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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Although GDP per capita is about $4,222.3, socio-economic vulnerabilities persist. In 2024, 13% of the population lived below the international poverty line ($3/day in 2021 PPP), with high income inequality (Gini index of 40.7) and limited job opportunities fueling emigration.

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.

In 2025, the economy is estimated to have grown by 2.1%, supported by improved electricity supply and tourism. Real GDP per capita stagnated and only 21% of those aged 15+ are employed. Growth is expected to average 3.7% in 2026–2028, 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 2027 and 12.8% by 2028.

Inflation averaged 10.3% in 2025. The central bank maintained a tight monetary policy, controlling excess liquidity through the issuance of Certificates of Deposit. Inflation is projected to ease to around 5% by 2028, supported by supply-side reforms and monetary discipline.

The external sector improved, with the current account deficit estimated to have reached 6.3% of GDP in 2025, due to reduced goods imports and stronger tourism exports. Reserves rose to $69 million by the end of 2025, from $39 million a year earlier.

Fiscal performance improved markedly in recent years, but challenges persist. The overall fiscal deficit (cash basis) improved from 3.9% of GDP over 2022-23 to 1.5% in 2024-25. Total public and publicly guaranteed (PPG)debt is estimated at 56.5% in 2025, down from 65.2% in 2024. Energy reforms are expected to enhance fiscal sustainability and growth, but social protection will be needed to protect low-income households.

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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:

• 3,574 students participated in adolescent clubs in 15 secondary schools, gaining life skills and strengthening sexual and reproductive health education
• WASH facilities were rehabilitated in nine schools, with similar work ongoing or scheduled in another eight in 2026, improving safety and accessibility
• Major learning assessment were completed, including national large-scale assessments (AALEB and AALES) and participation in the 2025 PASEC international assessment, strengthening national learning measurement systems and evidence-based policymaking.

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.

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