Sao Tome and Principe Sao Tome and Principe Background Discovered and claimed by Portugal in the late 15th century, the islands' sugar-based economy gave way to coffee and cocoa in the 19th century - all grown with plantation slave labor, a form of which lingered into the 20th century. Although independence was achieved in 1975, democratic reforms were not instituted until the late 1980s. Though the first free elections were held in 1991, the political environment has been one of continued instability with frequent changes in leadership and coup attempts in 1995 and 2003. The recent discovery of oil in the Gulf of Guinea is likely to have a significant impact on the country's economy. Sao Tome and Principe Economy This small poor island economy has become increasingly dependent on cocoa since independence 28 years ago. Cocoa production has substantially declined in recent years because of drought and mismanagement, but strengthening prices brighten prospects for 2003. Sao Tome has to import all fuels, most manufactured goods, consumer goods, and a substantial amount of food. Over the years, it has been unable to service its external debt and has had to depend 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. Sao Tome's success in implementing structural reforms has been rewarded by international donors, who pledged increased assistance in 2001. 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 that substantial petroleum discoveries are forthcoming in its territorial waters in the oil-rich waters of the Gulf of Guinea; production could begin as early as 2004. Sao Tome and Principe Location Western Africa, islands in the Gulf of Guinea, straddling the Equator, west of Gabon Sao Tome and Principe 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
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