São Tomé and Príncipe has reached a staff-level agreement with the International Monetary Fund on the second review of its economic program under the Extended Credit Facility (ECF). The agreement reflects steady progress in restoring fiscal stability, strengthening public finances, and maintaining moderate inflation despite external challenges.
The IMF noted that economic recovery continues gradually, supported by prudent policy implementation and stronger governance measures. Real GDP growth for 2025 is projected at about 3.2 percent, driven by activity in services, agriculture, and construction. Inflation has eased in recent months as fuel prices stabilized and monetary conditions tightened.
Authorities reaffirmed their commitment to reforms aimed at consolidating fiscal balances and improving the efficiency of public spending. Efforts to modernize tax administration and enhance digital payment systems are helping increase domestic revenue collection. The government also reiterated its goal of maintaining debt sustainability through better management of state-owned enterprises and transparent procurement.
The review highlighted that São Tomé and Príncipe continues to advance reforms in financial supervision and anti-money-laundering compliance. These steps are designed to strengthen the banking sector’s resilience and safeguard financial stability. The authorities are also improving public debt reporting and aligning fiscal targets with their medium-term development strategy.
The IMF emphasized that continued fiscal discipline is essential to reduce vulnerabilities and protect social spending. Ongoing reforms under the ECF focus on building policy buffers, supporting inclusive growth, and advancing climate adaptation projects that address the island nation’s exposure to external shocks.
The government’s 2025 budget proposal reflects a commitment to macroeconomic prudence while prioritizing infrastructure, education, and healthcare investments. Development partners have expressed confidence that these measures will help strengthen resilience and attract private investment.
Analysts view the agreement as a positive signal to investors and donors that São Tomé and Príncipe remains on a credible reform path. While challenges persist particularly from limited fiscal space and climate-related risks the country’s consistent policy execution has helped stabilize the economy and rebuild confidence in the local financial system.
The IMF board is expected to consider the staff-level agreement in the coming weeks. Upon approval, São Tomé and Príncipe will gain access to additional concessional financing, supporting its balance-of-payments needs and furthering economic recovery efforts.
With continued reform momentum and prudent economic management, São Tomé and Príncipe is positioning itself for more durable growth and stronger resilience to external shocks. The IMF’s latest review underscores that disciplined fiscal policy and governance reforms remain central to the country’s medium-term stability.
