## 1tcdea2024001-print-pdf ## Source details **Canonical URL:** [1tcdea2024001-print-pdf](https://www.imf.org/-/media/files/publications/cr/2024/english/1tcdea2024001-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2024/english/1tcdea2024001-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2024/english/1tcdea2024001-print-pdf.pdf.json) --- ### Recent economic developments - GDP and sectoral growth: - GDP at constant prices grew by 4.8 percent in 2023. - Non-oil activity expanded by 4.5 percent in 2023, driven by a rebound in agricultural production and a substantial increase in public investment. - Oil GDP grew by 7.6 percent in 2023 as closed oil fields were brought back on-stream. (Alternate reporting: real oil GDP growth in 2023: 7.4 percent in some excerpts.) - Inflation: - Year-on-year inflation: 4.2 percent (end-2023), 8.7 percent (end-August 2024). - Consumer price index (period average): 4.1 percent (2023), 8.7 percent (2024), 4.4 percent (2025, projected). - External sector: - External current account balance: returned to a deficit of 0.7 percent of GDP in 2023. - Current account balance, including official transfers: -0.7 (2023), -1.3 (2024), -4.2 (2025, projected). - Public finances and debt: - Non-oil primary deficit: increased to 11.9 percent of non-oil GDP in 2023; moderated to 4.2 percent of non-oil GDP during the first seven months of 2024 (alternate excerpt: non-oil primary deficit: 11.2 percent of non-oil GDP in 2023; 3.9 percent during January–July 2024). - Total public debt: 30.3 percent of GDP (2023); projections table shows 30.3 (2023), 29.5 (2024), 29.5 (2025). - Total public debt (nominal, end-2023): US$5,885; 30.3 percent of GDP. - Government deposits: 3.4 percent of GDP at end-2022; 1.1 percent at end-July 2024 (alternate: fell from 3.1 percent at end-2022 to 1 percent at end-July 2024 in other excerpts). - Monetary aggregates: - Credit to the economy: 11.0 percent (2023), 9.0 percent (2024), 9.5 percent (2025). - Broad money: 14.6 percent (2023), 10.3 percent (2024), 10.8 percent (2025). ### Outlook and key projections - Growth: - GDP growth projections in table: 4.8 (2023), 3.2 (2024), 3.4 (2025). - Economic growth projected to decline to 3.1 percent in 2024 in some text due to floods and slight decline in oil production; rebound in medium term expected from sustained public investment and structural reforms. - Non-oil GDP projections: 4.5 (2023), 3.7 (2024), 4.2 (medium term in table/context). - Oil production: slight decline in 2024 and 2025; rebound to a 6 -percent growth in 2026 as new fields become operational (note source formatting: "6 -percent"). - Inflation path: - Inflation expected temporarily elevated in 2024 (close to 9 percent in some projections) and to converge towards BEAC target of 3 percent over the medium term (towards 2026–2027). - External and reserve outlook: - Current account: -1.3 (2024), -4.2 (2025); medium-term average deficit ~3 percent of GDP. - Chad’s contribution to regional accumulation of foreign reserves expected to increase in 2024, stabilize in 2025, and resume in the medium term. - Debt dynamics: - Public debt projected to stabilize around 32 percent of GDP; net debt to decline to 27½ percent of GDP by 2029 with fiscal reserves building to 5 percent of GDP. - No-adjustment scenario projects net public debt increase to 38 percent of GDP by 2029 and 56 percent of GDP by 2034. ### Fiscal developments, reforms, and recommended consolidation - Fiscal balances and projections (percent of non-oil GDP unless noted): - Revenue and grants: 18.6 (2023), 20.2 (2024), 19.6 (2025). - Expenditure: 20.4 (2023), 20.4 (2024), 20.7 (2025). - Overall fiscal balance (commitment): -1.8 (2023), -0.1 (2024), -1.1 (2025). - Non-oil primary balance (commitment basis): -11.2 (2023), -7.5 (2024), -6.8 (2025). - Staff recommended medium-term fiscal framework (MTFF) and anchors: - Anchor MTFF on a net debt target of 28 percent of GDP (safety margin and rationale provided in source). - Operational requirements: reduce non-oil primary deficit to between -4 and -5 percent of non-oil GDP and accumulate liquid financial assets (deposits) up to 5 percent of GDP. - Suggested gross debt target: 33 percent of GDP compatible with net debt anchor of 28 percent of GDP if deposits reach 5 percent of GDP. - Consolidation path and measures (implementation starting 2025 in staff proposal): - Increase non-oil tax revenues by at least 1.3 percent of non-oil GDP from 2024 to 2029. - Contain wage bill (remove "ghost workers", improve payroll database, biometric IDs). - Phase-out water and electricity subsidies introduced in 2024 and phase-out one-off election organization spending (one-off electoral expenses in 2024 = 0.3 percent of non-oil GDP). - Mobilize average 4 percent of non-oil GDP in concessional project financing (grants and loans) during 2025–29 to keep public investment above 8 percent of non-oil GDP on average. ### Executive Board / Staff policy recommendations and priorities - Fiscal policy: - Create fiscal space for social and investment spending while rebuilding buffers; anchor fiscal stance on net debt target and buildup of fiscal buffers. - Accelerate non-oil revenue reforms, streamline non-priority spending, and strengthen public financial management. - Implement new legal framework for SOEs promptly. - Financial sector: - Finalize and implement restructuring plans for the two systemic public banks and provide recapitalization as needed. - Climate and environment: - Advance adaptation strategy, reactivate the High Interministerial Committee for the Environment, integrate climate into PND, and pursue direct access to climate funds. - Cost estimates: implementation of NDCs and NAP costs US$11.7 billion for 2021–2030 (US$6.7 billion mitigation; US$5.0 billion adaptation); US$1.7 billion expected from national funding sources. - Governance, inclusion, and business environment: - Implement governance and anti-corruption frameworks, digitalize procurement, publish procurement outcomes and beneficial ownership, improve education and infrastructure, promote formalization and financial inclusion. - Gender: - Improve women’s educational outcomes and increase female labor force participation, particularly in formal sectors; staff estimate reducing early marriage rates to SSA average could increase GDP growth by "1.2 percentage points". - Data and statistics: - Improve quality and timeliness of economic statistics; resolve BEAC–INSEED discrepancies; publish unified BOP covering 2018–2022. ### Risks, alternative scenarios, and stress tests - Downside risks (substantial and tilted to the downside): - Delays in fiscal consolidation. - Larger-than-expected decline in oil prices (commodity-price shock: one-standard deviation decline corresponding to a 58 percent fall in oil price in stress test). - Increased refugee inflows from Sudan and more frequent/severe climate events (droughts, floods). - Political instability or slow reform implementation. - No-adjustment (adverse) scenario outcomes: - Liquidity buffers depleted by end-2025. - Public debt rising to 38.6 percent of GDP by 2029 (public DSA no-adjustment) and external PPG debt rising substantially (external DSA no-adjustment: external debt 26.5 percent of GDP by 2029; 64.7 percent by 2044). - Debt service and other indicators breach risk thresholds in adverse scenarios. - Stress-test framework: - Standard and customized tests (including natural disaster and commodity price shocks) show commodity-price and export shocks generate the most extreme adverse outcomes for debt and debt-service indicators. ### Financial sector and macro-financial indicators - Banking sector (end-December 2023): - Capital adequacy ratio: -1.4 percent. - Non-performing loans (NPLs): 31.5 percent of total loans. - Ratio of liquid assets to short-term liabilities: 135 percent (prudential minimum: 100 percent). - Financial soundness indicators (2016–2023): - Total bank regulatory capital to risk-weighted assets: -1.4 (2023). - Non-performing loans (gross) to total loans (gross): 31.5 (2023). - Provisions to NPLs: 72.4 (2023). - Return on equity (ROE): 16.9 (2023). - Market and securities: - Stock of T-bills/bonds rose from 5.1 percent of GDP in early 2022 to 7.1 percent of GDP in July 2024. - Average spread between T-bills and T-bonds yields widened from 0.8 percent in 2021 to 3.4 percent in the first half of 2024. - Average T-bonds yield rose from 8.8 to 10.5 percent. - Cameroonian banks owned 56 percent of all outstanding Chadian paper as of February 2024. ### Social, humanitarian, and development context - Human development and fragility: - HDI ranking: 189th out of 193 countries. - Population (millions, 2023): 18.3. - Extreme poverty: 35.4 percent in 2023 (alternate poverty rate: 38.7 percent in 2022 in selected key statistics). - Children and youth: "45 percent is under 15 years"; population expanding "by more than 3 percent per year". - Humanitarian pressures: - Recent floods impacted close to 1.8 million people (10 percent of the population). - Refugees from Sudan estimated at more than 700,000 people. - Total persons in need of emergency assistance: 6 million; required budget ~ $1.125 billion; financing gap for refugees and IDPs: $602.5 million. - Gender indicators (selected): - Percentage of women in total population: "49.8". - Gender inequality index: "0.671". - Maternal mortality ratio: "1 063" (deaths per 100,000 live births). - Share of women with at least some secondary education: "1.7" (percent). - Women aged 15-49 experiencing intimate partner physical/sexual violence at least once: "28.6" (percent). ### Structural reforms, governance, and capacity development - PFM and revenue administration: - Digitalization measures: e-tax, e-invoicing/e-reporting of VAT, compulsory digital registration of procurement and property sales (from 2023), e-payment of custom taxes from 2024. - IFMIS (SIGFiP) deployment continues across provinces; operationalization for investment spending urged. - Four laws on SOEs governance and oversight ratified in October 2024; implementing decrees required. - Recommendation: consolidate Treasury Single Account, reduce DAOs use, transition to program budgeting, strengthen audits and publish RELF compliance audits for 2021–23. - Business environment: - Authorities adopted governance framework for SOEs, created independent anti-corruption authority, established three industrial zones with