The African Development Bank (AfDB) has approved a $7.9 million grant to bolster São Tomé and Príncipe’s economic recovery, marking a significant step in the archipelago’s journey toward financial stability and sustainable development.
The funding is part of the second phase of the Budget Viability and Economic Resilience Support Programme, an initiative aligned with the Bank’s 2024–2029 Country Strategy and the broader 2024–2033 Ten-Year Strategy.
The grant comes from the Transition Support Facility, a mechanism offering concessional resources to fragile and conflict-affected countries.
“This budget support operation aims to strengthen the country’s economic resilience by improving revenue and public expenditure reforms, while laying the foundation for sustainable reforms in the energy sector,” the Bank stated in its official release.
The initiative is designed not only to stabilise public finances but also to address structural economic challenges, particularly in the energy sector—an area the Bank identifies as a primary barrier to growth.
“The main obstacle to São Tomé and Príncipe’s economic recovery is the insufficient energy supply, worsened by outdated fossil fuel-based generation equipment and the poor performance of the state-run electricity company,” the statement added.
To address this, the programme includes comprehensive reforms aimed at improving energy governance and facilitating a transition toward renewable energy solutions.
Leila Mokaddem, AfDB’s Director General for Southern Africa, noted the timing of the grant: “This budget support operation comes at a critical moment to back the economic recovery through public revenue and expenditure reforms, while setting the stage for lasting reforms in the energy sector—essential to building a strong and dynamic private sector.”
Echoing this sentiment, Pietro Toigo, the Bank’s Country Manager for Angola and São Tomé and Príncipe, emphasized: “The budget support will greatly help bridge the financing gap the country is facing and boost its foreign exchange reserves, which are currently at their lowest.
It will further reinforce the government’s efforts to implement the reforms necessary for economic revival.”
The initial phase of the programme, amounting to $5.3 million, was approved in December 2023. With the latest disbursement, total support from the Bank for the initiative now stands at $13.2 million.
