Sao Tome & Principe

Country Summary

Macroeconomic performance and outlook

Real GDP grew by an estimated 4.0% in 2019 on the back of improvements in agriculture, construction, and services. The service sector explained about 70% of the growth in 2016–18, with strong performance in wholesale and retail trade and in restaurants and hotels, which benefited from growing tourism following reforms such as the e-Visa in 2018.

Growth was also boosted by higher public investment as new externally financed projects began. Public invest- ment averaged €43.7 million (about 12% of GDP) in 2017– 18. Until recently, São Tomé and Príncipe relied heavily on external support, mainly concessional funding exceeding 10% of GDP. But external grants have been declining, a trend projected to continue in the medium term.

The fiscal deficit narrowed slightly from 2.1% of GDP in 2018 to an estimated 1.9% in 2019. The government could reconsider its expansionary fiscal policy by, for instance, widening its tax revenue base and finding cheaper financing. Public debt increased from 64.2% of GDP in 2017 to 67.9% in 2018, adding pressure on public finances and increasing the country’s debt vulnerability.

Annual inflation increased from 5.7% in 2017 to 7.9% in 2018 and 2019, mainly due to higher fossil fuel prices. Even so, the peg of the national currency, the dobra, to the euro helped keep inflation fairly low. Since inflation that is too low could discourage domestic production in favor of imports, continuing structural reforms are key to maintaining competitiveness and boosting domestic production. The current account deficit has been nar- rowing since 2017 (a deficit of 9.3% of GDP in 2019), a trend projected to continue.

Tailwinds and headwinds

Real GDP growth is projected to accelerate to 4.5% in 2020 and 5.1% in 2021. To unlock the full potential of tourism, agriculture, and services, the country needs

to improve the business environment. Its comparative advantages—lush forests, spectacular waterfalls, aes- thetic coastline, and long sandy beaches—are attracting more visitors through niche tourism products. Tourism, which contributes 32.9% to GDP, is currently one of the main sources of foreign exchange receipts. (Cocoa exports are another, representing 66.6% of exports in 2018.) Tourism is expected to benefit from the Tourism Development Strategy launched in January 2018 and the new e-Visa system. Tourist arrivals should increase, particularly from countries in the region, such as Angola, Equatorial Guinea, Gabon, Ghana, and Nigeria.

Agricultural output is expected to increase following current measures, which include building greenhouses and improving farming and husbandry. A National Edu- cation Program should improve human resources.

The financial sector is less developed for tourism and needs to provide easy access to automatic teller machines and electronic points of sale. The govern- ment is developing a new payment system.

The energy sector also needs restructuring. Cur- rently, it largely depends on thermal generation, which reduces energy security and increases production cost. Electricity reaches only 70% of the population. The state utility has accumulated arrears of $77 mil- lion (about 18% of GDP). Recent heavy investments increased generation capacity and expanded the grid on both islands, but increased demand for fossil fuels for generation pushed oil imports to 65.5% of imports in 2018. In the long term, the country needs to increase renewable energy, such as mini-hydro plants, solar solutions, and wind power.

São Tomé and Príncipe’s geographical remoteness and small domestic market are major obstacles to attracting foreign direct investment. Continuing legal and regulatory reforms are needed to remove market barriers. And the dobra’s peg to the euro could lead to an over- valued local currency, dampening exports and making imports more attractive, harming local competition.

Health sector preparedness

The 2019 Global Health Index ranked São Tomé and Prín- cipe 192 among 195 countries, with a low score of 17.7 of 100, with indicators below average in all categories. The overall health system is weak with limited resources and capacity, implying that it is among the countries least pre- pared to deal with the pandemic.

Policy responses

A range of prevention and containment measures were introduced, and all borders have been closed until further notice. Public and private gatherings have also been for- bidden. The country is putting in place mechanisms to increase the availability of medical equipment to fight the pandemic.

The government approved a fiscal stimulus package amounting to STD 1.67 billion ($6.8 million). The measures include withholding interest payment and other additional fiscal fees accumulated during the pandemic, a morato- rium on any current fiscal payment, and a commitment to pay government obligations to suppliers of goods and services. On the monetary policy side, the central bank reduced the reference interest rate and local banking min- imum reserves, introduced flexibility on prudential ratios, increased the grace period to a minimum of six months, revised banking fees downward, and opened a credit line to business.

