The African Development Bank Group Board of Directors has approved a $7.5 million supplemental financing grant from the Nigeria Trust Fund (NTF) to support São Tomé and Príncipe's ambitious economic reform programme, taking total Bank support for the initiative to some $20 million over two years.
The grant will help close a critical financing gap in São Tomé and Príncipe's 2025 national budget while advancing fiscal reforms and energy sector transformation essential to the island nation's economic recovery. Economic growth projections demonstrate the program's potential impact: after modest expansion of 1.1 percent in 2024, the economy is forecast to accelerate to 2.9 percvent in 2025 and 4.8 percent in 2026, driven by agricultural exports, tourism recovery, and infrastructure investments.
"This approval marks an important multi-year reform path in public financial management and energy transition that helped stabilize the economy after the acute crisis in 2023," said Pietro Toigo, African Development Bank's Country Manager for São Tome' and Principe. "We are delighted of the collaboration with the Nigerian and Sao Tomean authorities to mobilize additional resources from the NTF to close a critical funding gap."
The Fiscal Sustainability and Economic Resilience Program addresses key structural challenges that have constrained São Tomé and Príncipe's growth potential. The country's economy, while showing resilience, faces significant headwinds, including persistent energy shortages, limited domestic revenue mobilization, and vulnerability to external shocks.
The programme supports two interconnected pillars of economic sustainability and energy sector transformation.
São Tomé and Príncipe has implemented significant revenue reforms, including introducing a value-added tax system and modernizing customs administration through the Automated System for Customs Data (ASYCUDA platform. These measures aim to increase the tax-to-GDP ratio while improving budget transparency and debt management.
The programme addresses the electricity sector's chronic inefficiencies, which have imposed substantial fiscal costs and hindered private sector development. Reforms include improved governance of the national power and water utility compancy -Empresa de Agua e Eletricidade- tariff adjustments to achieve cost recovery, and an accelerated transition to renewable energy sources.
São Tomé and Príncipe has joined the Mission 300 Energy Compact initiative and approved a National Energy Compact covering 2025-2030, signaling commitment to achieving universal electrification through clean energy.
The supplemental financing works in tandem with support from multiple development partners.
This coordinated approach amplifies impact and demonstrates international confidence in São Tomé and Príncipe's reform trajectory.
As a small island developing state, São Tomé and Príncipe faces unique vulnerabilities to climate change, commodity price fluctuations, and demographic pressures. The country imports all petroleum products and approximately half its food needs, making it highly exposed to global price volatility.
The reforms aim to strengthen economic resilience by diversifying revenue sources, reducing energy import dependence through renewable power development, and creating fiscal space for investments in human capital and infrastructure.The programme also supports the country in strengthening oversight institutions, including combatting money laundering and financing of terrorism which is critical to sustained economic growth and stable financial sector.
Key upcoming milestones include operationalising public procurement reforms, finalising anti-money laundering frameworks, implementing a comprehensive public financial management strategy, and rolling out prepaid electricity meters to improve utility revenue collection.
The programme aligns with São Tomé and Príncipe's Vision 2030 development strategy and the emerging National Strategy for Sustainable Development 2026-2040, which aim to structurally transform the economy and improve population wellbeing.
