According to bank provided information, management submits the following proposal and recommendation for a Transition Support Facility (TSF) grant amounting to six million Units of Account (UA 6,000,000) to the Democratic Republic of Sao Tome and Principe (STP) to finance the second phase of the Fiscal Sustainability and Economic Resilience Program (FSERPII). The FSERP was designed as a programmatic series of two consecutive General Budget Support (GBS) operations of UA 4 million in the fiscal year 2023 and UA 6.00 million in the fiscal year 2025 for a total financing of UA 10.00 million. This is the second phase of the two-year series of the Program Based Operation. It follows Board approval of the first phase on 1 December 2023 for an amount of four million UA (UA 4,000,000) and subsequent implementation of the related program measures.

In accordance with the initial program approved by the Board of Directors on December 1, 2023, the objective of FSERP II is to improve fiscal sustainability and governance in the energy sector by strengthening public financial management systems and reforming the energy sector. The two components will continue to be: Component 1: Improving transparency and fiscal sustainability, to support measures to increase domestic revenue, improve public expenditure efficiency, and strengthen debt transparency and sustainability; and Component 2: Improving energy sector governance and the transition to renewable energy, to support reforms in the energy sector and contribute to the transition to green energy.

The program's direct beneficiaries are the MPF through provision of resources to fiscus for implementing the national budget. The resources will reduce the budget deficit and help boost foreign exchange reserves. Improved foreign exchangesreservesare critical to the importation of essential goods and improved performance of the energy sector.The program will indirectly benefit all citizens of STP as an improved business environment will lead to growth and job creation, improved fiscal transparency will lead to better and more public services and boosted energy and climate resilience will allow more employment opportunities and a safer habitat.

Name Fenwick Dingiswayo KAMANGA
Email f.kamanga@afdb.org 

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