The government is encouraged to pursue various measures to mitigate the impact of the pandemic on the economy. The priority in the short term is to provide suf- ficient resources to boost the country’s health system. In the medium term, the government should implement pol- icies to ensure macroeconomic stability, promote human capital development, and improve business environment to facilitate investments into the country. In the long term, it should put in place policies to facilitate infrastructure development.

Source: African Economic Outlook 2020

Fixed Income


Treasury bills are currently the only public internal debt used. In 2019, debts issued with Treasury bills are estimated in USD 29.381.327.33. During 2019, two BT issues were carried out with a maturity of one year with  the usual subscribers  i.e. the country's commercial banks (BISTP, BGFI Bank and Ecobank). However, it should be noted that the 2019 shows were usedmainly to repay the debts contracted during the 2018 issues, taking into account that they were not amortized in the same year.

[Source: 2019 debt report]


Issuance strategy 

The first issue of treasury bill  in São Tomé and Príncipe took place on June 29, 2015, as part of a development strategy for the domestic debt market, up to 75 million dobras, at a fixed interest rate of 6.2%, after 6 months, for budgetary policy purposes. Since then, treasury bill issues have been carried out, as part of a development strategy for the domestic debt market. Treasury bills (BT) are dematerialized securities, redeemable over a period not exceeding one year, issued in dobras, for a minimum amount of 1,000.00 dobras, established at a discount by auction or bilaterally, reimbursable at the maturity at their nominal value.

BTs can be used as a day-to-day funding and management tool for the public treasury, ensuring public revenue and expenditure, as well as to stimulate the economy.This instrument can also be used for monetary policy purposes by the Central Bank, as money market instruments.Treasury bills are also expected to be an alternative means of investing savings by the public, seeking therefore to stimulate the development of the secondary market.

Treasury bonds  are dematerialized medium and long-term securities, placed by auction or bilateral procedures, which can be issued with or without a coupon, at a fixed interest rate and redeemable at maturity at their nominal value.

[Source: Central bank]

Guide to Buying Bonds

Procedures for market participation

The placement of treasury bills is done through an auction, which in turn can be done using the fixed rate or variable rate method, in which each participant can submit up to six proposals.

  •  Fixed rate auctions (amount auctions)

In this modality, the interest rate is fixed in advance by the BCSTP and the counterparties present proposals for the amounts they intend to process at the said interest rate.

  •  Variable rate auctions

In this mode, the counterparties offer the amounts and the interest rates at which they intend to carry out the transactions. In the variable rate auctions, the American and Dutch auctions are also distinguished.

American (multiple rate) - investment: made at the marginal rate / limiting investment rate (maximum absorption rate or minimum rate of return).

Dutch (single tax) - placement at the rate of each successful offer.

 When the total amount of tenders up to the limit rate exceeds the amount to be placed, the tenders submitted are satisfied by an allocation at this rate.

For treasury bonds, the Central Bank of São Tomé e Príncipe, after hearing the Public Treasury, defines the technical file with the conditions of issue of each series, namely the amount, the interest rate modality, the repayment date, among others specifications.
Treasury bonds are placed in market sessions through the Central Bank of São Tomé e Príncipe, representing the State. They can be placed directly or indirectly, by auction or by offering a subscription limited to one, some or a consortium of institutions duly authorized by the Central Bank.

Settlement cycle



Rating Agency Current rating Outlook
Standard and Poor's    

Primary dealers

Credit institutions participating in MMI and other financial institutions have access to the primary treasury bill market, as long as previously authorized by the Central Bank of São Tomé and Príncipe (BCSTP). Entities with access to the primary treasury bill market can make final or temporary transactions or purchases with treasury bills among themselves or with the BCSTP.Treasury bills bought by institutions with access to the primary market can also be placed with the public by opening securities accounts in the name of their customers.

Market restrictions

Openness to international investors

Capital control

Restrictions on FX and profit repatriation 

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