IMF国际货币组织全球-Democratic-Republic-of-S_227o-Tom_233-And-Pr_237ncipe_Request-for-Disbursement-Under-the-Rapid-Credit-Facility_34页_1mb

Summary of IMF Disbursement to São Tomé and Príncipe under the Rapid Credit Facility

Core Content

The Democratic Republic of São Tomé and Príncipe received a disbursement of SDR 9.028 million (approximately US$12.29 million) under the Rapid Credit Facility (RCF) on April 21, 2020, to address the economic and fiscal impact of the COVID-19 pandemic. This support is part of a broader effort to mitigate the crisis and stabilize the country's economy, which is heavily reliant on tourism and cocoa exports.

Main Points

• Economic Impact of the Pandemic:

  • The tourism sector, contributing 6-8% to GDP, was severely affected with a projected decline of over 70% in 2020.
  • GDP growth was expected to fall by 6% in 2020, compared to a pre-pandemic projection of 3.5%.
  • Externally financed projects were delayed, and international supply chains were disrupted, worsening the economic situation.

• Fiscal and Balance of Payments Needs:

  • The country faced an estimated balance of payments gap of US$24 million and a fiscal gap of US$17 million.
  • The IMF approved the disbursement to help cover these urgent needs and prevent a more severe economic contraction.

• IMF Support and Conditions:

  • The disbursement is part of the RCF exogenous shocks window and complements the existing Extended Credit Facility (ECF) arrangement.
  • The support is conditional on the implementation of specific policies aimed at mitigating the crisis, including increased health and social spending, fiscal transparency, and measures to safeguard the euro peg.

• Government Response:

  • The authorities acted swiftly, declaring a state of emergency on March 17, 2020, and implementing a contingency plan with WHO support.
  • They also expanded a World Bank-supported cash-transfer program and introduced measures to support the unemployed and private businesses.

• Policy Measures:

  • The central bank reduced reserve requirements by four percentage points to ease liquidity pressures.
  • A moratorium on bank dividends and loan restructuring were proposed to support financial stability.
  • The government committed to publishing public procurement contracts and monthly pandemic-related expenditures.

• Debt Sustainability:

  • While the country faces debt distress due to long-standing external arrears, the IMF staff assessed that its debt remains sustainable.
  • The disbursement will help maintain macroeconomic stability and provide space for critical health and social spending.

• Future Outlook:

  • Real GDP is projected to recover partially to the pre-crisis level in 2021, growing by 5.5%.
  • The IMF expects the fiscal position to return to a more stable path, although small fiscal and balance of payments gaps will persist.
  • Continued fiscal reforms and energy sector improvements are essential for long-term stability and growth.

Key Information

• Disbursement Amount: SDR 9.028 million (about US$12.29 million or 61% of quota).
• Purpose: To address the urgent balance of payments and fiscal needs caused by the pandemic.
• Eligibility: São Tomé and Príncipe meets the RCF eligibility criteria, including an urgent BOP need and a sustainable debt position.
• Debt Service Relief: The country also benefits from debt service relief under the Catastrophe Containment and Relief Trust (CCRT), estimated at US$0.15 million, which may be extended for up to 2 years.
• Support Mechanism: The disbursement will be provided to the central bank and then on-lent to the government to fund pandemic-related expenditures.
• IMF Statement: The IMF welcomed the authorities' commitment to the ECF-supported program and emphasized the importance of continued fiscal reforms and recovery efforts.

Risks

• Downside Risks: A local outbreak or prolonged global pandemic could exacerbate economic and social impacts.
• Debt Vulnerability: Failure to continue fiscal consolidation or reform the loss-making utility company EMAE could threaten debt sustainability.
• External Support: Additional external aid will be crucial to close the remaining financing gaps.

Additional Documents

• Letter of Intent (LOI): Attached to the Staff Report and includes policy commitments and financial plans.
• Debt Sustainability Analysis: Prepared jointly by the IMF and IDA to assess the country's debt situation.
• Staff Report: Completed on April 14, 2020, and discusses the economic context, impact of the pandemic, and policy discussions.
• Executive Summary: Outlines the context, impact, and policy responses to the pandemic.

Conclusion

The IMF's disbursement to São Tomé and Príncipe under the RCF is a critical response to the economic challenges posed by the COVID-19 pandemic. It supports immediate health and social measures, helps stabilize the economy, and reinforces the government's commitment to long-term reforms. The country's debt is considered sustainable, and further support from multilateral and bilateral partners is expected to aid recovery.