Looking for help from the IMF

A World Bank/IMF team found that a preliminary agreement with Sao Tome and Principe was going well but that more work needed to be done on reforms before a proposed adjustment programme could qualify for financing, a humanitarian source told IRIN. The team, which ended a two-week visit to Sao Tome and Principe at the weekend, said the government would have to adjust its spending to bring it in line with levels agreed in a referential programme concluded with the two Bretton Woods institutions. It will also have to press ahead with administrative reform and formally announce the privatisation of state companies, the team found. The administrative reform aims to improve the efficiency and productivity of the country's public service and to trim its 4,000 employees by 1,000 to 2,000, the source said. Ports and customs are also to be reorganised so as to increase state revenue. IMF/World Bank delegation leader Idrisse Thiam told representatives of international development organisations in the Sao Tome capital that he was confident the corrections needed would be completed by late October so that a reinforced structural adjustment facility programme can be signed. The IMF has pledged to co-finance the programme. How much it will contribute will only be known after the visit of the next evaluation mission, expected in November. The European Union (EU) has also agreed to provide balance of payments support. France has conditioned its assistance on the signing of an agreement between Sao Tome and the Bretton Woods institutions. Should the agreement be concluded in November, it could be presented to the IMF's Board of Governors for approval in January 2000. A meeting with donors on the financing of a medium-term development strategy which the government is now preparing with UN Development Programme (UNDP) assistance can only take place when this happens. Sao Tome is among countries vying for Highly Indebted Poor Country (HIPC) status so as to qualify for debt relief. Its external debt is about US $300 million, which is 14 times its annual exports. The price of Sao Tome's main export, cocoa, has been decreasing on the world market.