one-stop-shops, and transitioned to SYDONIA World. - Staff recommendations: enhance procurement transparency, improve education and vocational training, increase access to water/infrastructure, incentivize formalization, promote financial inclusion and mobile banking. - Climate and adaptation: - Staff recommends integrating climate into PND, advance NAP and NDC implementation, mobilize international climate funding, and phase out inefficient fossil-fuel subsidies while leveraging renewable energy. - Estimated climate finance need for 2021–2030: US$11.7 billion (US$6.7 billion mitigation; US$5.0 billion adaptation); domestic annual environmental budget ~ $23 million (CCDR, 2022). ### Data adequacy and statistical issues - Data adequacy assessment: overall median rating C. - Sector ratings: National Accounts B; Prices B; Government Finance Statistics C; External Sector Statistics D; Monetary and Financial Statistics B. - Key data actions and issues: - GDP rebasing to 2017 increased nominal GDP estimates by about 45 percent for 2021–2022 on average. - Reconciliation underway between BEAC and INSEED external sector numbers; unified BOP covering 2018–2022 expected. - Last published BoP data for Chad are from 2018; BoP data discrepancies affected surveillance. - Immediate priorities: implement Fund TA recommendations on external data, improve timeliness and quality of fiscal and BoP statistics. ### Selected key statistics (as reported) - Population (millions, 2023): 18.3 - GDP per Capita ($USD, 2023): 1051 - Poverty Rate (Percent, 2022): 38.7 - Main products and exports: Crude Oil; Livestock - Key export markets: USA; Nigeria - Government deposits: 3.4 percent of GDP at end-2022; 1.1 percent at end-July 2024 - Non-oil primary deficit: 11.9 percent of non-oil GDP (2023); 4.2 percent of non-oil GDP (first seven months of 2024) - Recent mission dates: fiscal staff mission in N’Djamena from October 3–15 and in Washington, DC from October 23–25, 2024 (team composition listed in source). *Source: CHAD STAFF REPORT FOR THE 2024 ARTICLE IV CONSULTATION (excerpt).* ### 4.9 percent. Non-oil activity expanded by 4.5 percent, driven by a rebound in agricultural ### 1tcdea2024001-print-pdf - 4.9 percent. Non-oil activity expanded by 4.5 percent, driven by a rebound in agricultural ### Recent economic developments - Real GDP growth and composition: - GDP at constant prices grew by 4.8 percent in 2023. - Non-oil activity expanded by 4.5 percent in 2023, driven by a rebound in agricultural production and a substantial increase in public investment. - Oil GDP grew by 7.6 percent in 2023 as closed oil fields were brought back on-stream. - Inflation: - Year-on-year inflation declined in 2023 (to 4.2 percent from 8.3 percent at end-2022) but increased to 8.7 percent at end-August 2024, reflecting a readjustment of fuel oil prices and a rebound in food prices. - Consumer price index (period average): 4.1 percent (2023), 8.7 percent (2024), 4.4 percent (2025, projected). - External sector: - The external current account balance returned to a deficit of 0.7 percent of GDP in 2023 as oil prices receded and an increase in public investment boosted imports. - Current account balance, including official transfers: -0.7 (2023), -1.3 (2024), -4.2 (2025, projected). - Public finances and debt: - After increasing substantially in 2023 (to 11.9 percent of non-oil GDP), the non-oil primary deficit moderated to 4.2 percent of non-oil GDP during the first seven months of 2024. - Total public debt fell to 34.2 percent of GDP in 2023 as persistently high oil prices boosted government revenue. - Government deposits fell from 3.4 percent of GDP at end-2022 to 1.1 percent at end-July 2024, reflecting depletion of liquidity buffers. - Total debt (percent of GDP): 30.3 (2023), 29.5 (2024), 29.5 (2025, projections shown in table). - External debt: 16.1 (2023), 15.8 (2024), 17.0 (2025). - Monetary aggregates: - Credit to the economy: 11.0 percent (2023), 9.0 percent (2024), 9.5 percent (2025). - Broad money: 14.6 percent (2023), 10.3 percent (2024), 10.8 percent (2025). ### Outlook and risks - Growth projections: - Economic growth is projected to decline to 3.1 percent in 2024 on account of the impact of the recent floods and a slight decline in oil production but would rebound in the medium term owing to sustained public investment and structural reforms. - GDP growth projections in table: 4.8 (2023), 3.2 (2024), 3.4 (2025). - Oil GDP projections in table: 7.6 (2023), -0.5-1.4 (2024 range indicated in source), (2025 value omitted in table excerpt). - Non-oil GDP projections in table: 4.5 (2023), 3.7 4.2 (2024 and 2025 values appear concatenated in source). - Fiscal consolidation and debt dynamics: - Further fiscal consolidation focused on mobilizing non-oil revenue and streamlining non-priority spending would contribute to a reduction in the non-oil primary deficit to 8 percent of non-oil GDP in 2024, 7.2 percent in 2025, and 5 percent over the medium term. - Public debt is projected to stabilize at around 32 percent of GDP while net debt would gradually decline to 27½ percent of GDP by 2029, reflecting the gradual build-up of fiscal reserves of 5 percent of GDP. - Inflation path: - Inflation is expected to remain temporarily elevated in 2024 and to gradually converge towards the BEAC target of 3 percent over the medium-term as food and fuel prices moderate. - Downside risks (substantial and tilted to the downside): - Potential delays in implementing fiscal consolidation measures. - A larger-than-expected decline in oil prices. - An increase in the influx of Sudanese refugees. - A further increase in the frequency and severity of climate change-related events. ### Fiscal developments and policy implications - Recent fiscal performance: - Revenue and grants (percent of non-oil GDP): 18.6 (2023), 20.2 (2024), 19.6 (2025). - Expenditure (percent of non-oil GDP): 20.4 (2023), 20.4 (2024), 20.7 (2025). - Overall fiscal balance (commitment): -1.8 (2023), -0.1 (2024), -1.1 (2025). - Non-oil primary balance (commitment basis): -11.2 (2023), -7.5 (2024), -6.8 (2025). - Drivers of recent deficits and buffer depletion: - The procyclical fiscal stance in 2023 and the first few months of 2023 led to depletion of liquidity buffers, large use of emergency spending procedures, and persistent overspending linked to shocks and pre-election pressures. - Net public debt movements: net public debt rose to 38.6 percent of GDP at end-2021, then declined to 29.4 percent of GDP at end-2023 due to a sharp increase in oil revenue in 2022-23. - Projected fiscal path under reforms: - Reduction in the non-oil primary deficit to 8 percent of non-oil GDP in 2024, 7.2 percent in 2025, and 5 percent over the medium term under further consolidation. - Stabilization of public debt around 32 percent of GDP and net debt decline to 27½ percent of GDP by 2029 with fiscal reserves building to 5 percent of GDP. ### Executive Board assessment and recommended reforms - Executive Directors’ key observations: - Noted negative impact of severe shocks (historical floods, continuous inflows of refugees from Sudan) on growth and food security. - Welcomed authorities’ reengagement with the Fund and commitment to broadening access to public services, strengthening governance, and improving the business environment. - Encouraged finalization of the national development plan (PND) with macro policies and reforms. - Priority policy recommendations: - Fiscal policy: - Aim at creating fiscal space for social and investment spending while rebuilding buffers; anchor fiscal stance on a net debt target and buildup of fiscal buffers. - Accelerate reforms to boost non-oil revenues, streamline non-priority spending, and strengthen public financial management. - Implement the new legal framework for SOEs promptly. - Financial sector: - Adopt and implement restructuring plans for the two systemic public banks and provide for their recapitalization. - Climate change: - Advance an adaptation strategy and reactivate the High Interministerial Committee for the Environment to strengthen coordination and facilitate access to international climate funding. - Gender and inclusion: - Improve women’s educational outcomes and increase female labor force participation, particularly in formal sectors. - Business environment and governance: - Implement governance and anti-corruption frameworks; improve education, access to basic infrastructure, formalization, and financial inclusion. - Data and statistics: - Improve quality and timeliness of economic statistics; align capacity development with authorities’ demand and coordinate technical assistance. ### Selected key statistics (as reported) - Population (millions, 2023): 18.3 - GDP per Capita ($USD, 2023): 1051 - Poverty Rate (Percent, 2022): 38.7 - Main Products and Exports: Crude Oil; Livestock - Key Export Markets: USA; Nigeria - Government deposits: 3.4 percent of GDP at end-2022; 1.1 percent at end-July 2024 - Non-oil primary deficit: 11.9 percent of non-oil GDP (2023); 4.2 percent of non-oil GDP (first seven months of 2024) - Fiscal staff mission dates and participants: Discussions took place in N’Djamena from October 3–15 and in Washington, DC from October 23-25, 2024; mission team composition listed in source. *Source: CHAD STAFF REPORT FOR THE 2024 ARTICLE IV CONSULTATION (excerpt).