Press Releases

Chad and the IMF

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile





Press Release No. 00/1
January 7, 2000
International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA

IMF Approves Poverty Reduction and Growth Facility Loan for Chad

The International Monetary Fund (IMF) today approved a three-year arrangement for Chad under the Poverty Reduction and Growth Facility (PRGF)1 equivalent to SDR 36.4 million (about US$49.9 million) to support the government's 1999/2002 economic program. The first annual loan equivalent to SDR10.4 million (about US$14.3 million) will be available in two equal installments, with the equivalent of SDR 5.2 million (about US$7.1 million) available immediately.

In commenting on the Executive Board discussion on Chad, Shigemitsu Sugisaki, Deputy Managing Director of the IMF, made the following statement:

"Chad successfully completed a three-year ESAF-supported program in April 1999, in spite of a few slippages. Public finances improved during the program period, and progress was made in implementing key structural reforms, particularly in the area of public enterprise privatization and elimination of price controls. Chad's difficulties in raising fiscal revenues continued to hamper economic performance, however, and its economy remains vulnerable to external shocks. These difficulties underscore the need for Chad to persevere with its adjustment efforts and to achieve the transition from crisis management and stabilization to the steady implementation of economic and social policies for development and poverty reduction.

"In considering the three-year program presented by Chad for support under the PRGF, Directors stressed the importance of consolidating the fiscal gains from the previous program. The key elements of fiscal policy will be securing a durable strengthening of revenue performance, and containing non-priority spending, while providing adequate allocations for social sectors.

"The progress made in recent months in the formulation of the authorities' medium-term strategy for the reform and liberalization of the cotton sector has been commendable, and the authorities are now encouraged to complete the public enterprise privatization program, strengthen the judicial and regulatory framework and enhance the transparency and accountability of the management of public resources.

"Chad's stated commitment to poverty reduction and its decision to elaborate a poverty reduction strategy through a broad participatory process within an ambitious timeframe is commendable. The importance of this process can not be underestimated and the authorities are urged to proceed quickly with the poverty reduction strategy," Sugisaki said.

ANNEX

Program Summary

Implementation of the 1995-99 program was broadly satisfactory, despite repeated waiver requests. Considerable progress was made toward meeting the macroeconomic objectives in terms of GDP growth, inflation, savings and investment, and the external current account. The public finance situation improved, with marked improvements in both tax and customs administrations, and firm control over current spending. The primary current fiscal balance shifted from a deficit of 1.7% of GDP in 1995 to surpluses of 1.1% of GDP in 1998 and a projected 0.9% of GDP in 1999. Progress was also made on key areas as structural reform, albeit with some delays, including the privatization or liquidation of the majority of public enterprises, and the liberalization of the external trade regime.

The medium-term program aims at achieving the transition from crisis management and fiscal stabilization to the implementation of economic and social policies for sustained development. Key elements include developing a comprehensive poverty reduction strategy over the next 12-15 months, maintaining macroeconomic stability, consolidating the public finance situation and strengthening the effectiveness of the public and financial administrations, and completing the unfinished structural reform agenda. Real GDP is projected to rebound to 3.8% in 2000, after contracting by about 1% in 1999, as cotton production and ginning activity are expected to pick up. Inflation would stabilize at 2.3% a year in 1999-2000.

Fiscal policy under the program aims at strengthening tax and customs administrations, including reinforcing tax audit procedures modernizing tax collection procedures, and enhancing the ability of the tax directorate, and simplifying expenditure procedures as well as reinforcing the system of internal and external controls of budget execution. But the major change in tax policy is the planned introduction on January 1, 2000, of a value-added tax (VAT at a single rate of 18%), replacing the 15% turnover tax (TCA).

The structural reform agenda is articulated around three principle objectives, including private sector development, administration efficiency, and economic management. The main feature of the private sector development policy concerns the completion of the public enterprise privatization program. As a prior action of this program, the government has adopted and published a medium-term strategy for liberalizing the cotton sector--the most important economic activity of the country.

Poverty Reduction Strategy

Poverty reduction has been the motivating principle of the Chadian authorities' efforts to define sectoral policies in health, rural development, transport, and education. The focus of the Poverty Reduction Strategy (PRS) would therefore be on measures in these priority sectors that had already been defined through consultative process with local stakeholders and external donors. The main challenge will be to prioritize the existing sectorial strategies and measures and to integrate them into a cohesive whole, with a detailed estimate of their costs. The level and composition of public spending, and the fiscal and external deficits, will thus have to be reexamined in light of the priorities established in the PRS. In addition, a full-scale household poverty and expenditure survey will be conducted over the next two years to provide a detailed analysis of poverty in Chad and establish a differential poverty profile. Together with the public expenditure review, this survey should permit a better appreciation of the precision of the targeting of social expenditures, and thus of their efficiency in reducing poverty.

