IMF Completes Second ECF Review for São Tomé and Príncipe, Approves $2.9m Disbursement
The Executive Board of the International Monetary Fund (IMF) has completed the second review under the Extended Credit Facility (ECF) Arrangement with São Tomé and Príncipe, approving an immediate disbursement of about SDR 2.1 million (approximately US$2.9 million).
This latest disbursement brings total IMF financing to São Tomé and Príncipe under the ECF programme to about US$13.7 million. The ECF Arrangement, approved on December 19, 2024, provides total access of SDR 18.5 million (around US$25.3 million), equivalent to 125 per cent of the country’s quota.
According to the IMF, the programme is intended to support economic rebalancing and strengthen medium-term growth prospects in an economy constrained by deep structural challenges. These include the country’s small size and remoteness, high exposure to climate risks, weak institutional capacity, a narrow export base, and sustained labour force losses through emigration.
The Fund noted that São Tomé and Príncipe is also contending with unfavourable demographic trends, a shock to electricity supply, and delays in the energy transition. As a result, economic growth projections have been revised downward to 2.1 per cent from an earlier estimate of 2.9 per cent. Inflation is expected to ease at a slower pace than previously anticipated, while an additional balance of payments gap has emerged.
Against this backdrop, the authorities have requested a 12-month extension of the ECF Arrangement, alongside an augmentation of SDR 4.44 million (about US$6.1 million), equivalent to 30 per cent of quota. This would raise total access under the programme to 155 per cent of quota and allow for a more gradual and less front-loaded fiscal adjustment path.
Programme performance has been assessed as broadly satisfactory. Four of the six end-June 2025 quantitative performance criteria were met. The IMF Executive Board approved waivers for the two missed criteria, citing the minor and temporary nature of the deviation on the domestic primary balance—linked to shocks in the energy sector—and corrective actions taken to address the accumulation of new external payment arrears.
On the structural front, of the 15 structural benchmarks assessed, five were met, three were converted into prior actions, and one was implemented with a delay.
Commenting on the review, IMF Deputy Managing Director and Acting Chair, Bo Li, said São Tomé and Príncipe has made progress on key reforms, including the adoption of a comprehensive domestic revenue mobilisation strategy and the submission of a draft Financial Institutions Law to Parliament.
However, he cautioned that the country’s economic recovery continues to face headwinds from demographic pressures, the ongoing energy crisis, and delays in the energy transition. These shocks, he noted, have weighed on growth, kept inflation elevated, and widened external financing needs.
Mr. Li underscored the importance of sustained fiscal consolidation anchored on stronger domestic revenue mobilisation, improved VAT administration, a rebalancing of the tax mix toward excise taxes, and enhanced public financial management to improve transparency and spending efficiency.
He also stressed the need for tighter monetary policy to contain inflationary pressures and called for the urgent appointment of all members of the new central bank board to fully operationalise the revised central bank law and implement key safeguards recommendations.
The IMF further welcomed the adoption of a new National Strategy for Sustainable Development, noting that its focus on human capital development, fiscal sustainability, and social protection is closely aligned with the objectives of the ECF-supported programme.
