São Tomé and Príncipe Gets $17.4m Budget Support from AfDB
The Board of Directors of the African Development Bank Group has approved $17.4 million in grants for Sao Tome and Príncipe to shore up the national budget and enhance public service delivery as part of the economic response to support public finance and energy sector reforms following several external shocks.
The government will receive $10.7 million divided evenly over fiscal year 2023 and fiscal year 2024 under the Fiscal Sustainability and Economic Resilience Program (FSERP), approved on 1 December.
A separate complementary grant of $6.7 million to strengthen budget execution and delivery of public services under the Institutional Support Project for Customs Administration and Public Expenditure Management (ISP-CAPEM), was approved on 28 November.
“After supporting the response to the COVID pandemic with a historic budget support operation in 2020, this operation aims to stabilize the economy from its aftershocks and crucially to kick start a set of reforms for Sao Tomé and Príncipe achieve energy sovereignty,” said Mr. Pietro Toigo, the Bank’s Country Manager for São Tomé and Príncipe.
FSERP has two elements: the first to enhance domestic revenue, public expenditure efficiency, and debt transparency. The second targets greater accountability in the energy sector, better corporate governance and the rollout of new incentives for private investment. It will leverage synergies with ongoing Bank operations in agriculture and energy.
Energy supply and quality has been a key constraint to the country’s economic growth, service delivery and private sector development. The reforms are expected to enable the country’s transition towards renewable energy and reduced dependency on imported fossil fuels.
ISP-CAPEM will underwrite improved revenue collection and strengthen capacity in public expenditure management through the modernized customs administration, improved expenditure management and oversight.
With the approval of these two operations, the Bank Group’s portfolio in São Tomé and Príncipe comprises nine operations with a total commitment of nearly $70 million. The agriculture sector accounts for 42% of the total portfolio, followed by finance (22%), energy (19%) and multi-sector (17%). Naira Devaluation Deepens Economic Crisis in Nigeria