São Tomé and Príncipe: High cost of local goods fuel inflation in São Tomé and Príncipe

São Tomé, São Tomé and Príncipe (PANA) - Inflation in São Tomé and Príncipe reached 6.5 percent year-on-year at end-August 2017, driven mainly by increased prices of locally-produced goods that resulted from higher than usual rainfall, but the island nation’s economic growth remains stable, a staff team from the International Monetary Fund (IMF) said on Thursday.

The team, led by Ms. Xiangming Li, visited São Tomé and Príncipe from 20 September to 5 October 2017, to discuss progress with the country’s economic programme supported by the IMF’s three-year Extended Credit Facility (ECF) arrangement.

It noted that the medium-term outlook is broadly positive and real GDP growth is projected to reach 5-6 percent, supported by robust activity in the construction, agricultural, and tourism sectors.

In a statement at the end of the visit, Ms. Li issued said that the team’s discussions with government officials during the visit focused on recent economic developments, performance under the authorities’ ECF-supported programme, near term challenges, and policies for 2017/18 and beyond.

“The team reached understanding on most key economic policy issues for the completion of the third and fourth ECF programme reviews,” she said, noting that the government is facing significant fiscal pressures.

“Revenues through end-August 2017 were less buoyant than expected due to lower receipts from income and international trade taxes. For the rest of 2017, tax compliance, especially by large taxpayers and state-owned enterprises, needs to be reinforced, and careful monitoring of the outlook for revenues and budget support needs to continue, to help match expenditures with available resources.

“As domestic revenues continue to be low, external budget support is declining, and the debt level remains high, the 2018 budget needs to aim for further consolidation to ensure that adequate resources are available to fund priority sectors, including health and education.

“The team reached agreement on the main parameters of 2018 budget that would balance macroeconomic and social needs, demonstrating the authorities’ strong commitment to the programme,” Ms. Li affirmed.

According to her statement, the fiscal programme of the government also prioritizes the clearance of the state’s own arrears to suppliers and seeks to bring the arrears clearance plan elaborated in 2015 back on track by 2019.
-0- PANA AR 5Oct2017

05 october 2017 19:38:56

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