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2022-07-07

Regulation (NAP) – Amendment of Base Rates, Minimum Cash Reserve Coefficient and Issuance of Deposit Certificates

The Central Bank of São Tomé and Príncipe has amended its base rates, raising the reference interest rate to 10.0% and the liquidity facility rate to 10.5%, while increasing the domestic currency minimum cash reserve coefficient from 18% to 28%. The foreign currency reserve coefficient remains unchanged at 21%, and the bank will issue one-month deposit certificates at a variable rate to support monetary policy alignment with fiscal measures. This permanent regulatory standard, effective June 13, 2022, formally revokes prior 2017 and 2020 monetary policy decisions to address elevated domestic inflationary risks.

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NAPCODE
PERMANENT REGULATORY STANDARDMGL 01
PROPOSER(S)EFFECTIVE DATEISSUANCE DATE
C.A.June 13, 2022July 7, 2022

Subject: Amendment of Base Rates, Minimum Cash Reserve Coefficient and Issuance of Deposit Certificates

Considering the recent evolution of the national and international economy as well as the outlook for 2022, particularly regarding domestic price levels;

Given the need to adopt monetary policy measures aligned with fiscal policy measures, aiming to contain high domestic inflationary risk;

In these terms, the Central Bank of São Tomé and Príncipe, pursuant to Article 32 of its Organic Law (Law No. 8/92), determines the following:

Article 1. (Base Rates of BCSTP)

i) The reference interest rate is amended from 9.0% to 10.0%; ii) The liquidity facility interest rate is amended from 9.5% to 10.5%;

Article 2. (Minimum Cash Reserve Coefficients - MCR)

i) The domestic currency MCR coefficient is amended from 18% to 28%; ii) The foreign currency MCR coefficient remains unchanged at 21%;

EndorsedRevocation Details: NAP 10/2017 - Amendment of Base Rates of the Central Bank of São Tomé and Príncipe dated June 28, 2017; Monetary Policy Committee Decision No. 2/2020 dated December 31, 2020.
NAPCODE
PERMANENT REGULATORY STANDARDMGL 01
PROPOSER(S)EFFECTIVE DATEISSUANCE DATE
C.A.June 13, 2022July 7, 2022

Article 3. (Issuance of Deposit Certificates)

Issuance of deposit certificates with a 1-month maturity at a variable rate.

Article 4. (Revocation)

NAP No. 10/2017, dated June 28, is hereby revoked, as well as the MPC Decision No. 02/2020 dated December 31, 2020.

Article 5. (Entry into Force)

This NAP enters into force as of June 13, 2022.

Central Bank of São Tomé and Príncipe, on the 7th day of July 2022.

EndorsedRevocation Details: NAP 10/2017 - Amendment of Base Rates of the Central Bank of São Tomé and Príncipe dated June 28, 2017; Monetary Policy Committee Decision No. 2/2020 dated December 31, 2020.
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