Project Summary

Project General Description

The proposed operation is a grant of UA 5 million to the Democratic Republic of Sao Tome and Principe to finance the Economic Reform and Power Sector Support Program- Phase I (ERPSSP-I). This is the first phase of a program-based budget support operation covering fiscal years 2019, 2020 and 2021, with an overall indicative financing of UA 10 million. ERPSSP supports the government’s reform efforts critical to guaranteeing macroeconomic stability and laying the foundations for sustainable and inclusive economic growth. The Bank is supporting both the country’s fiscal consolidation efforts to address short-term macroeconomic risks, and its strategic reform program to set the basis for sustainable and inclusive economic growth and poverty reduction. ERPSSP-I presents the multi-annual framework of the program and provides a list of reform measures considered as indicative triggers for the second phase and third phases (ERPSSP-II and ERPSSP-III). The operation is in response to a request submitted by the Sao Tome and Principe authorities in February 2019. Designed using a complementary approach with other Bank operations (PAGEF, ETISP) as well as with the operations of other TFPs while ensuring full ownership by the authorities and considering the country’s challenges, ERPSSP is based on two components: (i) Strengthening public financial management and the business climate; (ii) Promoting sustainable electricity supply. The program will also be implemented concurrently with a recently approved IMF 3-year Extended Credit Facility (ECF) program and a World Bank budget support operation.

Project Objectives

The goal of the operation is to support the implementation of the government medium-term development agenda aimed at building a strong foundation for inclusive and self-reliant economic growth through fiscal consolidation, improved governance, an improved business environment and a sustainable power sector. In this regard, the program aims to: (i) advance fiscal consolidation through enhanced budget credibility, cash management and expenditure efficiency, strengthened debt management, and higher revenue collection; (ii) improved business environment by streamlining investment approval processes and increasing investment promotion capacity; and (iii) ensure sustainable electricity supply through enhanced sustainability of public sector power consumption, a strategic and coherent energy sector policy framework and a sustainable and efficient public electricity utility.

Beneficiaries

ERPSSP will benefit the entire Sao Tome and Principe population. The direct beneficiaries of the program include Ministry of Planning, Finance and Blue Economy (MPFEA), Central Bank of Sao Tome and Principe (BCSTP), National Investment Promotion Agency (APCI) and Water and Electricity Company (EMAE). Indirect beneficiaries are the citizens of the Sao Tome and Principe, who will benefit from better PFM and improved fiscal space for pro-poor budgetary allocation for social services delivery, as well as from increased economic opportunity brought about by a macroeconomic stability and an improved business climate. In addition, the private sector in Sao Tome and Principe will also benefit from macroeconomic stability, an improved business climate and enhanced capacity for investment promotion. Finally, both the citizens of Sao Tome and Principe and the private sector will benefit from a more sustainable, reliable and efficient electricity supply.

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