

    23.3

    28.9

    31.5

    24.2

    32.9

    26.0

    29.0

    29.5

    29.1

    27.9

    26.5

    External sector

    Current account balance (percent of GDP)

    Including official transfers

    -13.2

    -12.3

    -12.1

    -17.4

    -14.1

    -16.3

    -11.3

    -7.5

    -6.7

    -6.3

    -6.0

    -5.7

    Excluding official transfers

    -24.3

    -21.0

    -18.5

    -28.6

    -23.9

    -20.1

    -21.2

    -15.1

    -13.3

    -12.4

    -11.5

    -10.7

    PV of external debt (percentage of GDP)

    31.5

    26.6

    27.2

    32.2

    25.4

    30.0

    24.4

    24.2

    23.9

    23.3

    22.6

    21.7

    External debt service (percentage of exports) 4

    3.8

    2.6

    4.5

    8.5

    5.0

    7.5

    11.6

    8.4

    6.8

    8.7

    9.0

    7.4

    Export of goods and non-factor services (US $ millions)

    86.1

    98.0

    96.2

    50.7

    51.7

    81.6

    61.2

    90.5

    111.7

    118.9

    129.5

    140.5

    Gross international reserves 5

    Millions of American Dollars

    51.4

    35.1

    40.4

    54.7

    67.6

    58.1

    63.4

    70.3

    72.0

    75.1

    76.6

    76.5

    Months of imports of goods and services

    3.1

    2.2

    2.8

    3.5

    4.3

    3.6

    4.0

    4.0

    3.9

    3.9

    3.8

    3.8

    Months of imports of goods and non-factor services 6

    4.2

    3.0

    4.0

    5.1

    6.4

    5.0

    5.7

    5.9

    6.0

    6.1

    5.9

    6.2

    National Oil Account (US $ millions)

    11.3

    19.5

    18.8

    16.2

    16.6

    13.2

    13.5

    12.5

    10.2

    8.3

    6.8

    5.6

    Memorandum item

    Gross domestic product

    Millions of new dobras

    8,154

    8,619

    9.424

    8.976

    10.247

    9.615

    10,750

    11,281

    11,972

    12,748

    13,602

    14,693

    Millions of American Dollars

    375.8

    415.6

    430.7

    418.1

    477.3

    478.2

    533.6

    572.9

    616.4

    662.2

    711.0

    771.6

    Per capita (in US dollars)

    1,842

    1.989

    2,022

    1,918

    2.190

    2,144

    2,393

    2,524

    2.657

    2.794

    2.938

    3.002

    Sources: data from the authorities of São Tomé and Príncipe and estimates and projections by IMF staff.

    1 Central Bank Median Rate (BCSTP).

    2 Excludes petroleum-related income, subsidies, interest earned, scheduled interest payments, and foreign-funded capital expenditures.

    3 Total public and state guaranteed debt as defined in the DSA, which includes EMAE debt to ENCO (and excludes government arrears to EMAE due to consolidation).

    4 Percentage of exports of goods and non-factor services.

    5 Gross international reserves exclude the National Petroleum Account and foreign currency deposits of commercial banks at BCSTP in order to meet reserve requirements, for new licenses and to meet capital requirements.

    6 Imports of goods and services excluding imports of capital goods and technical assistance.


    [1] US dollar exchange rate on the date of approval

    [2] At the end of the discussion, the Managing Director, in his capacity as Chairman of the Board, summarizes the points of view of the Executive Directors, and this summary is sent to the country’s authorities. An explanation of all the qualifiers used in the abstracts can be found here: https://www.IMF.org/external/np/sec/misc/qualifiers.htm.

    / Public distribution. This material is from the original organization and may be ad hoc in nature, edited for clarity, style and length. See it in full here.


    Source link

    Leave A Reply

    Your email address will not be published.