- IMF says São Tomé holds reform line despite energy crisis and oil-price shock
São Tomé and Príncipe has preserved a measure of macroeconomic stability despite a punishing energy crisis and a worsening external environment, according to the International Monetary Fund, which said most of the quantitative targets under the country’s Extended Credit Facility programme had been met at the third review stage.
In an end-of-mission statement issued on April 9, IMF staff said discussions with the authorities on the third review of the 52-month ECF arrangement had been productive, with “significant progress” recorded on a range of macro-structural reforms even as the small island economy remained under strain.
The Fund said growth remained subdued at just 1 per cent in 2025, reflecting the drag from persistent electricity shortages, tight monetary conditions and broader vulnerabilities. Inflation, however, has eased into single digits, a development the IMF partly attributed to monetary restraint.
That progress, though, is fragile. IMF staff cautioned that the war in the Middle East and the resulting oil shock could yet reverse some of the gains made under the programme, with higher fuel costs threatening both inflation dynamics and the broader growth outlook.
“São Tomé and Príncipe faces persistent disruptions in electricity supply and delays in the energy transition, while an uncertain external environment, including higher global oil prices, continues to weigh on the outlook,” the IMF said.
That formulation captures the dilemma facing the authorities. On one hand, they are trying to defend macroeconomic stability under a pegged exchange-rate regime, while on the other, they must manage the fiscal and external costs of an unresolved domestic energy crisis. For a small import-dependent economy, those pressures are mutually reinforcing.
The IMF said the government remains committed to the objectives of the Fund-supported programme approved by its Executive Board in December 2024. That commitment, the Fund noted, includes pursuing an ambitious medium-term fiscal adjustment designed to address high public debt and restore balance to the economy.
In the Fund’s assessment, fiscal consolidation remains the central policy lever available to the authorities. Under a currency peg, the space for macroeconomic adjustment is narrower, making fiscal discipline and tight monetary policy the main anchors of stability. But the IMF also made clear that fiscal adjustment alone will not be enough if the structural problems in the energy sector remain unresolved.
“Accelerating reforms in the energy sector is essential to alleviate pressures on the fiscal position and public debt, sustain the recovery in foreign exchange reserves, and unlock sustained growth,” the mission statement said.
That is perhaps the clearest message to emerge from the review. The energy crisis is no longer simply a service delivery failure; it has become a macro-critical issue affecting debt dynamics, reserve recovery, and the country’s medium-term growth capacity.
Even so, the Fund struck a broadly constructive tone. It said the programme continues to play a “pivotal role” in supporting macroeconomic stability, advancing structural reforms, and catalysing support from other development partners. That endorsement matters for São Tomé and Príncipe, which relies on IMF programme performance to maintain its reform credibility and access to concessional external support.
The mission, led by Slavi Slavov, held meetings in São Tomé from March 26 to April 8 with senior political and economic officials, including President Carlos Vila Nova, Prime Minister Américo d’Oliveira dos Ramos, Finance Minister Gareth Haddad do Espírito Santo Guadalupe, Natural Resources Minister Nelson Mário Cardoso and central bank governor Agostinho Fernandes, as well as private sector and civil society representatives.
