Since the 1800s, the economy of São Tomé and Príncipe has been based on plantation agriculture. At the time of independence, Portuguese-owned plantations occupied 90% of the cultivated area. After independence, control of these plantations passed to various state-owned agricultural enterprises. The dominant crop on São Tomé is cocoa, representing about 95% of exports. Other export crops include copra, palm kernels, and coffee.
Domestic food-crop production is inadequate to meet local consumption, so the country imports some of its food. Efforts have been made by the government in recent years to expand food production, and several projects have been undertaken, largely financed by foreign donors.
Other than agriculture, the main economic activities are fishing and a small industrial sector engaged in processing local agricultural products and producing a few basic consumer goods. The scenic islands have potential for tourism, and the government is attempting to improve its rudimentary tourist industry infrastructure. The government sector accounts for about 11% of employment.
Following independence, the country had a centrally directed economy with most means of production owned and controlled by the state. The original constitution guaranteed a "mixed economy," with privately owned cooperatives combined with publicly owned property and means of production. In the 1980s and 1990s, the economy of São Tomé encountered major difficulties. Economic growth stagnated, and cocoa exports dropped in both value and volume, creating large balance-of-payments deficits. Efforts to redistribute plantation land resulted in decreased cocoa production. At the same time, the international price of cocoa slumped.
In response to its economic downturn, the government undertook a series of far-reaching economic reforms. In 1987, the government implemented an International Monetary Fund structural adjustment program, and invited greater private participation in management of the parastatals, as well as in the agricultural, commercial, banking, and tourism sectors. The focus of economic reform since the early 1990s has been widespread privatization, especially of the state-run agricultural and industrial sectors.
In April 2000, the IMF approved a poverty reduction and growth facility for São Tomé aimed at reducing inflation to 3% for 2001, raising deal growth to 4%, and reducing the fiscal deficit. In December 2000, São Tomé received significant debt reduction under the IMF-World Bank's Heavily Indebted Poor Countries (HIPC) initiative. The reduction should free additional resources for poverty reduction and public investment.
São Tomé's success in implementing structural reforms has been rewarded by international donors, who have pledged increased assistance in 2001. The São Toméan Government has traditionally obtained foreign assistance from various donors, including the UN Development Program, the World Bank, the European Union, Portugal, Taiwan and the African Development Bank
Portugal remains one of São Tomé's major trading partners, particularly as a source of imports. Food, manufactured articles, machinery, and transportation equipment are imported primarily from the EU.
gross domestic product: purchasing power parity - $169 million (1999 est.)
GDP - real growth rate: 1.5% (1999 est.)
GDP - per capita: purchasing power parity - $1,100 (1999 est.)
GDP - composition by sector:
services: 58% (1997 est.)
Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%
Inflation rate (consumer prices): 10.5% (yearend 1999 est.)
Labor force: NA
Labor force - by occupation:
population mainly engaged in subsistence agriculture and fishing
note: shortages of skilled workers
Unemployment rate: 50% in the formal business sector (1998 est.)
revenues: $58 million
expenditures: $114 million, including capital expenditures of $54 million (1993 est.)
Industries: light construction, textiles, soap, beer; fish processing; timber
Industrial production growth rate: NA%
Electricity - production: 15 million kWh (1998)
Electricity - production by source:
fossil fuel: 46.67%
other: 0% (1998)
Electricity - consumption: 14 million kWh (1998)
Electricity - exports: 0 kWh (1998)
Electricity - imports: 0 kWh (1998)
Exports: $4.9 million (f.o.b., 1999 est.)
Imports: $19.5 million (f.o.b., 1999 est.)
Imports - commodities: machinery and electrical equipment, food products, petroleum products
Debt - external: $274 million (1998)
Economic aid - recipient: $57.3 million (1995)
Currency: 1 dobra (Db) = 100 centimos
Exchange rates: dobras (Db) per US$1 - 7,200.0 (October 1999), 7,104.05 (1998), 4,552.5 (1997), 2,203.2 (1996), 1,420.3 (1995)
Fiscal year: calendar year