* ### 5. Overall, Chad remains a fragile state facing daunting development challenges ### 5. Overall, Chad remains a fragile state facing daunting development challenges ### Human development and state fragility - Chad ranks 189th out of 193 countries in terms of Human Development Index (HDI). - Extreme poverty reached 35.4 percent in 2023. - Widespread deficiencies: limited access to education, electricity, and water, and poor health outcomes. - Ongoing conflict in Sudan and a large influx of refugees, plus recent floods, have strained limited state capacity and resources and adversely impacted growth and inflation. - With the political transition nearing its end, the new government has stated its intention to focus more on tackling these challenges. Following his election in May, President Déby stated his intention to build a just and equitable society. The government has been charged with ensuring broader access to electricity, water, education, and health, and has taken steps to increase mobilization of external project financing (essentially grants) and to update the National Development Plan (PND). Programs have been launched to increase access to electricity and digital services and improve the quality of higher education. ### Recent economic developments (key statistics and drivers) - Real GDP growth in 2023: 4.8 percent, reflecting higher oil production and non-oil sector growth. - Non-oil activity growth in 2023: 4.5 percent (driven by rebound in agricultural production and large public investments). - Real oil GDP growth in 2023: 7.4 percent (Perenco and CNPC increased production; Perenco brought back closed oil fields on-stream). - Inflation: eased in 2023 to 4.2 percent from 8.3 percent at end-2022, but year-on-year inflation rose to 8.7 percent at end-August 2024 due to domestic oil price readjustment and rebound in food prices linked to a long lean season. - Non-oil primary deficit: increased to 11.2 percent of non-oil GDP in 2023, moderated to 3.9 percent of non-oil GDP during January–July 2024 (reflecting reduced use of emergency spending procedures (DAOs) and financing constraints). - Non-oil revenues: in line with the budget law in 2023 and slightly above projections at end-July 2024 (primarily from higher-than-expected fuel excise revenues). - Oil revenues: in line with projections during January–July 2024. - Domestically financed expenditures: exceeded budget law projections by 7.5 percent of non-oil GDP in 2023; exceeded projections by 0.5 percent of non-oil GDP at end-July 2024. - Use of DAOs: fell from 55 percent of non-wage primary civilian spending in 2023 to 18 percent at end-July 2024. - Current spending slippages: 0.5 percent of non-oil GDP at end-July 2024 (down from 3.5 percent of non-oil GDP in 2023), primarily due to a persistently elevated wage bill. - Domestically financed social spending: 0.6 percent of non-oil GDP below projections (under-execution of social sector investment due to procurement delays). - Foreign-financed investment disbursements: 1.1 percent of non-oil GDP during January–July 2024 (same level as for 2023 as a whole). - Total public debt: fell from 31.5 percent of GDP in 2022 to 30.3 percent of GDP in 2023 (owing to a 1.8 percent of GDP fall in external debt). - Domestic debt: increased by ½ percent of GDP due to increased reliance on domestic treasury securities. - Government deposits: fell from 3.1 percent of GDP at end-2022 to 1 percent at end-July 2024. - Concessional budget support loan: US$150-million from the UAE in 2023 (used to finance the budget). - Stock of T-bills/bonds: rose from 5.1 percent of GDP in early 2022 to 7.1 percent of GDP in July 2024. - Average spread between T-bills and T-bonds yields: widened from 0.8 percent in 2021 to 3.4 percent in the first half of 2024. - Average T-bonds yield: rose from 8.8 to 10.5 percent. - As of February 2024, Cameroonian banks owned 56 percent of all outstanding Chadian paper. - Banking sector at end-December 2023: capital adequacy ratio was negative (-1.4 percent); NPLs amounted to 31.5 percent of total loans; ratio of liquid assets to short-term liabilities was 135 percent (prudential minimum requirement: 100 percent). - Structural fiscal reform progress: - Digitalization measures: launch of e-tax for online corporate tax declaration/payments; start of e-invoicing and e-reporting of VAT; compulsory digital registration of procurement processes and property sales from 2023; e-payment of custom taxes from 2024; operationalization of a data-sharing platform between tax and customs administrations. - IFMIS (SIGFiP) deployment continues across provinces. - Four laws regulating governance and oversight of state companies, public establishments, and independent administrative authorities (SOES) were prepared with IMF TA and ratified in October 2024. - Use of DAOs began to decline after a presidential decree limiting their use. - Remaining weaknesses: expanding wage bill, governance weaknesses in the energy sector, limited progress on public investment management (PIMA and C-PIMA) and publishing central government procurement contracts including awarded companies and beneficial owners. ### External sector assessment and exchange rate - Current account balance: returned to a deficit of 0.7 percent of GDP in 2023 (as oil prices receded and public investment boosted imports). - Nominal effective exchange rate: appreciated since mid-2022, largely reflecting euro dynamics against the dollar (CFA franc peg to euro). - Fund’s EBA-lite Current Account assessment: indicates a real effective exchange rate overvaluation of approximately 4 percent in 2023 (with considerable uncertainty in external sector data). ### Outlook and projections (baseline) - Projected real GDP growth: - 2024: 3.2 percent (decline due to slowdowns in agricultural and oil sectors). - Medium term: rebound driven by sustained public investment and structural reforms. - Non-oil growth: - 2024: 3.7 percent (impacted by floods and a longer lean season). - Medium term: rebound to 4.2 percent. - Oil production path: - Decline slightly in 2024 and 2025 (delays in bringing new fields onstream). - Rebound to a 6 -percent growth in 2026 as new fields become operational, then broadly stable over the medium term. - Inflation: - Year-on-year inflation projected close to 9 percent in 2024 (large increases in food prices and domestic fuel price readjustment). - Convergence to BEAC target rate of 3 percent towards 2026-2027, assuming moderation in food prices and no further domestic fuel price adjustments. - Non-oil primary deficit (NOPD) path under fiscal consolidation: - 2024: 7.5 percent of non-oil GDP. - 2025: 6.8 percent of non-oil GDP. - Around 5 percent over the medium term; below 5 percent by 2029 under continued reform and financing assumptions. - Revenue composition and assumptions for 2024: - Oil revenues: expected broadly in line with the budget in 2024. - Non-oil revenues: expected to exceed 2023 outturns by 2.2 percentage points of non-oil GDP, reflecting: - increase in fuel excise taxes: 0.7 percent of non-oil GDP; - dividends from the central bank, the refinery, and the government oil company: 0.5 percent of non-oil GDP; - one-off telecommunications licenses receipts: 0.9 percent of non-oil GDP. - Domestically financed primary spending: expected 1.3 percent of non-oil GDP lower than in 2023 (efforts to contain transfers/subsidies and lower domestically financed investment), offset by increased externally financed investment (project grants). - Comparison with 2024 budget law: budget law projected NOPD of 6.3 percent of non-oil GDP (based on lower domestically financed primary spending and higher non-oil revenue by 1.9 and 0.6 percent of non-oil GDP respectively). - Overall fiscal deficit (percent of non-oil GDP): projected to increase from 0.1 percent of non-oil GDP in 2024 to 2.6 percent in 2026, then stabilize around 1.8 percent of non-oil GDP from 2027–2029. - Public debt trajectory: - Expected to increase gradually to 32.6 percent of GDP by 2029 and stabilize. - Concessional financing assumed to meet primary financing needs. - A concessional budget support loan of US$500 million (2.4 percent of GDP) from the UAE, signed in October 2024 and expected to be disbursed by end-year, will finance short-term liquidity needs; deposits projected at 2.7 percent of GDP by end-2024 (compared to 1.5 percent a year earlier). - Net debt projected to decline to 27½ percent of GDP by 2029, reflecting gradual fiscal reserve buildup to 5 percent of GDP. - Debt Sustainability Analysis: under the baseline scenario debt would be sustainable, but judgment supports maintaining an assessment of a high risk of debt distress due to medium- to long-term uncertainty. - Current account projection: - 2024: deficit of 1.3 percent of GDP. - 2025: deficit of 4.2 percent of GDP. - Medium term: average deficit of 3 percent of GDP. - Chad’s contribution to regional accumulation of foreign reserves expected to increase in 2024, stabilize in 2025, and resume in the medium term (supported by external budget financing and anticipated rise in FDI in the oil sector). ### Risks and alternative scenarios - Risks are substantial and slanted to the downside: - Continued or intensified conflict in Sudan could increase refugee flows and social tensions. - Larger-than-expected decline in oil prices would negatively affect oil revenue and constrain fiscal space for investment and social spending. - Increased frequency/severity of climate-change events (droughts, floods) could durably affect agricultural production and population well-being. - Domestic delays in delivering promised broader access to education, health, energy, and water could lead to social tensions. - Baseline subject to high fiscal uncertainties, including implementation of agreed measures in 2025. - Alternative (no adjustment) scenario: - Debt would increase substantially with greater reliance on non-concessional debt, putting sustainability at risk and raising exposure to global financial conditions. - Upside: - Sustained increase in oil prices would help the government finance its budget. - Global systemic risk: - Risk from potential global systemic financial instability remains moderate for Chad as, under the baseline with reforms, the country can attract external concessional financing, reducing dependence on the domestic market. ### Authorities’ views - Authorities consider growth could be higher in 2024 if the impact of flooding is limited. - They acknowledge medium- and long-term risks and intend to address them under the PND via: - prudent fiscal policy; - a strategy for adaptation to climate change; - measures to further diversify the economy and reduce dependence on the oil sector and the primary sector in general. *Source: IMF country chapter text provided.