An interview with Prime Minister Norberto da Costa Alegre

'Our external debt is too big'

Sao Tomamp; Principe, a democracy in its infancy, had its fiirst political crisis in April, three months after the country's first completely free elections since independence in 1975. The cause ? A difference of opinion over his powers, which prompted President of the Republic Miguel Trovoada to remove Prime Minister Daniel Dalo, leader of the Democratic Convergence Party (PCD) and winner of the legislative elections with 64% of the votes and 32 of the 55 seats in the House. The PCD contested the decision strongly to begin with and then accepted it when legal specialists from all the political parties together with two eminent Portuguese constitutionalists investigated the presidential powers closely and clarifed the situation. President Trovoada chose a new Prime Minister from the ranks of the PCD - Norberto da Costa Alegre, the Finance Minister from the previous Government, who answers questions from The Courier in this interview.

· Sao Tomas just seen its new institutions' first political crisis, hasn't it, Prime Minister ? How is it possible to take over the job of Prime Minister from the leader of your own party and what will be your policy ?

- Countries which already have democratic traditions may find it a bit difficult to grasp, but we who are in a new phase and getting a democratic rme going do not find it so. We are trying to find pragmatic solutions without endangering the still very fragile institutions - that was the background against which a new Prime Minister was appointed. But I have to say that my Government is the natural continuation of its predecessor. Programmes are being adapted, of course, but, basically, we shall be carrying on with what was started before.

· But the previous Government also fell because of popular discontent, backed up with demonstrations, and you say you are going to carry on with that policy ?

- The popular discontent was due to the country's economic problems. And, of course, the opposition parties exploited it. But everyone has learnt a lesson from a crisis which, ultimately, was beneficial for the institutions, because democracy has now been strengthened and it is clear to everyone that crises don't help anyone.

· Your Government apparently has only a tiny majority at the moment. Do you actually have the means of governing ?

- Yes, I am convinced that we do. We may have taken things slowly so far, but that is not to say that we are not governing with the requisite stringency and determination. All that has to be done is to try and make a more thorough job of consulting and sounding out the existing political forces, and the various social forces too, so a general framework can be designed and we can move forward in a set-up everyone agrees on.

· Since independence, Sao Tomas been heavily dependent on external aid, which makes a lot of people think that the country isn't viable - although they may only say so in private. What do you have to say to them ?

- I should say that Sao Tomamp; Principe's difficulties are not so very different from the difficulties facing the other countries of Africa. We are running a balance of payments deficit and a budget deficit and we are trying to do something about that. Our investments are not financed with national savings, so we have to look abroad for financing and we have an external debt out of all proportion to the country's domestic production. But those are the problems of other African countries too. Our country is going through what is currently a very difficult period, but we are convinced that things will look up after 1994. At the round table of funders, we shall be concentrating on discussing the debt and the balance of payments and this could mean we can set up the country's development in 1994-2000 differently. So, to sum it all up, the next couple of years will be very difficult, but with the lightening of the debt, the programming of investments and the projected budget, tax and monetary regulation, things will be different after 1994.

· The people who doubt the country's viability point to its lack of exportable resources above all. They say that Sao Tomas even fewer resources than the rest of Africa.

- It does and it doesn't. It does because currently we are 90% dependent on cocoa and it doesn't because the country's potential is varied and we could produce every food product except cereal.

· Although you do in fact produce a little bit of maize...

- Yes, we do. We could diversify our farming and concentrate more on livestock to make up what is currenctly a very big food deficit. We could also look at producing exportable products which don't require a huge amount of space - cinnamon, I mean, and pepper, the spices for which we were once famous. This sort of diversification takes time, of course, but now we are suffering from not having done it before. So it's not that there is no potential. It's that there wasn't a structured enough development plan to promote this sort of agricultural diversification before. When cocoa goes up, everything is fine, but we also have to cater for the times when it goes down, which means alternative products. That is what was missing in the early years of independence.

· Are there economic activities which your country could go in for other than what you have just mentioned, Prime Minister?

- We are very well placed when it comes to developing the services sector. Certainly, there is a whole set of infrastructure there which has to be developed and improved. There is also the whole range of free zone activities. We are particularly well placed there too when it comes to developing exports to Africa and the other continents, because we are on the route to Europe and America. But as I said, this is potential which can only be realised if we develop the infrastructure and that will be one of our priorities in 1992-1994.

