Will banks and other financial institutions close during the state of emergency?

No. The Central Bank of Sao Tome and Principe ("CBSTP") and commercial banks shall operate from Monday to Friday, between 07.30 am and 11.00 am, and from 07.30 am to 3.00 pm, respectively, being obliged to adapt their operation in such a way as to ensure the public health guidelines, in particular the rules on social distancing and the sanitation of the areas where the service is provided.

CBSTP shall only operate for the provision of services and activities deemed essential.  

 

What are the activities of Central Bank of Sao Tome and Principe deemed essential in the context of COVID 19?

Internally, CBSTP has established as essential the following services to be provided on a continuous basis: (1) payment system; (2) reserve and monetary management; (3) cash withdrawal operations by commercial banks; (4) processing payments to suppliers; (5) processing payments to pensioners and (6) credit risk central.

 

How will commercial banks operate then?

Banks and other financial institutions must ensure their role in the functioning of the real economy and the continuity of their normal functioning and the service to customers and the public, but, (a) favouring digital channels to carry out their financial operations, (b) establishing a regime of conditional access to their counters and (c) managing the flow of entrances to the facilities in order to avoid people gatherings.

Banks and other financial institutions shall adopt measures to protect their own employees.

 

What are the monetary stimuli and prudential flexibilization to face the situation generated by COVID-19?

According to a press release dated 24 March, the Board of Directors of the Central Bank of Sao Tome and Principe resolved to adopt, a derogatory set of monetary stimuli and prudential flexibilization measures to mitigate the impact of COVID-19 on the national economy, to be effective as of 1 April.

The set of measures has the objective of (a) providing guarantees to commercial banks that, by providing credit in the context of COVID-19 where risk and uncertainty have increased exponentially, they will not lack liquidity and will not be penalized in terms of capital; and (b) promoting lower interest rates on loans to be granted by the banks, preventing possible difficulties in the normal compliance of credit payment obligations in the adverse context of the pandemic.

In this framework, the set includes the following measures:

  1. Reduction of the marginal lending rate, from 11% to 9,5%;
  2. Reduction of minimum cash availabilities from 18% to 14%, in national currency, and from 21% to 17% in foreign currencies;
  3. Guiding commercial banks on granting moratoriums on the payment of banking instalments to economic agents (companies and individuals) whose revenue or businesses are directly affected by Covid-19;
  4. Guiding banks on suspending and/or reducing some commissions, especially those related to electronic payments;
  5. Collaborate with SPAUT (Automatic Payment System Management Company) and commercial banks to ensure the continued supply to ATM machines.

Further to the above listed measures, the Board of Directors of the Central Bank of Sao Tome and Principe has resolved, through Permanent Application Rule no. 07/2020, of 22 may 2020, on the review of the pricelists, having suspended, during the period of effectiveness of the Rule – i.e. during the emergency period and on the three months thereafter, the charge by the banks of commissions and costs related to:

a) Interbank transfer orders and instructions;

b) Credit withdrawal;

c) Accelerated performance of credit, excluding credit migration to another institution

During the same period, cheque books and Dobra 24 debit cards are issued at production costs and fees, commissions and other costs related to the assessment and opening of credit facilities are reduced in 50%.

 

 

 

__________________________

This information is being updated on a regular basis.

The information provided and the opinions expressed herein have been prepared with the help of VdA Legal Partners and are of a general nature. They are not in lieu of appropriate legal advice in connection with specific cases.