* ### 20. The pro-cyclical fiscal policy implemented in 2022-23 made the country less resilient ### 20. The pro-cyclical fiscal policy implemented in 2022-23 made the country less resilient ### Impact of 2022–23 pro-cyclical fiscal policy and downside scenario - Continued high spending observed in 2022-23 would "rapidly result in a depletion of sustainable financing" and likely require a very significant adjustment—possibly through a sharp reduction in domestically-financed investments (similar to past boom-bust investment cycles). - Under a no-adjustment scenario discussed with the authorities: - Significant build-up of domestic arrears would occur. - Growth would decline. - Net debt would increase by 9 percent of GDP (to 38 percent of GDP) by 2029, making debt unsustainable in the medium term. - The country would become highly vulnerable to shocks, such as a drop in oil prices. ### Staff recommendation: medium-term fiscal framework (MTFF) and fiscal anchors - Anchor the MTFF by a net debt target to keep public debt under a safe maximum debt level (estimated at 42 percent of GDP) even in the face of shocks, aiming to keep the risk of debt distress at moderate. - Because a safety margin of 14 percent of GDP is needed to limit the probability of the safe level being exceeded to 5 percent, staff recommended a net debt target of 28 percent of GDP. - Operational requirements to meet the net debt target: - Gradual reduction of the non-oil primary deficit to 4-5 percent of non-oil GDP. - Set a floor on accumulation of liquid financial assets (deposits) of up to 5 percent of GDP over the medium term. - Use net debt (gross public debt minus government deposits) as the fiscal anchor. - A deposit stock of 5 percent of GDP and a gross debt target of 33 percent of GDP would be compatible with the net debt anchor of 28 percent of GDP. ### Recommended fiscal consolidation path and financing composition (implementation starting 2025) - Timing and focus: - Start implementing a gradual fiscal consolidation in 2025. - Focus on domestic revenue mobilization and containment of non-priority current spending. - Revenue mobilization targets and assumptions: - Increase non-oil tax revenues (net of 0.9 percent of non-oil GDP of one-off telecommunications license revenues in 2024) by at least 1.3 percent of non-oil GDP from 2024 to 2029 to help offset projected declines in oil revenues in 2025 and 2026. - Expenditure control and savings: - Control the wage bill by removing “ghost workers”, improving the payroll database, and introducing biometric identification of civil servants. - Phase-out water and electricity subsidies introduced in 2024 and phase-out one-off election organization spending. - Demonstrating fiscal discipline in 2025 and over the medium term would cause these expenses to decline by at least 0.6 and 1.2 percent of non-oil GDP, respectively, from 2024 to 2029. - Phasing-out of one-off electoral expenses incurred in 2024 amounted to 0.3 percent of non-oil GDP in transfers to the national electoral management agency. - External concessional financing and investment: - Continued efforts to mobilize an average of 4 percent of non-oil GDP in concessional project financing (grants and loans) from 2025-29. - This should allow maintaining overall public investment above 8 percent on average of non-oil GDP during 2025-29. ### Protection of social spending and execution - Consolidation should streamline non-priority spending while protecting budget allocations to social sectors. - Ensure effective execution of social allocations through competitive and transparent public procurement and strengthen the public investment framework in line with PIMA recommendations. ### Public finance management (PFM) and public investment management (PIM) reforms - Key PFM reforms urged for acceleration: - Consolidation of the Treasury Single Account, in line with the strategy and roadmap adopted in 2023. - Further reduce the use of DAOs while ensuring their full registration in SIGFiP by implementing strictly the presidential decree adopted in 2023. - Align annual budget objectives with a multi-year framework and prepare the transition to program budgeting. - Improve quarterly budget execution reports; strengthen internal and external audit by implementing the new regulation organizing the Cours of Auditors (Cour des Comptes) and the General Inspectorate of Finance (Inspection Générale des Finances); finalize and publish the compliance audits on the execution of the budget law (RELF) for 2021-23. - Public investment management actions: - Improve and finalize the three-year public investment plan to align with PIMA principles. - Fully operationalize the use of SIGFiP for investment spending and budgeting. - Finalize and adopt PIM procedures manuals. - Put in place a unified database of public investment projects. - Address inter-departmental coordination challenges—introduction of a new organigram consolidating previously dispersed functions is expected to help. ### Structural reforms to boost resilience and revenue mobilization - Revenue administration and tax policy reforms: - Modernize, digitalize, and expand geographic reach of reforms. - Promote fiscal discipline and strengthen internal fiscal controls, particularly in telecommunications, banking, and oil sectors. - Broaden the tax base and improve tax arrears recovery. - Revenue administrations should enhance inter-agency collaboration, IT interconnectivity, cross-data exchange, and use analysis to identify unregistered or non-compliant taxpayers. - Strengthen cooperation with customs administrations of neighboring countries, particularly by finalizing IT connectivity with Cameroon’s CAMCIS. - Ongoing review of excise rates (including tobacco and alcohol) with World Bank support to inform tax policy reforms. - Review and streamline customs and tax expenditures, particularly on VAT and including oil companies, to reduce revenue losses while promoting equity and efficiency. - Governance and transparency in oil and energy sectors: - Reform inefficient and costly energy subsidies (following the increase in fuel and diesel prices of 35 and 14 percent respectively in 2024). - Complete and publish the audit of oil revenue collected by the Treasury, including through the state oil company (Société des Hydrocarbures du Tchad, SHT). - Implement the four laws on SOEs’ governance and oversight adopted in October 2024 by issuing required implementing decrees. - Ensure transparency in awarding public contracts through competitive bidding, expand e-procurement, and make procurement outcomes publicly available. - Wage bill reforms and sequencing: - Clean the personnel registry and payroll database via biometric identification, permanently remove “ghost workers”, and enhance monitoring of automatic wage adjustments and benefits allocation. - Consider medium-term measures to limit wage bill growth such as regulating promotions by category and grade with annual promotion rates defined in the budget law and developing capacity for staffing and budget planning. - Pursue gradual implementation to avoid abrupt adjustments and social unrest while shifting resources toward social and investment spending. ### Climate resilience, financing needs, and policy recommendations - Climate vulnerability and needs: - Chad is one of the hottest countries; without decisive action global temperatures would increase by an estimated 2.7 degrees Celsius by 2100, relative to 1990 (World Bank, 2021). - Intensified droughts and floods have increased food insecurity, conflicts over land, and internal displacement; most of the population depends on rain-fed agriculture and livestock. - Financing needs for NDC and NAP: - Implementation of NDCs and NAP estimated to cost $11.7 billion for 2021 to 2030: - $6.7 billion for mitigation (35% of 2024 GDP, to cut emissions by 19.3% by 2030). - $5.0 billion for adaptation. - $1.7 billion expected from national funding sources. - Domestic annual environmental budget (including climate change) is around $23 million (CCDR, 2022). - From 2010 to 2020 Chad received US$1.3 billion in climate funds (OECD). - Staff recommendations to confront climate challenges: - Institutionalize climate change policies by integrating climate into the National Development Plan (2024-2029), sectoral plans, budget planning, and reactivating the High Interministerial Committee for the Environment to pursue “direct access” to climate funds. - Enhance efficiency and transparency in public investment management: improve the medium-term public investment plan, publish procurement results and beneficiaries, and update the National Capacity Building Action Plan for Disaster Risk Reduction (2015-2020). - Reform the energy sector: phase out fossil fuel subsidies, leverage solar and wind potential, finance partly by subsidy savings, and reform sector governance in line with Fund technical assistance to reduce inefficiencies and waste. - Pursue an inclusive adaptation strategy: decentralize investment project management to local communities with coordination, complete the unique social registry (with World Bank support) to enable targeted assistance alongside energy subsidy reforms. - Capacity and financing constraints: - Capacity constraints complicate accessing international funds like GCF and GEF; financing gaps for mitigation and adaptation remain vast. - Upcoming NDC revision including oil sector climate impact likely to raise ambitions and funding needs. - Staff noted targeted technical assistance will be necessary. ### Authorities’ views (on fiscal framework, reforms, and climate) - Fiscal framework and debt management: - Authorities agreed on the need for a more resilient MTFF, better expenditure control, and continued domestic revenue mobilization to finance social spending and investment priorities. - Determined not to contract external financing on non-concessional terms and to cap the increase in the stock of sovereign securities (OTA/BTA) at CFAF 15 billion per year. - Agreed with fiscal projections and recommended measures; indicated the NOPD in the 2025 draft budget law will not exceed the baseline projection. - Reserved the option to resort to additional concessional financing so long as the external debt service-to-revenue ratio remains below the DSA threshold of 14 percent. - Argued that the recommended accumulation of deposits is not adapted to the Chadian context, citing considerable social needs and the security context. - PFM, revenue, and procurement reforms: - Agreed to continue reforms to strengthen domestic revenue mobilization, control expenditure, and improve PFM. - Emphasized generalizing digitalization of tax collection, establishing the single Treasury account, territorializing and enlarging SIGFiP, and strengthening budgetary surveillance. - Reaffirmed determination to reduce DAOs, implement the new regulatory framework for governance of state companies and public establishments, and progressively digitalize procurement to increase transparency and efficiency. - Climate policy stance: - Authorities generally agreed with mission recommendations but noted many structures and laws/regulations already exist and need operationalization. - Stressed the need to maintain subsidies relating to domestic gas because of their role in combating deforestation. - Called for mobilization of funds for reforestation, including in refugee-receiving areas and the Upper Sahel and Sahara. - Highlighted difficulty mobilizing financing due to limited capacity and competition from more advanced countries; proposed a financing window dedicated to the most vulnerable countries and requested TA to increase capacity to prepare financing requests in time. *Source: IMF staff chapter titled “20. The pro-cyclical fiscal policy implemented in 2022-23 made the country less resilient” from the provided PDF content.