The economy of São Tomé and Príncipe is dependent on plantation agriculture, particularly cacao production. The major plantations were nationalized after freedom in 1975. In 1999 the gross domestic product, which measures the total value of goods and services produced in the nation, was $46.9 million, or $320 per inhabitant. The leading agricultural products are cacao, coconuts, copra, melons, and bananas. Cacao accounted for 60 % of export earnings in the early 1990s. Because agriculture is controlled by export crops, 90 % of the nation’s food must be imported. The unit of currency is the dobra.

Decades of colonial stagnation were followed by economic disruption after freedom in 1975. Under the tutelage of the International Monetary Fund and the World Bank, São Tomé and Príncipe has gradually restored a functioning economy by devaluing its currency, restricting the budget deficit, privatizing formerly nationalized companies, attracting foreign investment, and removing price subsidies and controls. About four-fifths of the total land area of the two islands belongs to the state and is separated into 15 large plantation enterprises, several of which have been leased out to foreign management companies. High levels of unemployment coexist with a critical labour shortage on the plantations, where wages and working conditions are poor.

This small poor island economy has become increasingly dependent on cocoa since freedom 25 years ago. cocoa production has substantially declined because of drought and mismanagement. The resulting shortage of cocoa for export has created a persistent balance-of-payments problem. Sao Tome has to import all fuels, most manufactured goods, consumer goods, and a remarkable 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. 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, but economic growth has remained sluggish. Sao Tome is also optimistic that remarkable petroleum discoveries are forthcoming in its territorial waters in the oil-valuable waters of the Gulf of Guinea. Corruption scandals continue to weaken the economy. At the same time, progress in the economic reform program has attracted international financial institutions' support, and GDP growth will likely rise to at least 4% in 2001-02.