Prime Minister Maria das Neves told Portuguese newspaper Expresso that she hopes to clean up the finances of what is one of the world's poorest countries and restore its international reputation.

"(I) guarantee available resources are allocated for sustainable development and improving the living conditions of most of the population, which lives in absolute poverty

Maria das Neves Prime Minister Sao Tome and Principe

She supports continuing austere budget measures, "even if it causes pain and is unpopular", to adhere to the World Bank's debt forgiveness programme.

Ms das Neves is from the Movement for the Liberation of Sao Tome and Principe, the largest party in the parliament, and leads a "national unity" government.

The former Portuguese colony is made up of two islands in the Gulf of Guinea, has a population of roughly 165,000 and large unexploited oil reserves.

Oil deals

She said cutting foreign debt would be her government's "priority of priorities" in 2003 because it "strangles Sao Tome's future".

Future oil revenues will not be included in current budget because contracts are still being negotiated.

The prime minister has promised to "guarantee available resources are allocated for sustainable development and improving the living conditions of most of the population, which lives in absolute poverty".

Negotiations are currently underway with Nigeria over the division of the Gulf of Guinea's oil reserves

The two countries settled a maritime border dispute last year in which Nigeria will take 60% of the oil produced and Sao Tome 40% plus a yet to be finalised compensation package.

Nigeria has offered Sao Tome 10,000 barrels of oil a day in compensation, once it signs the agreement, allowing it to start selling oil before it begins production.

The package also includes Nigerian funding for a deep water port and an oil refinery.

American interests

Plans to build a "sheltering port" for the US Navy, to patrol the Gulf of Guinea and its oil resources, and become a trading post for the region also form key legs of her economic policy.

"A deep water port will be part of our medium-term strategy to turn Sao Tome into a platform of highly qualified services, for a region which represents a market of 500 million people," she said.

While details remain sketchy, US assistant secretary of state for African affairs, Walter Kansteiner, visited Sao Tome early in October to reaffirm US interest.

Mr Kansteiner told Sao Tome's leaders that US companies were interested in searching for oil off the coast.

Ms das Neves is a former of economy "super" minister in the government of Guilherme Posser da Costa in 1998.