Sao Tome and Prínciple: AfDB Approves $17.4m Grants To Boost Financial, Energy Reforms

The Board of Directors of the African Development Bank Group has approved grants amounting to $17.4 million for Sao Tome and Príncipe.

This move is part of the economic response strategy aimed at supporting public finance and energy sector reforms following several external setbacks.

Mr. Pietro Toigo, the Bank’s Country Manager for São Tomé and Príncipe, emphasized the significance of these grants, stating, “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 to achieve energy sovereignty.”

The approved grants consist of $10.7 million allocated evenly over fiscal years 2023 and 2024 under the Fiscal Sustainability and Economic Resilience Program (FSERP), endorsed on December 1st.

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Additionally, a separate grant of $6.7 million was approved on November 28th under the Institutional Support Project for Customs Administration and Public Expenditure Management (ISP-CAPEM) to fortify budget execution and improve public service delivery.

“FSERP has two elements,” explained Mr. Toigo. “The first focuses on enhancing domestic revenue, public expenditure efficiency, and debt transparency, while the second targets greater accountability in the energy sector, better corporate governance, and the rollout of new incentives for private investment.”

The reforms are poised to address the longstanding challenge of energy supply and quality, which has hindered the country’s economic growth, service delivery, and private sector development.

By transitioning towards renewable energy and reducing dependency on imported fossil fuels, Sao Tome and Príncipe aim to achieve greater energy sovereignty.

The ISP-CAPEM project aims to boost revenue collection and strengthen capacity in public expenditure management through modernized customs administration and improved oversight.

With these operations’ approval, the African Development Bank Group’s portfolio in São Tomé and Príncipe now comprises nine operations with a total commitment of nearly $70 million, predominantly allocated to the agriculture, finance, energy, and multi-sector sectors.