* ### 36. Staff emphasized the need to improve the business environment and promote ### 1tcdea2024001-print-pdf - 36. Staff emphasized the need to improve the business environment and promote ### Improving the business environment and promoting inclusive growth - Context and challenges: - Poverty levels are high—particularly in rural areas. - The population is young: "45 percent is under 15 years" and expanding "by more than 3 percent per year". - The government is the main source of formal sector employment in urban areas. - The updated National Development Plan for the 2024-2028 contains many elements to promote inclusiveness and diversification. - Authorities’ recent measures: - Adopted a new governance framework for state-owned enterprises. - Created an independent authority to fight corruption. - Established three industrial zones with one-stop-shops for investors. - Completed the transition from the SYDONIA++ system to SYDONIA World. - Adopted a decentralization law to encourage local authorities to recruit teachers. - Producing a plan to digitize public procurement procedures to increase transparency and fight corruption. - Expanding access to water with international partners. - Staff recommendations to promote private sector-led growth: - (i) Improve governance, including transparency of procurement procedures and anti-corruption framework. - (ii) Enhance quality of education and strengthen employability of youth and women through more vocational trainings and private-public partnerships. - (iii) Improve access to water, internet, and electricity. - (iv) Reduce red tape in customs (where some advances are being recorded). - (v) Create incentives for the informal sector to join the formal sector, notably through more active labor market policies. - (vi) Promote financial inclusion and mobile banking while safeguarding financial integrity. - Authorities’ views: - Broad agreement with recommendations; noted many initiatives already launched (digitization of tax and customs procedures; new governance framework for state-owned enterprises). - Significant improvement in the business climate is a main objective of the National Development Plan (PND) for 2024-29. ### Strengthening the financial sector and financial inclusion - Financial sector vulnerabilities and recommended actions: - Some vulnerabilities persist, posing moderate financial stability risks. - Staff called for rapid finalization and implementation of restructuring plans for the two systemic public banks. - At the end of 2023, both banks did not comply with any prudential ratios established by COBAC. - Their non-performing loans averaged "33 percent" and their exposure to sovereign risk was elevated. - Ambitious restructuring plans should clearly identify necessary measures and sources of recapitalization and be promptly finalized and implemented. - Financing and liquidity: - Financing resources in the CEMAC region are drying up. - Liquidity risk for the government remains moderate due to attraction of external concessional financing. - Authorities project to increase domestic financing by only "CFAF 15 billion per year" over the medium terms as yields on domestic securities rise rapidly. - Staff advised adopting a prudent fiscal policy and combining it with concessional external financing. - Financial inclusion: - Staff encouraged adoption of a new national financial inclusion strategy aligned with the next regional BEAC strategy. - Household use of financial services has increased but Chad remains behind CEMAC peers, low-income countries, and sub-Saharan African countries. - Low use particularly severe for women. - Staff encouraged updating the strategy in coordination with technical partners. - Authorities’ views: - One weak bank had made some progress; authorities agreed on need to restructure and recapitalize the two systemic public banks if needed and to assess and update restructuring plans. - Authorities agreed to improve financial inclusion—cited recent decisions regarding mobile banking—and intend to implement awareness campaigns on account and credit use. - Microfinance sector will be a PND priority with a dedicated strategy. ### Advancing the governance reform agenda - Macro-criticality and current performance: - Good governance and reduction of corruption are macro-critical issues. - Indicators show Chad has been the worst performer among Sahel countries for the last twenty years. - The potential growth dividend from reducing corruption and improving governance is significant. - Authorities’ efforts and legal measures: - Digitalization of public services and financial integrity efforts have improved revenue collection and public financial management. - Chad adhered to the United Nations Convention against corruption in 2018. - Created the General State Inspection and the Independent Authority against Corruption in 2023. - Adopted in September 2024 a bill related to the code of good governance for public companies. - Launched standardized electronic invoice to improve market regulations. - Remaining implementation gaps and risks: - Implementation of some measures remains limited. - Digitalization of public finances still incomplete. - Asset declaration and conflict of interest regime remains insufficient. - Implementation of AML/CFT measures is limited. - Problems with impartiality, independence, and access to justice weaken protection of property rights. - New legal framework for public enterprises was recently adopted; implementation requires accompanying decrees. - Lack of infrastructure and limited access to water remain constraints to market access; regulatory framework and competition implementation limited. - Staff recommendations for further governance reforms: - Pursue digitalization to ensure full operationality of integrated systems and reap benefits of digital services. - Limit use of DAOs and strengthen budget execution through monitoring mechanisms. - (i) Implement penal code in alignment with the UN Convention and develop asset declaration and conflict of interest regime consistent with international good practices. - (ii) Strengthen institutional capacity of the Independent anti-corruption authority and the courts to support enforcement. - (iii) Identify, collect and publish information on beneficial owners of public procurement contracts, potentially supported by e-procurement. - (iv) Implement legal framework to enhance impartiality, independence, and access to justice—support protection of property rights, potentially via a digital public platform such as a land register. - (v) Implement regulatory framework and competition measures to improve market access and simplify administrative procedures. - Finalize implementing decrees for recently adopted laws on governance of public enterprises so implementation can take place. - Authorities’ views: - Recognized macro-critical nature of governance issues and progress made, but acknowledged further implementation needed. - Requested Fund TA, intend to continue digitalization efforts, and seek improvements in good governance and budgetary transparency. - Suggested judicial convictions should be capped and that seizures and notices comply with OHADA rules, including revising codes and laws (notably the labor code). - Expressed interest in a governance diagnostic mission. ### Tackling gender issues - Key population and gender indicators (Source: Human Development Report 2023-24): - Population (millions of persons): "18.3" - Percentage of women in the total population: "49.8" - Gender inequality index: "0.671" - Maternal mortality ratio (deaths per 100,000 live births): "1 063" - Share of population with at least some secondary education (Women, in percent)): "1.7" - Women’s exposure to violence (in percent) (Source: WHO data; Amnesty International Report 2022/23): - Women aged 15-49 years experiencing intimate partner physical and/or sexual violence at least once in their lifetime: "28.6" - Women aged 15-49 years experiencing intimate partner physical and/or sexual violence in the last 12 months: "17.5" - Women aged 20 to 24 years who were first married or in union before age 18: "67" - Macro-criticality and estimated growth impact: - Gender disparities exist across opportunities and outcomes (education, finance access, legal system; employment, political empowerment). - Despite progress in educational access, substantial gender gaps persist in secondary completion, adult literacy, labor force participation, and poverty rates. - Violence against women is prevalent; maternal mortality rate among the highest in the world. - Using the IMF toolkit, staff estimates that reducing early marriage rates to the SSA average level could help increase GDP growth by "1.2 percentage points". - Authorities’ legal measures to reduce gender inequality: - 2015 law prohibiting child marriage. - 2017 revision of the penal code to punish incest, marital rape, genital mutilation and sexual harassment. - 2018 law on gender parity. - National policy for the advancement of women and strategies for family planning and female entrepreneurship. - Imposition of quotas on number of women in decision-making positions. - Staff recommendations to strengthen implementation: - Strengthen implementation of legal framework in coordination with partners such as UNFPA; engage religious leaders and village chiefs; ensure sanctions are taken. - Phase implementation of gender budgeting in all ministries, starting with pilot ministries. - Include measures to promote women’s economic empowerment in the PND, including greater access to water, property rights, and agricultural inputs. - Deploy biometric IDs for all (initiative with UNICEF and UNHCR) and establish a social registry INSEED