WASHINGTON, June 6, 2013 – The World Bank Board of Executive Directors today approved an International Development Association (IDA*) grant totaling US$5.5 million in support of the Government of São Tomé and Príncipe (STP)’s Second-Governance and Competitiveness Development Policy Operation (DPO2). This operation, which is part of a series of three single-tranche budget-support operations, seeks to support the Government in implementing critical reforms aimed at strengthening the links between public expenditure, fiscal sustainability, and sector strategies, with the objective of diversifying the sources of growth and reducing the country’s vulnerability to economic shocks.
“Despite remarkable economic gains over the past couple of years, STP’s economy remains highly vulnerable to external shocks,” said Laurence C. Clarke, World Bank Country Director for STP. “This IDA grant, which represents close to 2 percent of the country’s Gross Domestic Product, will support critically-needed policies that can improve business environment, diversity the economy and contribute to create jobs and ultimately build a more resilient economy, while contributing to reduce fiscal deficit.”
Specifically, the development objective of this operation is to assist the Democratic Republic of São Tomé and Príncipe as it strives to: (i) strengthening economic governance, with a focus on improving the transparency, monitoring and accountability of public and natural resources, improving the management and reporting of statistics, promoting fiscal stability, and strengthening public debt management; and (ii) support broad-based growth by improving the investment climate, with a focus on simplifying business regulations and reducing the cost of international trade, and by promoting economic diversification.
“This financing and the reforms supported as part of the program will help the government’s efforts to mitigate the ongoing economic and poverty-related effects of the global economic slowdown, by directly reducing the country’s fiscal distress and by enhancing public sector governance and the overall competitiveness of the economy,” said Marco Antonio Hernandez Ore, World Bank Country Economist and Task Team Leader for this operation.
The Governance and Competitiveness Development Policy Operation series supports the implementation of STP's Second Poverty Reduction Strategy (2012-2016), and is consistent with the objectives of the World Bank’s Country Strategy for Sao Tome and Principe as well as its Africa Regional Strategy.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing loans (called “credits”) and grants for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 82 poorest countries, 40 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since 1960, IDA has supported development work in 108 countries. Annual commitments have increased steadily and averaged about $15 billion over the last three years, with about 50 percent of commitments going to Africa.