Chad joined the IMF on October 7, 1963. Its quota2 is the equivalent of SDR 56 million (about US$76.8 million). Its outstanding use of IMF financing currently totals the equivalent of SDR 50.2 million (about US$68.8 million).

Chad: Selected Economic and Financial Indicators, 1996-2002

 

1996

1997

1998

1999

2000

2001

2002

     

Est.

Proj. Rev. Proj.

Projections

 

National income

 

GDP at current prices

15.9

7.0

12.5

4.3

-6.8

9.9

8.6

9.4

GDP at constant prices

3.7

4.1

8.1

1.2

-1.1

3.8

4.5

4.0

Of which: Non oil

3.7

4.1

8.1

1.2

-1.1

3.8

4.0

4.0

Implicit GDP deflator

11.8

2.8

4.1

3.1

-5.7

5.9

4.0

5.2

Consumer price index (average)

11.8

5.9

4.4

3.3

-8.4

2.3

4.1

3.2

Consumer price index (December to December)

10.2

0.5

3.6

3.3

-8.3

5.7

4.1

3.2

                 

Central government finance

               

Revenue

32.8

14.8

11.5

39.8

14.4

9.8

14.8

15.5

Total expenditure

16.5

4.7

-3.5

23.0

21.1

17.5

10.1

10.9

Of which: current expenditure

19.3

-4.8

2.0

22.4

17.6

13.0

7.9

9.9

                 

Money and credit

               

Net foreign assets 1/

2.2

-4.8

-9.5

11.6

0.7

-5.3

...

...

Net domestic assets 1/

17.9

-4.5

3.2

-5.4

-4.4

6.5

...

...

Domestic credit

20.5

-1.0

11.3

-2.8

-0.3

5.0

...

...

Of which: net claims on central government 2/

9.2

-3.0

7.8

-6.2

-0.2

4.4

...

...

credit to nongovernment sector 1/

11.3

2.0

3.5

3.4

-0.1

0.6

...

...

Broad money 3/

20.2

-9.3

-6.2

6.2

-0.3

1.3

...

...

Velocity (GDP relative to average M2) 4/

6.0

7.3

8.6

9.0

9.1

9.1

...

...

                 

External sector (valued in CFA francs)

               

Exports, f.o.b.

-8.3

24.7

11.4

-9.2

-18.9

8.7

15.9

5.9

Imports, f.o.b.

6.1

5.8

15.2

13.4

-16.0

26.0

35.5

20.0

Export volumes

-7.1

20.7

8.0

-6.9

-18.6

12.1

8.6

4.2

Import volumes

5.1

5.4

-7.8

18.4

-6.2

16.3

30.5

16.7

Terms of trade

-1.4

1.6

-12.9

2.2

-0.9

-4.4

6.4

1.0

Real effective exchange rate (- depreciation)

6.8

-1.6

7.9

...

...

...

...

...

 

Basic ratios

               

Gross fixed investment

16.5

15.0

16.4

19.9

17.0

22.7

34.1

40.3

Central government investment

6.3

6.6

5.4

6.5

7.2

8.0

8.2

8.4

Private sector investment

10.2

8.4

11.0

13.4

9.8

14.7

25.9

31.9

Of which: oil sector

5.9

2.6

5.3

4.8

2.5

7.6

18.6

24.5

Gross domestic savings

-0.5

0.1

1.9

1.0

-1.2

0.5

1.4

1.5

Gross national savings 5/

3.3

2.8

4.0

3.3

-0.4

1.8

2.0

2.0

General government

-0.1

-0.2

0.3

1.8

-1.5

-1.6

-1.8

-1.5

Central government

4.1

4.1

3.9

6.0

3.0

3.2

3.1

3.4

Other public bodies

-4.3

-4.3

-3.6

-4.1

-4.6

-4.8

-4.9

-4.9

Private sector

3.4

3.0

3.7

1.5

1.2

3.5

3.8

3.5

                 

Central government finance

               

