The International Monetary Fund (IMF) on Monday approved the disbursement of $4.6 million to São Tomé and Príncipe to respond to COVID-19 economic crisis.
The IMF approved two disbursements for São Tomé and Príncipe under the Extended Credit Facility (ECF) arrangement. The first approval was for $2.6 million while the second one was an augmentation of the ECF arrangement by $2.08 million.
Both approvals bring São Tomé and Príncipe’s total disbursements under the arrangement to $7.35 million.
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São Tomé and Príncipe’s ECF arrangement for $18.15 million at the time was approved on October 2, 2019 to support the government’s economic reform program for stronger and more inclusive growth.
In April 2020, the Executive Board also approved US$12 million emergency financing for São Tomé and Príncipe under the Rapid Credit Facility (RCF) and IMF debt service relief under the Catastrophe Containment and Relief Trust (CCRT) to address external financing needs arising from the COVID-19 pandemic.
Mr. Tao Zhang, Deputy Managing Director and Acting Chair, the country’s performance under the ECF-supported program was off to a good start in late 2019, however, the Covid-19 pandemic impacted São Tomé and Príncipe hard.
Looking ahead, Zhang said, “it is essential to keep the wage bill under control and complete the transition to the VAT by mid-2021 to increase revenue and create space for social spending and public investment.”
“It will be important to continue financial sector reform, including implementing the recommendations of the safeguards assessment and the asset quality review. It will also be crucial to redouble efforts to reform the energy sector to reduce debt vulnerabilities, strengthen energy security, and support economic growth. Enhancing efforts to implement the recently adopted national strategy on gender equality, continuing to adapt to climate change, and developing a plan to remove the country from the EU air safety blacklist are also important,” he said.