Abidjan, Côte d'Ivoire, May 27, 2025 (Lusa) - The African Development Bank (AfDB) has predicted a "cautiously positive" evolution of the economy of Sao Tome and Principe, with growth of 2.7% in 2025 and 4.4% in 2026, according to the latest analysis of the country.

The forecast is justified by "relatively high prices for cocoa," in which the archipelago is rich, "tourism, public works and planned investments in infrastructure," added the financial institution in the chapter dedicated to Sao Tome and Principe in its African Economic Outlook (AEO) report for 2025, released on Tuesday.

"Inflation is expected to continue to fall to 7% by 2026, which will improve household purchasing power," the AfDB predicted.

The rise in cocoa prices and a reduction in the bill for imported fuel (used to produce electricity in the country), coupled with a recovery in tourism, had already helped Sao Tome and Principe to grow (0.4% in 2023 and 0.9% in 2024), the institution recalled, also noting a decline in inflation, which nevertheless stood at 14.5% in 2024.

For this year, the budget deficit is expected to decrease to 2.5% of GDP and then to 1.4% of GDP in 2026.

The AEO 2025 was published during the AfDB's annual meetings in Abidjan, Côte d'Ivoire, with the central theme of mobilising the continent's resources to free it from external dependence.

"Encouraged by an Extended Credit Line from the International Monetary Fund (IMF), budgetary discipline should help reduce public debt to less than 55% of GDP by 2027" and the current account deficit "should improve in 2025-26", again driven by high cocoa prices, improved tourism and moderate oil prices.

Risks include "slow progress in energy sector reforms", along with global uncertainties that include a reduction in foreign aid on which the country depends.

"Sao Tome and Principe should use its natural capital to mobilise financial resources that reduce dependence on imported oil for energy production, such as solar panels that accelerate the energy transition, climate debt swaps, carbon credits or fishing agreements that can alleviate foreign exchange shortages," recommended the AfDB.

*** The Lusa news agency travelled at the invitation of the African Development Bank (AfDB) *** LFO/ADB // ADB.

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