Revenue

7.2

7.7

7.6

10.4

9.4

9.4

9.9

10.4

Of which: oil revenue

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Total expenditure

18.3

17.9

15.3

18.4

19.9

21.3

21.6

21.9

Current balance (-deficit) 6/

-2.1

-0.6

0.1

1.4

-0.1

-0.4

0.2

0.7

Current primary balance
(-deficit) 6/

-0.6

0.8

1.1

2.3

0.9

0.7

1.1

1.5

Overall fiscal deficit (commitment basis) 6/

-11.1

-10.2

-7.7

-8.0

-10.6

-12.0

-11.7

-11.4

Overall fiscal deficit (cash basis) 6/

-14.6

-11.5

-8.1

-11.1

-10.5

-12.8

-13.5

-12.3

Domestic financing

1.4

-0.4

0.3

-0.9

-0.8

0.5

-0.2

-0.4

External financing (already obtained)

13.2

11.9

7.8

9.7

11.3

9.7

9.9

9.5

Financing gap (-)

0.0

0.0

-0.1

-2.3

0.0

-2.6

-3.8

-3.2

                 

External sector

               

Current account (- deficit)

               

Including official
transfers 5/

-14.8

-14.1

-12.9

-16.6

-17.4

-20.9

-32.1

-38.3

Excluding official transfers

-21.1

-18.8

-16.7

-21.1

-20.5

-24.4

-35.0

-40.9

External debt
outstanding 7/

53.6

54.9

51.6

60.6

63.6

64.2

64.5

63.1

Debt-service ratio 8/

               

Including Fund

12.1

12.2

13.7

12.5

13.0

9.5

8.5

8.8

Excluding Fund

9.2

7.9

10.1

10.6

10.9

8.7

7.3

6.6

Total grants

10.4

10.3

7.6

6.4

7.9

9.2

7.9

7.4

Current grants

6.2

4.7

3.8

3.6

3.1

3.6

2.8

2.7

Capital grants

4.1

5.6

3.8

2.8

4.8

5.6

5.1

4.8

                 
                 
                 

Contribution to the official external reserves of the Bank of Central African States (BEAC)

188.2

143.1

131.5

156.7

152.3

206.6

188.0

176.2

Nominal GDP

1,622.8

1,532.7

1,697.0

1,853.1

1,533.2

1,685.3

1,848.0

2,059.4

Nominal GDP (in billions of CFA francs)

830.2

888.2

999.3

1,026.6

931.2

1,023.6

1,112.1

1,217.0

Of which: oil GDP (in billions of CFA francs)

0.0

0.0

0.0

0.0

0.0

0.0

5.1

5.7

CFA franc per U.S. dollar (period average)

511.6

579.5

588.8

554.0

607.4

...

...

...

CFA franc per U.S. dollar (end of period)

523.7

598.8

562.2

554.0

607.4

...

...

...

Population (midyear, in millions)

6.5

6.7

6.8

7.0

7.0

7.2

7.3

7.5

                 

Sources: Chadian authorities; and IMF staff estimates and projections.

 

1/ Changes as percent of broad money stock at beginning of period.
2/ Defined as the treasury.
3/ For 1994 onward, including correction for currency notes not yet sorted at the Bank of Central African States (BEAC) national agency.
4/ Ratio of GDP to average broad money.
5/ For 1999 and 2000, assuming the financing gap is fully financed.
6/ Excluding grants.
7/ Including arrears, and the Fund.
8/ Scheduled debt service in percent of exports of goods and nonfactor services.


1On November 22, 1999, the IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed the Poverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper (PRSP). This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. At this time for Chad, pending the completion of a PRSP, a preliminary framework has been set out in a statement by the government, and preparations for a participatory process are underway. It is understood that all policy undertakings in the government's statement beyond the first year are subject to reexamination and modification in line with the strategy that is to be elaborated in the PRSP. Once completed and broadly endorsed by the Executive Boards of the IMF and World Bank, the PRSP will provide the policy framework for future reviews under this PRGF arrangement.

PRGF loans carry an interest rate of 0.5 percent a year, and are repayable over 10 years with a 5 year grace period on principal payments.

2A member's quota in the IMF determines, in particular, the amount of its subscription, its voting weight, its access to IMF financing, and its share in the allocation of SDRs.


IMF EXTERNAL RELATIONS DEPARTMENT

Public Affairs    Media Relations
E-mail: publicaffairs@imf.org E-mail: media@imf.org
Fax: 202-623-6278 Phone: 202-623-7100