to better target social protection and humanitarian/social transfers. - Promote access to education for girls, especially in rural areas, by supporting school feeding programs and creating schools specifically for girls. - Authorities’ views: - Viewed creation of girls’ educational establishments and school canteens as key priorities. - Considered stylized facts less alarming but recognized inequalities and funding/societal constraints. - Stressed PND will be an opportunity to mobilize resources and progress implementation. ### Data, capacity development, safeguards, and other issues - Data quality and timeliness: - Chad is considered a case "C" country (data provided to the Fund has some shortcomings that somewhat hamper surveillance). - Deterioration from previous ("B") reflects large discrepancies between BEAC’s balance of payments estimates and INSEED’s national accounts. - Persistent delays in transmission of data to the Fund need addressing. - Some progress has been made bringing BEAC and INSEED trade data closer together; BEAC publication of revised balance of payments series could improve Chad’s Data Adequacy Assessment Rating. - Capacity development (CD) priorities and delivery: - CD strategy prioritizes: PFM, tax policy and revenue administration, expenditure control, debt management, and statistics. - Fund has provided significant TA; progress achieved in many areas but implementation of some TA recommendations lagged due to limited absorptive capacity, coordination challenges, and high turnover. - CD delivery planning should be closely aligned with government demand, monitored on an ongoing basis, and coordinated with other TA providers (World Bank, African Development Bank, French Development Agency, European Union). - Exchange system: - Authorities reported no change to Chad’s exchange system since the 2019 Article IV. - Safeguards (BEAC): - BEAC is the regional central bank of CEMAC. - 2022 safeguards assessment: BEAC maintained strong governance and external audit arrangements; internal audit and risk management practices needed strengthening. - A safeguards monitoring mission at end-2023 followed up on recommendations, including onboarding for new senior management/Board members and an enhanced delegation framework. - BEAC is addressing recommendations though additional efforts needed. ### Staff appraisal and policy guidance - Recent shocks and outlook: - Chad’s economy continues to be affected by severe shocks; recent floods will contribute to growth slowdown and worsen food security. - Continuous arrival of Sudanese refugees pressures state capacity and resources and contributes to elevated inflation in border regions. - Medium-term development focus: - With the end of the transition period, authorities plan to focus on economic and social development: broadening access to public services, strengthening governance, and improving the business environment. - In collaboration with IMF and development partners, authorities need to articulate in the PND the macroeconomic policies and reforms to implement over the medium term. - Fiscal policy guidance: - A prudent and sustainable fiscal policy should be a key component of the PND to create fiscal space for social and investment spending while rebuilding buffers. - The procyclical fiscal policy implemented in 2022-23 cannot be sustained without greatly heightening macroeconomic sustainability risks. - Chad’s external and overall public debt continues to be assessed at high risk of distress, with judgment applied due to uncertainty on medium- to long-term debt dynamics. - Essential to implement an MTFF that ensures accumulation of adequate buffers to withstand shocks without disorderly adjustment. - Proposed fiscal policy anchoring aims to: - Provide accumulation of sufficient buffers. - Keep debt on a sustainable path and moderate risk of distress. - Mobilize non-oil revenue and contain non-priority spending to fund socioeconomic agenda. - Elicit donor support and provide additional sustainable fiscal space. - Reduce government reliance on market financing and moderate risk from potential global systemic financial instability. *International Monetary Fund staff summary from the cited chapter.* ### 60. This policy should be underpinned by an acceleration of structural fiscal reforms. Over ### 60. This policy should be underpinned by an acceleration of structural fiscal reforms. ### Fiscal reforms and public finances - Medium-term objective: reduce the NOPD from a projected 8 percent of non-oil GDP in 2024 to around 5 percent over the medium term, while protecting social spending. - Key measures to achieve this: - Accelerate digitalization and other tax administration reforms to boost non-oil revenues. - Enhance expenditure controls and reduce the use of DAOs. - Streamline non-priority spending to contain outlays on the wage bill, goods and services, and transfers and subsidies. - Strengthen implementation of budget execution procedures. - Operationalize the use of SIGFiP for investment spending and budgeting. - Implement the new legal framework for SOEs to increase efficiency and reduce their fiscal burden. ### Financial sector stability - Assessment: some vulnerabilities persist posing moderate financial stability risks. - Priority actions: - Tackle the two weak systemic public banks more forcefully. - Design restructuring plans to improve operational and financial performance and provide necessary financing for recapitalization. - Reduce banks’ exposure to sovereign risk to free resources for private sector financing. ### Climate vulnerability and adaptation - Observation: increased frequency of climate-related shocks underlines Chad’s vulnerability to climate change and the importance of advancing the adaptation strategy. - Current status: authorities have developed initiatives (notably on reforestation and anti-flood measures), but much remains to be done to ensure the NAP can be effectively implemented and funded. - Recommended actions: - Integrate climate change into the new National Development Plan. - Enhance public investment management capacity. - Reactivate the High Interministerial Committee for the Environment to strengthen policy coordination and facilitate access to international climate funding. ### External position and economic diversification - Projection: decline in oil prices should reinforce the need to diversify the economy. - Assessment: Chad’s external position in 2023 is moderately weaker than the level implied by medium-term fundamentals and desirable policies. - Trend: the current account balance returned to a deficit in 2023 and is expected to deteriorate further in the coming years. - Policy priorities to diversify and sustain growth: - Strengthen governance and anti-corruption frameworks. - Improve education and increase access to basic infrastructure. - Promote formalization and financial inclusion to create a favorable business environment for investment and business creation. ### Gender and human capital - Priority: reducing gender gaps to increase employment, economic growth, and resilience. - Specific recommendations: - Improve women’s educational outcomes and increase female participation in the labor force, particularly in formal sectors. - Intensify efforts to strengthen implementation of existing legal frameworks protecting the rights of girls and women. - Facilitate women’s access to education, water, and land ownership. ### Governance and public sector transparency - Recommendation: enhance governance to support sustainable and inclusive growth. - Specific measures: - Implement a robust asset declaration regime. - Digitalize public procurement. - Publish beneficial ownership information of legal entities awarded contracts in the procurement process. - Pursue judicial reform. ### Data quality and timeliness - Finding: further improvements are necessary in the quality and timely provision of data. - Issues: remaining quality problems—most markedly with BoP data—and persistent delays in transmission of data to the Fund. - Implication: these issues pose challenges to surveillance and to the provision of timely policy advice by staff. *Source: IMF staff text (excerpt).* ### 67. Staff recommends that the next Article IV consultation with Chad be held on the 12- ### 67. Staff recommends that the next Article IV consultation with Chad be held on the 12-month cycle. ### Medium-Term Outlook (2021–2028) - Figure shows Overall Growth, Non-oil Growth, and Oil Growth series for 2021–2028 with three scenario lines: Pre-Pandemic (Dec. 2019), ECF Request (Dec. 2021), Current Projections. - Source: Chadian authorities and IMF staff calculations. ### Fiscal Operations of the Central Government (2022–29) — Key figures (CFA francs, unless otherwise indicated) - Total revenue and grants: 1,814 (Act. 2023); Budget 1,875; Prel. 2024 1,762; Proj. 2025 2,016; Proj. 2026 2,105; Proj. 2027 2,219; Proj. 2028 2,103; Proj. 2029 2,286; Proj. (later) 2,426; 2,621. - Revenue: 1,725 (Act. 2023); 1,691 (Budget); 1,703 (Prel. 2024); 1,821 (Proj. 2025); 1,905 (Proj. 2026); 1,966 (Proj. 2027); 1,832 (Proj. 2028); 1,994 (Proj. 2029); 2,113; 2,284. - Oil revenue: 1,162 (Act. 2023); 1,067 (Budget); 1,063 (Prel. 2024); 952; 965; 1,011; 781; 834; 832; 870. - Non-oil revenue: 563 (Act. 2023); 624; 641; 869; 940; 955; 1,051; 1,160; 1,281; 1,414. - Expenditure: 1,418 (Act. 2023); 1,318 (Budget); 1,932 (Prel. 2024); 1,961; 2,118; 2,340; 2,415; 2,530; 2,683; 2,872. - Current expenditure: 1,176 (Act. 2023); 951 (Budget); 1,283 (Prel. 2024); 1,185; 1,359; 1,423; 1,415; 1,472; 1,525; 1,583. - Wages and salaries: 530 (Act. 2023); 510; 580; 614; 635; 679; 711; 744; 791; 828. - Interest: 117 (Act. 2023); 99 (Budget); 125 (Prel. 2024); 90; 151; 176; 130; 127; 131; 110. - Investment: 241 (Act. 2023); 367 (Budget); 650 (Prel. 2024); 777; 759; 916; 1,001; 1,059; 1,158; 1,290. - Overall balance (incl. grants, commitment): 397 (Act. 2023); 557 (Budget); -170 (Prel. 2024); 55; -13; -121; -312; -245; -257; -252. - Overall balance (incl. grants, cash): 243 (Act. 2023); 472; -167; 23; -35; -121; -312; -245; -257; -252. - Non-oil primary balance (excl. grants, cash): -781 (Act. 2023); -473; -1,055; -691; -803; -766; -714; -685; -688; -703. Notes and specific items: - Grants: 89 (Act. 2023); 84 (Budget); 91 (Prel. 2024); 95; 200; 53; 27; 129; 131; 3336 (table shows trailing digits; preserved as in source). - Budget support: 146 (Act. 2023); 