AfDB guarantees 39 million dollars for São Tomé State Budget and energy transition on the island of Príncipe

The African Development Bank (AfDB) today announced direct support of US$15 million to the São Tomé State Budget and a US$24 million project to guarantee 100% renewable energy on the island of Príncipe in two years.

According to the AfDB representative for Angola and São Tomé and Príncipe, the 15 million dollars will be made available with the participation of the Nigerian Government, the amount of which was not disclosed, and will be directed “to support the implementation of the budget and compliance with the goals agreed with the International Monetary Fund (IMF) during this year”.

Pietro Toigo said last year the AfDB's support for the São Tomé State Budget was 5.5 million dollars, and that the same amount was expected for this year, but "it was decided to increase the amount" with the aim of "improving the transparency of public finance management" and "strengthening budget management".

According to the AfDB representative, another priority defined with the São Tomé executive is the energy transition so that it can “provide the basis for the country’s economic development” and allow for lower balance of payments costs in fuel imports.

In this sense, he highlighted a project worth around 24 million dollars to be approved by October, which aims to finance a solar park to help guarantee “complete energy independence for the island of Príncipe” within two years.

According to Pietro Toigo, the project includes actions to “strengthen the Príncipe network so that it can support this greater energy load” and also “modernize the structure” of the Information and Communication Technologies (ICT), IT and digital services of the Water and Electricity Company (Emae), in addition to the installation of more than 60 thousand prepaid meters “to ensure the financial sustainability of Emae”.

Additionally, the AfDB representative announced that between May and June, work should begin on the construction of a mini hydroelectric plant on the Papagaio River, also on the island of Príncipe, with a capacity of 0.6 megawatts.

Pietro Toigo said that the island of Príncipe needs less than two megawatts of energy, but the two renewable plants that will be built could inject 2.6 megawatts to replace fossil fuels on the island, which has been a UNESCO World Biosphere Reserve since 2012.

During the last week, the AfDB representative met with the President of São Tomé, Carlos Vila Nova, with Prime Minister Américo Ramos, and several members of the new São Tomé Government, in office since January 14.

The State Budget of São Tomé and Príncipe for 2025, submitted to parliament on Friday, is around 260 million euros, significantly higher than the 178 million euros in the previous year's State Budget.

“Of these 260 million euros, 51% is financed with our own revenues. The remainder with donations and external financing in the form of concessional credits”, explained the Minister of State, Economy and Finance, Gareth Guadalupe, after the documents were delivered.

The minister also said that 49% of expenses are operating expenses, “precisely because of the large weight of the wage bill at the public administration level”, 39% are investment expenses and the remaining 12% will be for the amortization of public debt”.

In a statement from the Council of Ministers on Thursday, the Government had announced a forecast of GDP growth of 3.3% and a reduction in inflation to 8.9%, but the Minister of Economy and Finance said that the State Budget foresees “growth of around 3%” and inflation of approximately 7%.