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7

Despite the imbalances recorded in the first half of 2006, mainly as a result of three major elections (presidential, legislative, local and regional governments) being held in the same year, and also as a result of the need to advance resources to the Treasury budgets to fund projects pending financing by international donors, this objective was met thanks to the measures adopted to collect overdue indirect taxes on petroleum products and the raising of surtaxes on some imported goods, including alcoholic beverages and tobacco, and as a result of the measures adopted to curtail communications-related expenses.

Real GDP growth (%) GDPpm (in millions of dollars) GDP per capita (in dollars) CPI (end-period; %)

2000 3 58.7 427.5 9.6

2001 4 57.9 420.7 9.4

2002 4.1 61.4 437.4 8.9

2003 5 64.5 450.2 9.9

2004 3.8 64.7 442.8 15.2

2005 3.8 69.4 466 17.2

Unemployment rate (%) Primary balance (nonoil; billions of DBS)1/

14.4 n/a

15.7 n/a

17.6 n/a

16.4 -57.9

16.1 -128

14.8 -132

Money supply (M3) (end-period; billions of DBS) Exports of goods & services (millions of USD) Imports of goods & services (millions of USD) Net external supply (millions of USD) Nominal exchange rate DBS/USD (annual average) Net international reserves (millions of USD)

116.7 16.3 -41.6 -25.3 7,978.2 11.7

156.1 16.1 -44.8 -28.7 8,842.1 15.6

198.2 18.5 -44.9 -26.4 9,089 17.5

301.8 20.7 -52.8 -32.1 9,348 21.5

307.8 20.1 -57 -36.9 9,902 16.9

458.7 21.1 -63.8 -42.7 10,558 18.1

São Tomé and Príncipe –

Economic Indicators

2006

8 77.5

510 24.6

n/a a) -154

630.4

  • b)

    24.8

  • b)

    -67

    • -

      42.2

12,445 24.7

(in months of exports of goods and services)

3.4

4.2

4.7

4.9

3.6

3.4

4.4

Source: INE and Central Bank and IMF estimates 1/ Budget Directorate a) and b) Estimates

The Central Bank continued its policy of controlling inflation in close coordination with fiscal policy, while maintaining a flexible exchange rate. The Central Bank resumed its single-price auctions and direct sales of foreign exchange based on market trends. The monetary authority continued to observe its goal of maintaining positive real interest rates. The Central Bank’s reference rate changed from 18.2 percent in 2005 to 28 percent in 2006.

In order to mop up the excess liquidity found in the economy in 2006, the Central Bank issued certificates of deposit (CDs) for the first time at the end of December, while minimum reserve requirements were increased to 24.5 percent in 2006.

Structural reforms progressed significantly. The powers of the Inspectorate General of Finance were reinforced so that it could better supervise and audit the government’s financial operations, and steps are being taken to restructure the port and airport companies. Significant progress was also made in preparing the integrated government financial management system for execution of the budget, financials, capital assets and

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