IMF Staff Concludes Visit to Chad
The recently approved Extended Credit Facility (ECF) arrangement by the IMF Executive Board will help lessen the severe stress on the economy
Chad’s macroeconomic developments have been adversely impacted by a series of adverse and long-lasting shocks
Chad’s economic and financial situation and medium-term prospects have worsened due to a series of long-lasting shocks since the onset of the COVID-19 pandemic; The recently approved Extended Credit Facility (ECF) arrangement by the IMF Executive Board will help lessen the severe stress on the economy and put it on a balanced and sustainable path toward inclusive green growth and poverty reduction; Debt treatment under the G20 Common Framework and significant donor support are key for restoring debt sustainability and promote durable inclusive growth. In this respect, finalization of a debt treatment with both public and private creditors by end-March will be critical.
An International Monetary Fund (IMF) mission led by Edward Gemayel visited N’Djamena during January 12-18, 2022 to take stock of recent economic developments and update the macroframework prior to the finalization of the debt treatment by Chad’s main official and private creditors. This follows the approval by the IMF Executive Board on December 10, 2021 of a new 36-month ECF arrangement in an amount of SDR 392.56 million (about US$570.75 million or 280 percent of quota), to help meet Chad’s large balance-of-payments and budgetary needs, including by catalyzing financial support from official donors.
At the conclusion of the visit, Mr. Gemayel issued the following statement:
“Chad’s macroeconomic developments have been adversely impacted by a series of adverse and long-lasting shocks. These include: (i) the COVID-19 pandemic; (ii) oil price volatility and a significant deterioration in the output of the oil sector; (iii) security attacks; and (iv) climate change and food insecurity. Real GDP in 2021 is estimated to have contracted by 1.1 percent, driven by a reduction in oil production. Meanwhile, average annual inflation was contained after soaring in 2020 to 4.5 percent. The pandemic will likely leave long-lasting scars, and the Chadian economy is projected to remain weak over the near term, before gradually rebounding in 2024, to 3.6 percent provided adequate reforms are implemented.
``Public spending pressures are rising due to security and social tensions. Maintaining fiscal discipline in the runup to the parliamentary and presidential elections is critical for macroeconomic stability. To this end, the authorities’ efforts should continue to focus on strengthening domestic tax revenue mobilization, streamlining exemptions, improving VAT collection, controlling the wage bill, increasing social spending, and clearing domestic arrears. Staying the course with the reform agenda is equally important, including in the banking sector.
“Progress has been made on structural reforms and further efforts are envisaged to continue with the program reform agenda. Steps are being taken to meet the structural benchmarks slated for the first half of 2022. These relate to tax exemptions, and transparency in the oil sector and in public procurement contracts. The recent launch of a pilot program to decentralize wage bill management under the Integrated Financial Management System is a step in the right direction to improve public financial management. More efforts are needed to speed up improvement in tax revenue administration. Progress is being made in the preparation of a new national development plan and the rebasing of national accounts. Further progress is needed in improving the business environment to support the role of the private sector in economic recovery. The IMF stands ready to provide technical assistance to support these critical reforms.
“The mission was received by President Mahamat Idriss Deby, and met with Mr. Tahir Hamid Nguilin, Minister of Finance and Budget, Mr. Issa Doubragne, Minister of Economy, Development Planning and International Cooperation, Mr. Mahamat Hamid Koua, Minister Secretary General of the Government, Mr. Idriss Ahmat Idriss, the National Director of BEAC, and other senior officials, as well as representatives of international development partners.
“The IMF team would like to thank the Chadian authorities and other counterparts for their hospitality, excellent cooperation, and candid and constructive discussions.”
Distributed by APO Group on behalf of International Monetary Fund (IMF).