· Your relations with the Bretton Woods Institutions have been frozen for the time being, haven't they? Can you confirm that you will be returning to cooperation with the IMF and the World Bank ?

- I am sorry to say that you are wrong there. Relations are not frozen. We very fortunately started them up again early last year and, I have to say, the results are good.

· But payment of the second instalment of the structural adjustment monies was held up...

- No it wasn't. The second instalment will still be paid in June. The Sao Tomamp; Principe programme was put before the Board of the IBRD and the IMF on 10 June - and that was one of the conditions for the round table of funders in Geneva in mid-July. Running the structural adjustment programme with the World Bank and the Monetary Fund was one of the most important things the first Government did and that is going to continue, because Sao Tomamp; Principe's special situation demands it. As I told you, we have to have external aid to meet our internal requirements, to finance our investments and make up the deficit in our balance of payments. So the economic and financial credibility which these institutions confer is very important to us.

· One of the bones of contention with the IMF and the IBID was the administrative reform, wasn't it ? Will the army be cut down too ?

- The army hasn't come into the programmes under discussion with the IBRD and the IMF for the moment. We are talking about public administration as such, but not about very specialised sectors like the army.

· They say that some Portuguese former owners are trying to get back the property they abandoned on independence. What are your Government's intentions here ?

- We have told the Portuguese authorities on a number of occasions that Portuguese investors and promoters will be welcome in Sao Tomamp; Principe.

· That doesn't answer my question. Will they be able to get their property back ?

- That's not it. It's more a question of them applying for investments in farming or other sectors. There is no question of the State just giving property back, unless it can be proven that there were irregularities. There have been cases of irregular expropriation and there the courts decided and the people involved, Sao Toms or foreigners, got their property back. This is a problem for the courts, not the Government. But the Government has told the Portuguese authorities that investors will be welcome in Sao Tome and Principe.

· You said just now that your country had too big a debt for its meagre resources. What is your Government going to try to do about this?

- That will be one of the big questions at the Geneva meeting in mid-July. There are creditors with whom we have to discuss ways of lightening the debt burden. There are many ways of going about it. With some of them, we shall be talking about the possibility of turning these debts into direct investment in Sao Tomamp; Principe. With others, we shall be negotiating a rescheduling of what we owe. And then, of course, there is the whole system we have to find with the donors of bridging the financing gap in our balance of payments.

· By wiping debts out?

- The question is this. We are going to investigate rescheduling the debt and wiping it out and converting it into direct investment with the creditors, but there is more to it than that. There is the external deficit, after all. There is infrastructure which is completely run down. There are imports of goods and equipment to keep up with - which is why, in one and the same framework, we have to discuss the macro-economic set-up for this period with our creditors and with our funders so as to find the means of guaranteeing viability.

· Some of these debts are incomprehensible, Prime Minister, aren't they? What about the 21 million Swiss francs spent on 120 low-grade houses or the cost of the airport - $S million to begin with, but probably more than $15 million in the end ?

- I have to say that Sao Tomamp; Principe is not the only place to have this type of problem, but unfortunately it is in the poorest countries that these things stand out the most. I don't think that the rehabilitation of the airport is the same sort of thing. There were delays which caused the budget to overrun in this case. However, these prefabricated houses are a sorry affair, but, as I said, that is the sort of problem which you don't just see in Sao Tomamp; Principe. Unfortunately you see such things in other parts of Africa too.

· Your country is hosting a very rich foreign citizen, Mr Herringer, I think. What can he do for Sao Tomamp; Principe's development ?

- You have just mentioned someone you claim to be a very rich foreigner. Let me tell you that Sao Tomamp; Principe is host to other foreigners too. I can't tell you how rich they are, but we welcome all foreigners who want to take part in the development of Sao Tomamp; Principe. This gentleman has already invested in some very specific sectors - civil aviation and tourism - and the contacts he established suggested that he was willing to continue his activity. So, as far as we are concerned, he is welcome here.

· One aspect of your policy, I believe, is to boost regional cooperation, not just with the Portuguese speaking nations but with your immediate neighbours too.

- Absolutely. We are convinced that a little country like ours can only survive, in an increasingly regionalised world, if it is an integral part of the sub-region. So all the efforts we are making now to get the economy off the ground again are ultimately intended to enable our country to gain its rightful place in Africa and the world and to make the most of any comparative advantages to put its development on a firmer footing.

Interview by Amadou TRAORE