Democratic Republic of São Tomé and Príncipe : Country Integrated Fiduciary Assessment, Volume 1. Executive Summary

Abstract

This Integrated Fiduciary Assessment is
 the first of its kind for Sao Tome and Principe. It combines
 the analysis and policy recommendations from a public
 expenditure review (PER), a country financial accountability
 assessment (CFAA), and a country procurement assessment
 review (CPAR). The goal of the report is to identify the
 major challenges facing the country in the prepetroleum era
 (the next three to five years) in public finance management
 (including public enterprises) as it attempts to implement
 its National Poverty Reduction Strategy (NPRS) with a tight
 resource envelope. This executive summary presents recent
 economic developments and fiscal sustainability analysis
 that takes into account petroleum and no-petroleum
 scenarios, with corresponding analysis on which of the
 Millennium Development Goals (MDGs) are reachable. The
 summary reports on revenue and expenditure performance since
 2000-01, issues related to the implementation of the public
 investment program (PIP) and its coordination with the NPRS,
 and the budget process, including findings from the Health
 PER, which highlights a lack of allocative efficiency. The
 summary reports on the financial fragility of state-owned
 enterprises (SOEs) and the possible fiscal consequences for
 the central budget, especially regarding the implicit
 subsidies and tax breaks to (and the hypothetical tariff
 increases of) the electricity and water company. The summary
 of reports on the status of the public finance management
 system (budget preparation, execution, control, governance,
 and human resources) and the reform process that may address
 many of the concerns it rises. Finally, the summary presents
 the findings related to the procurement process, including
 the legislative and regulatory framework, institutional
 framework and management capacity, procurement operations
 and market practices, and integrity and transparency of the system.