Sao Tome and Principe

São Tomé and Príncipe (STP) has been a multiparty, semi-presidential, democratic system since its independence, and it has been a model for the democratic transition of power in Central Africa. The Independent Democratic Action (ADI) party, which holds 30 out of 55 parliamentary seats, has been mandated to govern from 2022 to 2026.

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In 2025, the economy is estimated to have grown by 1%, as power outages disrupted agriculture and services.

Economic growth has relied on externally financed public spending, but this model is increasingly unsustainable due to the decline in official development assistance. A shift toward private sector-led growth is needed, supported by investments in human capital, infrastructure, and business climate reforms.

Although GDP per capita was about $4,044 in 2025, socio-economic vulnerabilities persist. In 2025, 13.1% of the population lived below the international poverty line ($3/day in 2021 PPP), with limited job opportunities fueling emigration.

Inflation pressures have persisted. After dropping from 11% in 2025 to a four-year low of 8.6% in April 2026, it rose to 9.2% year-on-year in May, following fuel price adjustments.

External pressures have intensified. After strong 2025 exports performance, international cocoa prices lowered while higher fuel prices raised the import bill by 3%, pressuring the current account. Yet, supported by external disbursements, gross reserves increased from $95 million in 2025 to $111 million, about four months of imports, by May 2026.

The fiscal balance shifted from a 0.3 percent-of-GDP surplus in 2024 to a 3.3% deficit in 2025, as slower growth and declining donor support weakened fiscal revenues, while government-financed fuel imports for Empresa de Água e Electricidade (EMAE), the state-owned water and electricity utility, reached 2.4% of GDP.

In July 2026, President Vila Nova was reelected for a second five-year term, supporting economic policies continuity. Near-term growth is expected to remain subdued, at 0.4% in 2026, as the energy crisis continues to weigh on economic activity. A recovery to 2.6% on average over 2027-28 is expected, driven by energy reforms, tourism, and agriculture. The share of people living under the international poverty line ($3/day in 2021 PPP) is projected to decline to 12.8% by 2028. Inflation is projected to ease to around 7% by 2028, supported by supply-side reforms and monetary discipline. The current account deficit is expected to continue to reduce and a fiscal primary surplus is expected from 2027.

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The current World Bank portfolio, funded by the International Development Association (IDA), has 10 projects with a total net commitment of $226 million.

São Tomé and Príncipe is a small, lower-middle-income island nation with a population of around 240,000 and an area of 960 square kilometers. Despite its rich biodiversity and potential for nature-based tourism, STP faces structural challenges typical of small, remote islands. Limited land and population constrain economic diversification, while geographic isolation raises trade costs and vulnerability to external and climate shocks.

The business environment suffers from weak infrastructure, particularly costly and unreliable electricity, fragile institutions, limited connectivity, and climate risks. Public finances are strained by high service delivery costs, low domestic revenue, and declining official development assistance (ODA).

Risks include delays in energy reforms, weak social protection, reduced donor support, commodity price volatility, and climate shocks.

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World Bank Group engagement in the country is defined under the latest São Tomé and Príncipe Country Partnership Framework (CPF) FY2024–2029, endorsed by the World Bank Group Board in January 2024.

The strategy has five pillars: 1) Improve access to more affordable and greener electricity; 2) Strengthen public financial management; 3) Improve access to education and skills; 4) Strengthen road and digital connectivity; and 5) Increase the climate resilience of coastal communities.

Through a highly selective and sequenced set of engagements focusing on the energy, digital, road transport, social protection, and education sectors, the World Bank Group aims to address critical constraints to sustainable and inclusive growth and development in STP.

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The Digital STP Project is supporting the modernization of the legal and regulatory framework for telecommunications, cybersecurity functions, and the creation of an integrated data protection management platform. It is also supporting a digital ID pilot to bring public services closer to the citizen and increase efficiency.

Flooding affects around 30,000 people on average each year (13% of the population). Adaptation options, including protection, accommodation, and relocation, were implemented to reduce exposure in 12 communities through the West Africa Coastal Areas Resilience Investment Project. Households report that their houses and other properties (animals, canoes, and wood stocks) are now protected, with flooding shorter and less impactful.

The Girls Empowerment and Quality Education for All Project supported STP to equip girls with life skills and improve all student learning outcomes. Results achieved:

• 3,500 students participated in life skills clubs in secondary schools, strengthening knowledge of sexual and reproductive health, building socio-emotional skills, and expanding access to psychosocial support.
• WASH facilities were rehabilitated in 13 schools, providing safer, more inclusive, and disability-accessible learning environments for students and teachers, with 4 additional schools under rehabilitation. Seven pilot school projects were launched to promote innovation in teaching and learning, including activities in STEM, digital literacy, arts and culture, remedial education, and violence prevention.
• More than 1,100 preschool teachers and pedagogical assistants received professional development and teaching and learning materials, contributing to improvements in the quality of early childhood education.
• National learning assessment systems were strengthened through the implementation of the AALEB and AALES large-scale assessments (the national large-scale learning assessment for primary and secondary education) and participation in the PASEC international assessment, improving the availability of data to inform education policy and decision-making.

The Social Protection and Skills Development Project supports the Government of STP in strengthening systems to assist poor and vulnerable families. The project finances conditional cash transfers to 6,000 households—about 10% of the country’s population—through the Vulnerable Family Program (VFP), conditional on children’s school attendance and complemented by parenting support through the Parental Education Program (PEP). It also helps beneficiaries transition out of poverty through a new self-employment support effort.

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