an embassy in
Sao Tome and Principe; the Ambassador to Gabon is accredited to Sao
Tome and Principe on a nonresident basis and makes periodic visits
to the islands

Flag: three horizontal bands of green (top), yellow (double
width), and green with two black five-pointed stars placed side by
side in the center of the yellow band and a red isosceles triangle
based on the hoist side; uses the popular pan-African colors of
Ethiopia

Economy
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Economic overview: This small poor island economy has remained
dependent on cocoa since independence 20 years ago. Since then,
however, cocoa production has gradually declined because of drought
and mismanagement, so that by 1987 annual output had fallen from
10,000 tons to 3,900 tons. As a result, a shortage of cocoa for
export has created a serious balance-of-payments problem. Production
of less important crops, such as coffee, copra, and palm kernels,
has also declined. The value of imports generally exceeds that of
exports by a ratio of 3 to 1 or more. The emphasis on cocoa
production at the expense of other food crops has meant that Sao
Tome has to import 90% of food needs. It also has to import all
fuels and most manufactured goods. Over the years, Sao Tome has been
unable to service its external debt and has had to depend on
concessional aid and debt rescheduling. 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 and to
encourage market-based mechanisms, e.g., to facilitate the
distribution of imported food. Annual GDP growth has hovered around
1.5% since 1991.

GDP: purchasing power parity - $138 million (1994 est.)

GDP real growth rate: 1.5% (1994 est.)

GDP per capita: $1,000 (1994 est.)

GDP composition by sector:
agriculture: 28%
industry: 14%
services: 58% (1994 est.)

Inflation rate (consumer prices): 38% (1994 est.)

Labor force: most of population mainly engaged in subsistence
agriculture and fishing; shortages of plantation labor and of
skilled workers

Unemployment rate: NA%

Budget:
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 ra