40 (Budget); 0; 0; 0; 0; 0; 0; 0; 0. - Domestically financed investment: 131 (Act. 2023); 160 (Budget); 542 (Prel. 2024); 433; 513; 474; 480; 500; 557; 645. - Foreign financed investment: 110 (Act. 2023); 207 (Budget); 108 (Prel. 2024); 344; 246; 442; 521; 559; 600; 645. - Financing components (selected): IMF financing shows 79 (Act. 2023); -29; -24; -29; -38; -50; -60; -62; -72; -58. - Disbursements (foreign financing): 348; 714; 016; 934; 747; 052; 954; 756; 761; 4 (table formatting preserved from source). - Amortization (foreign): -260; -274; -229; -271; -195; -120; -82; -121; -117; -80. - Memorandum: Non-oil GDP: 8,687 (2022); 9,490 (2023); 9,490 (2024); 10,398 (2025); 10,398; 11,310; 12,155; 13,049; 14,020; 15,060. - Bank deposits (including BEAC): 345; 619; 162; 201; 344; 438; 429; 516; 635; 864 (in billions CFA francs). - BEAC advances: 480; 477; 477; 461; 445; 429; 413; 397. Footnotes retained as in source: - Net of cash calls and transportation costs linked to the oil public enterprise (SHT) participation in private oil companies. - Transfers of oil derivatives in-kind to the national electricity company (SNE) valued at fixed price of $46.90 per barrel (in line with the average Brent oil price in 2015-16). - The 2023 budget allocated CFAF 391bn for domestic investment, but execution was capped at CFAF 160bn under the ECF program absent agreement with the IMF on additional fiscal space. ### Fiscal Operations (in percent of non-oil GDP) — Key ratios - Total revenue and grants: 20.9 (Act. 2023); 19.8 (Budget); 18.6 (Prel. 2024); 19.4; 20.2; 19.6; 17.3; 17.5; 17.3; 17.4. - Revenue: 19.9; 17.8; 18.0; 17.5; 18.3; 17.4; 15.1; 15.3; 15.1; 15.2. - Oil (share of non-oil GDP): 13.4; 11.2; 11.2; 9.2; 9.3; 8.9; 6.4; 6.4; 5.9; 5.8. - Non-oil revenue: 6.5; 6.6; 6.8; 8.4; 9.0; 8.4; 8.6; 8.9; 9.1; 9.4. - Expenditure: 16.3; 13.9; 20.4; 18.9; 20.4; 20.7; 19.9; 19.4; 19.1; 19.1. - Investment: 2.8; 3.9; 6.8; 7.5; 7.3; 8.1; 8.2; 8.1; 8.3; 8.6. - Overall balance (incl. grants, commitment): 4.6; 5.9; -1.8; 0.5; -0.1; -1.1; -2.6; -1.9; -1.8; -1.7. - Non-oil primary balance (excl. grants, commitment): -7.2; -4.1; -11.2; -6.3; -7.5; -6.8; -5.9; -5.2; -4.9; -4.7. - Memorandum: Net debt (in percent of GDP): 28.3; 29.0; 26.8; 26.2; 27.3; 27.4; 27.5; 27.5. ### Balance of Payments (2022–29) — Selected items (percent of GDP unless otherwise indicated) - Current account, excl. budget grants: 4.7 (Act. 2022); -0.7 (2023 Prel.); -1.3 (2024 Proj.); -4.2 (2025); -4.0 (2026); -2.9 (2027); -2.6 (2028); -2.8 (2029). - Exports, f.o.b.: 33.6 (Act. 2022); 28.1 (2023 Prel.); 26.2 (2024); 22.9 (2025); 22.2 (2026); 21.4 (2027); 21.2 (2028); 20.3 (2029). - Of which oil: 26.1; 20.8; 19.1; 15.7; 15.1; 14.1; 13.7; 12.7. - Imports, f.o.b.: -16.7; -17.6; -16.9; -16.7; -16.5; -16.0; -15.9; -15.4. - Trade balance: 16.9; 10.5; 9.2; 6.2; 5.8; 5.4; 5.3; 4.9. - Financial and capital account: -1.4; 0.4; -0.9; 2.2; 2.3; 1.3; 1.2; 1.4. - Overall balance: 3.3; -0.3; -2.1; -2.0; -1.6; -1.6; -1.4; -1.4. - Financing gap: 1.0; 0.8; 2.4; 2.1; 2.0; 1.8; 1.7; 1.8. - Nominal GDP (USD bn, memorandum): 17.9 (2022); 19.2 (2023); 20.9 (2024); 22.5 (2025); 24.0 (2026); 25.4 (2027); 26.9 (2028); 28.6 (2029). - Gross imputed reserves (billions of USD): 1.0; 1.0; 1.1; 1.1; 1.2; 1.3; 1.4; 1.5. ### Monetary Survey (2022–29) — Selected items (CFA francs, unless otherwise indicated) - Net foreign assets (Q4): 163; 146; 219; 277; 386; 484; 614; 733 (billions CFA francs). - Central bank foreign assets: 633; 636; 670; 677; 726; 763; 821; 883. - IMF financing (liability): -461; -424; -386; -335; -275; -214; -142; -84. - Net domestic assets: 1,760; 2,056; 2,211; 2,416; 2,579; 2,778; 2,972; 3,230. - Credit to the economy (levels): 857; 951; 1,036; 1,135; 1,245; 1,367; 1,497; 1,639. - Money and quasi money: 1,922; 2,202; 2,429; 2,693; 2,965; 3,262; 3,586; 3,963. - Currency outside banks: 850; 920; 1,085; 1,203; 1,324; 1,457; 1,601; 1,770. - Broad money (annual percentage change, memorandum): 26.2; 14.6; 10.3; 10.8; 10.1; 10.0; 9.9; 10.5. - Credit to the economy (annual percentage change): 6.8; 11.0; 9.0; 9.5; 9.7; 9.8; 9.5; 9.5. ### Financial Soundness Indicators (2016–23) — Selected metrics - Total bank regulatory capital to risk-weighted assets: 13.2 (2016); 18.0 (2017); 16.8 (2018); 6.8 (2019); 2.9 (2020); 9.1 (2021); 6.0 (2022); -1.4 (2023). - Total capital (net worth) to assets: 7.7; 8.8; 7.5; 2.8; 1.6; 5.0; 4.0; -1.0. - Non-performing loans (gross) to total loans (gross): 20.9; 25.8; 28.6; 22.9; 25.9; 26.0; 27.7; 31.5. - Provisions to non-performing loans: 52.4; 50.1; 53.0; 57.4; 61.1; 62.9; 63.8; 72.4. - Return on equity (ROE): 13.7; 0.7; 2.3; -2.8; -7.2; 0.0; 5.8; 16.9. - Gross loans (banks' book) in bn FCFA: 732; 711; 723; 762; 884; 1,047; 1,121; 1,193.0. - Gross loan annualized growth rate: 6.6; -2.9; 1.7; 5.3; 16.0; 18.5; 7.0; 6.9. ### Selected Macro-Critical Gender Related Indicators (2018–2023) - Female Human Capital Index (HCI): 0.29 (2018); latest year available 2020 value shown as 0.29; AFR 25th percentile 0.37; 75th percentile 0.43; median 0.40; average 0.39. - Gender Development Index (GDI): 0.79 (2018); 0.77 (2019); 0.77 (2020); 0.78 (2021); 0.78 (2022); latest aggregate year 2022 statistics: 0.88 (25th), 0.95 (75th), 0.92 (median), 0.92 (average). - Gender Inequality Index (GII): 0.70 (2018); 0.70 (2019); 0.70 (2020); 0.66 (2021); 0.67 (2022); 2022 comparative percentiles: 0.50 (25th), 0.61 (75th), 0.54 (median), 0.54 (average). - Global Gender Gap Index: 0.58 (2018); 0.60 (2020); 0.59 (2021); 0.58 (2022); comparative: 0.64 (25th), 0.73 (75th), 0.69 (median), 0.69 (average). - Women Business and the Law Index (WBL): 66.25 across 2018–2023; 2023 comparative percentiles: 67.50 (25th), 83.75 (75th), 79.38 (median), 76.10 (average). - Labor and income gaps: Gender Gap (F-M) in Employment-to-Population Ratio (15+ yrs): -22.48 (2018); -22.22; -21.54; -21.49; -23.11; -23.12 (2023). - Proportion of Seats Held By Women in National Parliaments: 15.25 (2018); 14.88; 15.43; 32.26; 25.89; 25.89 (2023); comparative percentiles: 14.57 (25th), 33.81 (75th), 24.49 (median), 25.64 (average). - Maternal Mortality Ratio per 100,000 Live Births (modeled): 1,076.00 (2018); 1,047.00 (2019); 1,063.00 (2020); comparative 2020 aggregate: 219.50 (25th), 487.00 (75th), 303.00 (median), 372.43 (average). - Total Fertility Rate (Births Per Woman): 6.46 (2018); 6.41 (2019); 6.35 (2020); 6.26 (2021); 6.22 (2022); comparative 2022 percentiles: 3.48 (25th), 4.62 (75th), 4.08 (median), 4.51 (average). Notes on gender indicators: - Source: GenderDataHub. See Gender Data Hub metadata for original data sources and definitions. - Index scoring notes retained as in source (e.g., Female HCI scored 0-1; GII scored 0-1 with higher values indicating higher inequality; WBL scored 0-100). ### Staff recommendation and administrative timing - Staff recommends that the next Article IV consultation with Chad be held on the 12-month cycle. *Source: Chadian authorities; and IMF staff estimates and projections, as presented in the IMF staff report tables and figures.* ### Annex I. Status of Key Recommendations from the 2019 Article IV ### Annex I. Status of Key Recommendations from the 2019 Article IV Consultation ### Summary of recommendations and implementation status - Reforming the granting of tax exemptions - Recommendation: Prevent automatic renewal and centralize the granting of exemptions at the ministry of finance, assess their impact on revenue, and prohibit granting of tax exemptions on VAT. - Implementation: Tax exemptions are no longer automatically renewed, and the granting of exemptions have been centralized at the ministry of finance. The fiscal impact of tax exemptions granted to non-oil companies has been assessed for the period 2020 to 2022. - Strengthening tax administration (personal income tax and corporate income tax) - Recommendation: Strengthen tax administration notably for personal income tax and corporate income. - Implementation: The tax administration has been implementing a medium-term strategy rooted in digitalization and capacity building to boost efficiency and the collection of non-oil corporate income taxes and VAT. Reforms targeting the personal income tax are expected in the medium term. - Auditing and clearing domestic arrears - Recommendation: Audit domestic arrears and implement a comprehensive strategy for clearing them and avoid further accumulation going forward. - Implementation: An audit was concluded in 2019 but proved not to be exhaustive. A plan for clearing audited arrears has been launched but not fully implemented. - Limiting the use of emergency spending procedures - Recommendation: Limit the use of emergency spending procedures. - Implementation: The recourse to emergency spending procedures (DAO) increased strongly in 2022–23. The use of DAOs has since somewhat declined, following the adoption in November 2023 of a presidential decree aiming at limiting their use, but remains elevated. - Reducing the banking system’s exposure to government debt - Recommendation: Reduce the exposure of the banking system to government debt. - Implementation: This has not been achieved as the banking system exposure to the state rose to almost 40 percent of banks’ total assets in 2022 (by far the highest in CEMAC). - Increasing social spending envelope while improving efficiency - Recommendation: Increase the social spending envelope while improving the efficiency of these expenditures. - Implementation: - Social spending declined as a share of domestically financed primary spending from 31 percent in 2019 to 19 percent in 2023. - Social spending grew as a share of non-oil GDP from 2.6 percent in 2019 to 3.1 percent in 2023. - Two-thirds of social spending were allocated to the payment of wages and salaries and only 10 percent to investment. - Establishing a single treasury account (TSA) - Recommendation: Establish a single treasury account (TSA), starting with a census of all accounts in commercial banks that could be covered by the TSA. - Implementation: While the TSA has still to be established, the authorities have adopted a strategy and a roadmap for its gradual consolidation. An agreement between the Ministry of Finance and the regional central Bank (BEAC) for the creation of a joint team in charge of steering and implementing the TSA is awaiting formal adoption by both parties. - Maintaining the wage bill under control - Recommendation: Maintain the