Sao Tome and Principe Economy - 2006

Economy - overview:
This small, poor island economy has become increasingly dependent on cocoa since independence in 1975. Cocoa production has substantially declined in recent years because of drought and mismanagement, but strengthening prices helped boost export earnings in 2003. Sao Tome has to import all fuels, most manufactured goods, consumer goods, and a substantial amount of food. Over the years, it has had difficulty servicing its external debt and has relied heavily on concessional aid and debt rescheduling. Sao Tome benefited from $200 million in debt relief in December 2000 under the Highly Indebted Poor Countries (HIPC) program, and is expected to benefit from an additional round of HIPC debt relief in early 2006, to help bring down the country's $300 million debt burden. In August 2005, Sao Tome signed on to a new 3-year IMF Poverty Reduction and Growth Facility (PRGF) program worth $4.3 million. Considerable potential exists for development of a tourist industry, and the government has taken steps to expand facilities in recent years. The government also has attempted to reduce price controls and subsidies. Sao Tome is optimistic about the development of petroleum resources in its territorial waters in the oil-rich Gulf of Guinea, which are being jointly developed in a 60-40 split with Nigeria. The first production licenses were sold in 2004, though a dispute over licensing with Nigeria delayed Sao Tome's receipt of more than $20 million in signing bonuses for almost a year. Real GDP growth reached 6% in 2004, and also probably in 2005, as a result of increases in public expenditures and oil-related capital investment.

GDP (purchasing power parity):
$214 million (2003 est.)

GDP (official exchange rate):
NA

GDP - real growth rate:
6% (2004 est.)

GDP - per capita (PPP):
$1,200 (2003 est.)

GDP - composition by sector:
agriculture: 16.7%
industry: 14.8%
services: 68.4% (2005 est.)

Labor force:
NA

Labor force - by occupation:
note: population mainly engaged in subsistence agriculture and fishing; shortages of skilled workers

Unemployment rate:
NA%

Population below poverty line:
54% (2004 est.)

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices):
15.1% (2005 est.)

Investment (gross fixed):
31.2% of GDP (2005 est.)

Budget:
revenues: $26.39 million
expenditures: $59.48 million; including capital expenditures of $54 million (2004 est.)

Agriculture - products:
cocoa, coconuts, palm kernels, copra, cinnamon, pepper, coffee, bananas, papayas, beans; poultry; fish

Industries:
light construction, textiles, soap, beer, fish processing, timber

Industrial production growth rate:
NA%

Electricity - production:
15 million kWh (2003)

Electricity - consumption:
13.95 million kWh (2003)

Electricity - exports:
0 kWh (2003)

Electricity - imports:
0 kWh (2003)

Oil - production:
0 bbl/day (2003 est.)

Oil - consumption:
650 bbl/day (2003 est.)

Oil - exports:
NA bbl/day

Oil - imports:
NA bbl/day

Natural gas - production:
0 cu m (2003 est.)

Natural gas - consumption:
0 cu m (2003 est.)

Current account balance:
-$19 million (2005 est.)

Exports:
$8 million f.o.b. (2005 est.)

Exports - commodities:
cocoa 80%, copra, coffee, palm oil

Exports - partners:
Netherlands 37.3%, China 12.8%, Belgium 7.7%, Germany 6.6%, Poland 5.3%, France 5%, Brazil 4.1% (2004)

Imports:
$38 million f.o.b. (2005 est.)

Imports - commodities:
machinery and electrical equipment, food products, petroleum products

Imports - partners:
Portugal 51.2%, Germany 9.7%, US 6.2%, Netherlands 5%, South Africa 4.4%, Belgium 4.2% (2004)

Reserves of foreign exchange and gold:
$20 million (2005 est.)

Debt - external:
$318 million (2002)

Economic aid - recipient:
$200 million in December 2000 under the HIPC program

Currency (code):
dobra (STD)

Exchange rates:
dobras per US dollar - 9,900.4 (2005), (2004), 9,347.6 (2003), 9,088.3 (2002), 8,842.1 (2001)