ost
prosperous regions of Italy, which supplies much of its food.

Sao Tome and Principe
This small poor island economy has become
increasingly dependent on cocoa since independence in 1975. Cocoa
production has substantially declined in recent years because of
drought and mismanagement, but strengthening prices helped boost
export earnings in 2003. Sao Tome has to import all fuels, most
manufactured goods, consumer goods, and a substantial amount of
food. Over the years, it has had difficulty servicing its external
debt and has relied heavily on concessional aid and debt
rescheduling. Sao Tome benefited from $200 million in debt relief in
December 2000 under the Highly Indebted Poor Countries (HIPC)
program, but lacking a formal poverty reduction program with the
IMF, it has not benefited from subsequent HIPC debt reductions. Sao
Tome's external debt stands at over $300 million. Considerable
potential exists for development of a tourist industry, and the
government has taken steps to expand facilities in recent years. The
government also has attempted to reduce price controls and
subsidies. Sao Tome is optimistic about the development of petroleum
resources in its territorial waters in the oil-rich Gulf of Guinea.
The first production license was sold to a consortium led by
US-based oil firms. Much of the 2005 budget is dependent upon the
sale of additional production licenses.

Saudi Arabia
This is an oil-based economy with strong government
controls over major economic activities. Saudi Arabia possesses 25%
of the world's proven petroleum reserves, ranks as the largest
exporter of petroleum, and plays a leading role in OPEC. The
petroleum sector accounts for roughly 75% of budget revenues, 45% of
GDP, and 90% of export earnings. About 40% of GDP comes from the
private sector. Roughly five and a half million foreign workers play
an important role in the Saudi economy, for example, in the oil and
service sectors. The government in 1999 announced plans to begin
privatizing the electricity companies, which follows the ongoing
privatization of the telecommunications company. The government is
encouraging private sector growth to lessen the kingdom's dependence
on oil and increase employment opportunities for the swelling Saudi
population. Priorities for government spending in the short term
include additional funds for education and for the wate