Emport Home

 

Economy


This small, poor island economy has become increasingly dependent on cocoa since independence in 1975. Cocoa production has substantially declined in recent years because of drought and mismanagement. Sao Tome and Principe has to import fuels, most manufactured goods, consumer goods, and a substantial amount of food, making it vulnerable to fluctuations in global commodity prices. Over the years, it has had difficulty servicing its external debt and has relied heavily on concessional aid and debt rescheduling. Sao Tome and Principe benefited from $200 million in debt relief in December 2000 under the Highly Indebted Poor Countries (HIPC) program, which helped bring down the country's $300 million debt burden. In August 2005, the government signed on to a new 3-year IMF Poverty Reduction and Growth Facility (PRGF) program worth $4.3 million. In April 2011 the country completed a Threshold Country Program with The Millennium Challenge Corporation to help increase tax revenues, reform customs, and improve the business environment. Considerable potential exists for development of a tourist industry, and the government has taken steps to expand facilities in recent years. The government also has attempted to reduce price controls and subsidies. Potential exists for the development of petroleum resources in Sao Tome and Principe's territorial waters in the oil-rich Gulf of Guinea, which are being jointly developed in a 60-40 split with Nigeria, but any actual production is at least several years off. The first production licenses were sold in 2004, though a dispute over licensing with Nigeria delayed the country''s receipt of more than $20 million in signing bonuses for almost a year. Maintaining control of inflation, fiscal discipline, and increasing flows of foreign direct investment into the oil sector are the major economic problems facing the country.
Agriculture - products: cocoa, coconuts, palm kernels, copra, cinnamon, pepper, coffee, bananas, papayas, beans; poultry; fish
Industries: light construction, textiles, soap, beer, fish processing, timber
Exports - commodities: cocoa 80%, copra, coffee, palm oil
Exports - partners: Netherlands 32.7%, Belgium 21.4%, Spain 10.8%, Nigeria 5.7%, US 5% (2012)
Imports - commodities: machinery and electrical equipment, food products, petroleum products
Imports - partners: Portugal 63%, Gabon 6% (2012)
 
This project has been funded with support from the European Commission. This publication [communication] reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.