[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-111192-en":3,"doc-seo-111192-105":29,"detail-sidebar-cat-0-en-105":91},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},111192,34359740700684,"Finn","https://ap-avatar.wpscdn.com/avatar/1f400023980c374ae676?_k=1777273430885731487",8,"Research & Report","The Democratic Republic of São Tomé and Príncipe: Joint Bank-Fund Debt Sustainability Analysis - Debt distress risk assessment","The Democratic Republic of São Tomé and Príncipe remains in external debt distress, driven by prolonged unsettled external arrears of about 1.6 percent of GDP at end-2023. Export recovery and fiscal consolidation are assessed to gradually lower risks, but baseline indicators breach key thresholds temporarily. The PV of debt-to-exports breaches through 2027 and the debt service-to-exports breaches from 2025 to 2028. Weak debt-carrying capacity is linked to a composite indicator score and sizable concessional and arrears-related public debt dynamics, with contingent liabilities increasing overall risk.","Public Disclosure  \nPub lic Disc losure Authorized  \nApproved by:  \nManuela Francisco and Hassan Zaman (IDA) and Costas Christou and Anna Ivanova (IMF)  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF)  \n\n| THE DEMOCRATIC REPUBLIC OF SÃO TOMÉ AND PRÍNCIPE:\u003Cbr>JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | In debt distress |\n| Overall risk of debt distress | In debt distress |\n| Granularity in the risk rating | Sustainable |\n| Application of judgment | No |\n\nSão Tomé and Príncipe (STP) remains in debt distress, due to prolonged unsettled external arrears of around 1.6 percent of GDP at end-2023 . Nevertheless, staff assesses that the country has the capacity to repay the external arrears over time. The recovery of exports and fiscal consolidation will help lower debt risks. Two external debt indicators temporarily breach their respective thresholds under the baseline. Specifically , the present value (PV) of debt-to-exports ratio breaches its threshold through 2027, and the debt service-to-exports ratio breaches the threshold from 2025 to 2028. These breaches are attributed to the large amount of external debt and debt service obligations. The PV of total public and publicly guaranteed (PPG) debt—after accounting for the concessional terms of utility company EMAE’s and central government’s debt and arrears to the country’s fuel supplier ENCO—is projected to temporarily breach the benchmark (35 percent of GDP) associated with a weak debt-carrying capacity through 2024.  \n1 As public debt remains on a downward trajectory, predicated on the authorities’ commitment to reform EMAE, borrow externally at a measured pace, and implement fiscal consolidation and energy sector reforms, public debt sustainability  \n1 The thresholds are determined by the Composite Indicator (CI) . São Tomé and Príncipe’s CI score based on the October 2024 World Economic Outlook (WEO) and the 2023 World Bank Country Policy Institutional Assessment (CPIA) data is 2 .453, corresponding to a weak debt-carrying capacity.  \nis preserved but subject to large risks, which have increased since the last DSA, with an elevated likelihood of contingent liabilities materializing.  \n1. For the purposes of the DSA for São Tomé and Príncipe (STP), PPG debt includes the central government, the central bank, and EMAE’s debt,2,3 and the public-sector debt coverage is comprehensive albeit not yet complete (Text Table 1) .4 EMAE (Empresa de Agua e Electricidade , the state-owned utility company) has been accumulating arrears over the years to its fuel supplier ENCO (Empresa Nacional de Combustíveis e Óleos), totaling 29 percent of GDP at end-2023, which are included in PPG debt for DSA purposes.5 Contingent liabilities associated with the other three state-owned enterprises (SOEs)—ENAPORT, ENASA, and Correios—are estimated at 2 percent of GDP at the end- 2023, and are included in the analysis based on the latest TA mission data. The DSA uses the residencybased definition of external debt. The use of the currency criterion would trigger substantial differences in results as EMAE’s debt and arrears to ENCO are denominated in USD and are classified as domestic debt.  \n2. Contingent liabilities are captured in the contingent liabilities stress test (Text Table 2) . Additional potential liabilities from other SOEs are assumed at 2 percent of GDP. Contingent liabilities from financial markets are set at their default value of 5 percent of GDP. In addition, the contingent liabilities stress test includes disputed debt of US$30 million (4 .4 percent of GDP at end-2023) owed to Nigeria. The authorities maintain that its repayment was conditional on oil revenues, which have no near-term prospect of materializing. Estimated fines of US$12 .4 million (1 . 8 percent of GDP) imposed by the Permanent Court of Arbitration after its ruling on STP’s seizure of a Maltese ship in 2","cbCaiedwImJqL13P","https://ap.wps.com/l/cbCaiedwImJqL13P","pdf",1020887,1,21,"English","en",105,"# Risk of external debt distress\n## Overall risk of debt distress\n## Granularity in the risk rating\n## Application of judgment\n# Debt indicators and thresholds\n## PV of debt-to-exports\n## Debt service-to-exports\n## Benchmark breach related to debt-carrying capacity\n# Public and contingent liabilities coverage\n## PPG debt scope and utility debt/arrears\n## Contingent liabilities stress test inputs\n## Exclusions and baseline assumptions","[{\"question\":\"What is the overall debt distress risk assessment for São Tomé and Príncipe?\",\"answer\":\"The overall risk of debt distress is assessed as being in debt distress, reflecting continued external arrears and adverse indicators under the baseline scenario.\"},{\"question\":\"Which debt indicators breach their thresholds and when?\",\"answer\":\"The PV of the debt-to-exports ratio breaches its threshold through 2027, while the debt service-to-exports ratio breaches from 2025 to 2028 under the baseline.\"},{\"question\":\"How does contingent liabilities affect the debt sustainability outlook?\",\"answer\":\"Contingent liabilities are captured in a stress test, including arrears, potential SOE liabilities, financial-market shocks, and disputed debt elements, which increase the likelihood of liabilities materializing and raise overall risk.\"}]",1784489040,53,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":86,"head_meta":88,"extra_data":90,"updated_unix":27},"the-democratic-republic-of-sao-tome-and-principe-joint-bank-fund-debt-sustainability-analysis-debt-distress-risk-assessment","",{"@graph":35,"@context":85},[36,53,68],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/the-democratic-republic-of-sao-tome-and-principe-joint-bank-fund-debt-sustainability-analysis-debt-distress-risk-assessment/111192/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":62,"encodingFormat":60,"isAccessibleForFree":63,"interactionStatistic":64},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-20","2026-07-19",true,{"@type":65,"interactionType":66,"userInteractionCount":20},"InteractionCounter",{"@type":67},"ViewAction",{"@type":69,"mainEntity":70},"FAQPage",[71,77,81],{"name":72,"@type":73,"acceptedAnswer":74},"What is the overall debt distress risk assessment for São Tomé and Príncipe?","Question",{"text":75,"@type":76},"The overall risk of debt distress is assessed as being in debt distress, reflecting continued external arrears and adverse indicators under the baseline scenario.","Answer",{"name":78,"@type":73,"acceptedAnswer":79},"Which debt indicators breach their thresholds and when?",{"text":80,"@type":76},"The PV of the debt-to-exports ratio breaches its threshold through 2027, while the debt service-to-exports ratio breaches from 2025 to 2028 under the baseline.",{"name":82,"@type":73,"acceptedAnswer":83},"How does contingent liabilities affect the debt sustainability outlook?",{"text":84,"@type":76},"Contingent liabilities are captured in a stress test, including arrears, potential SOE liabilities, financial-market shocks, and disputed debt elements, which increase the likelihood of liabilities materializing and raise overall 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