Press Release: Statement at the Conclusion of a Mission to Chad
June 15, 2011Press Release No. 11/235
June 15, 2011
An International Monetary Fund (IMF) mission led by Mr. Jaroslaw Wieczorek, Mission Chief for Chad, visited N’Djamena during the period June 2-15, 2011 to conduct the consultations under Article IV of the IMF Articles of Agreement.
At conclusion of the mission, Mr. Wieczorek issued the following statement:
“In 2010, agriculture was the engine of economic growth, which partly shielded Chad from the impact of the global food crisis. Because of good rainfall and measures taken to support farmers, GDP grew by 13 percent, and consumer prices fell by 2 percent.
“The recovery of international oil prices helped to improve the overall fiscal balance in 2010, compared with 2009. However, the underlying fiscal position, as measured by the non-oil primary balance, deteriorated somewhat (from 28 percent to 31 percent of non-oil GDP). Notwithstanding efforts to contain expenditure at year-end, the ceiling established in the supplementary budget was exceeded, essentially due to the high level of infrastructure investment, and other expenses related to the pre-electoral period and the fiftieth anniversary of independence.
“The current account deficit widened from 2009 to 2010 (from 18 percent to 33 percent of GDP) because of the high import content of public investment and direct investment in the energy sector. Nevertheless, international reserves grew by CFAF 35 billion. External public debt remains low (25 percent of GDP) but is likely to increase, if fiscal policy is not geared toward medium-term sustainability.
“In 2011, economic growth is projected at 3.1 percent, and inflation, which remained negative throughout the first quarter, is projected at 2 percent. More recently, however, complaints have been noted about a rise in food prices that can be partly attributed to the start of the inter-harvest period.
“Public finances for the first five months of the year were slightly better than the same period in 2010. However, non-oil revenue was lower than expected, and extrabudgetary expenditure continued. The execution of current spending on goods, services and equipment for social services was slow, in contrast to spending on infrastructure and the construction of government buildings.
“The IMF reaffirms its willingness to work with the Chadian authorities to ensure macroeconomic stability. To that end, the mission recommends that the authorities realign fiscal policy for the rest of 2011 with the objectives set in the 2011 Budget Law and not to resort to emergency payment procedures for unbudgeted, non-emergency spending. Sound performance in this area could pave the way, as the authorities wish, toward an IMF staff-monitored program and, if successful, toward a use of Fund resources program, to be followed, ultimately, by debt relief under the Highly Indebted Poor Countries Initiative.
“The mission welcomes the Chadian authorities’ enthusiasm for organizing an economic forum on the challenges and opportunities facing the Chadian economy. This forum will provide a chance for the Chadian authorities to present their vision for economic and social development, and to take advantage of the intellectual inputs likely to enrich that vision, through discussion with civil society, the private sector, and their development partners.
“The mission thanks the Chadian authorities, the employers’ association and civil society, as well as the development partners, particularly the World Bank, for the excellent collaboration and high-quality discussions with the mission during the visit.”