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© 2008 International Monetary Fund - page 13 / 55

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9

dependence on oil1; (ii) greater international competition in markets where Sãotomean exports are very specialized, given the increasing integration of international trade.

  • 7.

    São Tomé and Príncipe is in the process of oil exploration and production that is vital for shaping the country’s future. It is entering into several agreements with international oil organizations to realize this activity.

  • 8.

    Prospective oil exploration in São Tomé and Príncipe will have a profound impact on the Sãotomean society, bringing with it unlimited expectations—job opportunities, new markets, dramatic improvements in infrastructure and services—and creating a very promising outlook for the economy, not only in the oil industry but also in the other sectors that shape the economic system. As a result, its effects will be felt in all sectors of the country’s economic, social and political life.

  • 9.

    In that regard, debt forgiveness has been an important step that has opened avenues for the country to access international resources. It has also meant that fewer resources are being sent abroad and can be used to boost domestic saving that will be channeled into poverty reduction projects.

  • 10.

    Notwithstanding, the country faces the major challenge of determining how it will manage these expectations in light of its weak institutions and, especially, the dearth of human resources.

11. In order to maximize the positive impact of these opportunities, the government, in the context of program implementation, has set as a priority the pursuit of goals that would reduce poverty, targeting mainly the areas of education, health, public works, the judicial system, and law and order, in addition to maintaining sustainable economic and social development, based on a disciplined and rational approach to the use of public resources.

III – ANALYSIS OF NPRS ACTION PLAN IMPLEMENTATION

3.1 Status of NPRS implementation

As in recent years, the NPRS annual action plan has been only partially implemented. This year, the failure to completely implement the objectives was the result of mainly exogenous factors, such as the holding of successive elections leading to a long period of “non governance,” which in turn resulted in only partial completion of the actions planned for this year.

1 Compared with other fuels, at December 2006 the level of oil imports had risen nominally by 73.5 percent of total imports for the same period of 2005.

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