Republic of São Tomé and Príncipe: Second Review Under the Extended Credit Facility Arrangement, Requests for Waivers of Nonobservance of Performance Criteria, Modification of Performance Criteria, Extension and Augmentation of the Arrangement, and Fi

São Tomé and Príncipe (STP) is confronting a challenging macroeconomic environment marked by unfavorable demographic trends, an energy crisis, and delays in the energy transition. As a result, GDP growth forecasts have been revised downward, and an additional balance of payments gap is projected. Against this backdrop, the authorities are requesting a 12-month extension of the 40-month ECF arrangement approved in December 2024, along with an augmentation of SDR 4.44 million (30 percent of quota), bringing total access to 155 percent of quota, combined with a more gradual and less front-loaded path for fiscal adjustment, on the heels of the large cumulative fiscal consolidation since 2022.