wage bill under control. - Implementation: The efforts have not been successful, as the wage bill to non-oil GDP has continued to grow over the period. - Fostering inclusive growth and economic diversification (2017-2021 NDP priorities) - Recommendation: Foster inclusive growth and economic diversification by implementing the priorities of the 2017-2021 NDP, including improving the business environment and strengthening financial inclusion. - Implementation: Progress has been limited in these areas. A new NDP is being finalized taking into consideration the new government’ priorities, including improving the business environment. *Source: Annex I. Status of Key Recommendations from the 2019 Article IV Consultation* ### 2023. A large uncertainty surrounds these estimates and analysis due to the absence of consistent external ### 1tcdea2024001-print-pdf - 2023. A large uncertainty surrounds these estimates and analysis due to the absence of consistent external ### Potential Policy Responses - A stronger external position coupled with improved reserve buffers and sustainable capital inflows in the medium term requires: - a transparent fiscal strategy; and - structural governance reforms to boost the non-oil sector and strengthen financial inclusion. ### Current Account — Background and Assessment - Findings: - Oil revenue account for 85 percent of goods exports. - Oil exports in 2023 amounted to 20.8 percent of GDP, down from 26.1 percent in 2022, but substantially higher than the 2015-2021 average of 15.3 percent. - Oil-related imports: machines and equipment for the oil industry constitute about 20 percent of import; services related to transportation costs (shipping, freight, insurance) account for about 15 to 20 percent of net services. - 2023 outcome: a current account deficit of 0.7 percent of GDP (contrasting with an exceptional surplus of 4.8 percent in 2022 and a 2015-2021 average deficit of 4 percent). - Model assessment (EBA-Lite Current Account model): - Cyclical contributions (terms-of-trade adjustments) estimated to have contributed approximately +0.1 percentage points in 2023. - Natural disasters and conflicts accounted for -0.1 percentage point (difficult to estimate). - Gap implied by current policies relative to fundamentals and desired policies: -0.9 percent of GDP (Text Table IV.1). - Adjusted CA: -0.8 percent of GDP; Adjusted CA Norm: 0.1 percent of GDP; CA Gap: -0.9 percent of GDP. - Relative policy gap component: -2.9 percent of GDP. - Qualitative assessment: - Chad’s external position is moderately weaker than the level implied by medium-term fundamentals and desirable policies, particularly linked to low social safety nets and weak foreign reserves accumulation during high oil prices. - Policy implications: - Increasing fiscal credibility, improving governance, and establishing a long-term fiscal policy strategy would strengthen the business climate, attract external investment, and support private sector development and financial inclusion. - Growing uncertainty about global growth could lead to a larger decline in oil prices, widening the current account deficit and deepening the external financing gap; implementing fiscal policy targets is crucial to build buffers and fiscal space. ### Real Exchange Rate - Background: - The nominal effective exchange rate appreciated since mid-2022 and stabilized at a historically high level since August 2023, largely reflecting euro fluctuations (CFA franc peg). - China and India became main trading partners, accounting for estimated 30 and 10 percent of bilateral trade on average over recent years. - CPI inflation, which remains elevated, amplified the appreciation of the real effective exchange rate (REER). - Assessment: - EBA-Lite CA model indicates REER overvaluation of 4.3 percent under a trade semi-elasticity assumption of -0.2. - REER model indicates an overvaluation of 7.0 percent. - Final assessment anchored on the CA model; estimated 2023 REER overvaluation is comparable (though lower) to the 2019 Article IV assessment of an 11-percent overvaluation. ### Capital and Financial Accounts: Flows and Policy Measures - 2023 developments: - Capital and financial account returned to a surplus in 2023. - Foreign direct investment (primarily to the oil sector) amounted to approximately 2 percent of GDP in net terms. - 2022–2023: loan repayments generated larger net outflows of other and long-term investments — partly reflecting accelerated repayments due to a cash-sweep clause, partly offset in 2023 by UAE loan disbursement inflows. - Capital transfers, including public-sector grants for capital projects, slowed in 2021–2022 but rebounded somewhat in 2023. ### Reserves Level - 2022: current account surplus supported accumulation of foreign exchange reserves after reserves fell in 2021 due to government liquidity constraints. - 2023: contribution to regional accumulation of foreign reserves was limited due to the current account deficit. - 2024: reserves accumulation expected to resume, supported by external budget financing; Chad is expected to contribute to regional foreign exchange reserve accumulation in 2024. ### Authorities’ Views - The authorities concur with IMF team findings. - The authorities intend to pursue reforms to develop the non-oil economy and aim to achieve regular publication of balance of payments figures swiftly. - Recent GDP rebasing by INSEED highlighted large discrepancies in external sector aggregates with BEAC numbers for 2018-2022; consistent estimates expected to be published swiftly with IMF technical assistance. ### Annex V — No-Adjustment Scenario (Key Points and Projections) - Scenario assumptions: - Expenditure and revenue policies remain unchanged; spending and non-oil revenue increase in line with historical patterns. - No donor support; budget financed via non-concessional financing and accumulation of domestic arrears. - Negative impact on private sector and slowdown of non-oil GDP growth to 3 percent over the medium term. - Risks and timeline: - If no additional adjustment in 2025 and over the medium term, remaining liquidity buffers would be depleted by end-2025, including the US$500m budget support loan from the UAE expected by end-2024. - With declining oil revenues, a sharp policy reversal (e.g., sharp reduction in domestically financed investment) or significant additional borrowing would become inevitable, risking a disorderly adjustment. - Debt dynamics: - Without policy change, public debt declining trend reverses in 2026. - Total public debt projected to increase to 38.6 percent of GDP by 2029 and to 56 percent of GDP by 2034. - All public and external debt burden metrics projected to rise from 2026 onwards and exceed risk thresholds; debt would be unsustainable. - Financing and buffer recommendations: - Strengthen tax administration to increase non-oil revenue mobilization; enhance spending controls to contain non-priority spending. - Accumulate deposits from 1.6 percent of GDP at end-2023 to 5 percent of non-oil GDP by end-2029 to provide buffers for shocks and permit orderly policy responses. - Baseline scenario in Staff Report aligns with these recommendations. - Selected projections and assumed values (No-Adjustment Scenario fiscal operations, percent of non-oil GDP, 2026–2029): - Total revenue and grants: 19.3 (2026), 16.9 (2027), 17.1 (2028), 16.9 (2029), 16.9 (2029 repeated in table header alignment). - Revenue: 17.3 (2026), 15.0 (2027), 15.2 (2028), 14.9 (2029), 15.0 (2029). - Oil revenue: 9.0 (2026), 6.5 (2027), 6.6 (2028), 6.2 (2029), 6.1 (2029). - Non-oil revenue: 8.3 (2026), 8.4 (2027), 8.6 (2028), 8.7 (2029), 8.9 (2029). - Expenditure: 21.2 (2026), 21.4 (2027), 21.6 (2028), 21.8 (2029), 22.1 (2029). - Investment: 8.2 (2026), 8.6 (2027), 8.6 (2028), 8.6 (2029), 8.6 (2029). - Overall balance (incl. grants, commitment): -2.0 (2026), -4.5 (2027), -4.5 (2028), -5.0 (2029), -5.2 (2029). - Non-oil primary balance (excl. grants, commitment): -7.9 (2026), -7.9 (2027), -7.8 (2028), -7.8 (2029), -7.7 (2029). - Financing composition highlights: - Domestic financing: 0.7 (2026), -0.9 (2027), -0.7 (2028), -0.5 (2029), -0.3 (2029). - Bank financing / Central Bank (BEAC): 1.3 (2026), -0.4 (2027), -0.6 (2028), -0.7 (2029), -0.5 (2029). - Deposits: 1.9 (2026), 0.3 (2027), 0.0 (2028), 0.0 (2029), 0.0 (2029). - Foreign financing (loans net): 0.3 (2026), 4.4 (2027), 4.3 (2028), 4.5 (2029), 4.5 (2029). - Memorandum items: - Non-oil GDP: 11,237 (2025), 11,936 (2026), 12,665 (2027), 13,448 (2028), 14,272 (2029). - Net debt (in percent of GDP): 27.0 (2025), 29.9 (2026), 32.3 (2027), 35.1 (2028), 38.0 (2029). - Bank deposits (including BEAC, percent of GDP): 1.0 (2025), 0.7 (2026), 0.7 (2027), 0.7 (2028), 0.7 (2029). - BEAC advances: 4.1 (2025), 3.7 (2026), 3.4 (2027), 3.1 (2028), 2.8 (2029). ### Annex VI — Anchoring Fiscal Policy: Towards a Medium-Term Fiscal Framework (Summary) - Problem statement: - Chad’s dependence on the volatile oil sector and recent procyclical fiscal policy pose risks to growth and fiscal sustainability. - Fiscal policy has been highly correlated with oil prices; slower fiscal adjustment during slumps versus expansion during booms led to asymmetric fiscal balances, higher public debt, reduced buffers, and boom-bust cycles in public investment. - Proposed approach: - Staff propose a debt anchor as part of a medium-term fiscal framework to stabilize the economy and provide insurance against shocks. - Rationale for debt anchor over asset-accumulation or permanent-income rules: - Political difficulty of accumulating large financial assets amid high short-term development needs. - Reliance on volatile oil price projections and complex wealth estimates. - Institutional complexity (sovereign wealth fund) difficult in low-capacity, weak-governance contexts. - A debt anchor allows flexibility to use oil revenues for development while incentivizing buffer accumulation during booms and smoothing during downturns. - Specific proposals: - Medium-term debt target: 28 percent of GDP. - Determination: maximum debt limit set at 42 percent of GDP (nominal face value), consistent with DSA thresholds and NPV debt threshold of 35 percent for low credit-carrying capacity countries. - Safety buffer estimated at 14 percent of GDP with a risk tolerance of 5 percent. - Debt target inferred as maximum debt limit minus safety buffer = 28 percent of GDP. - Monitor performance using net debt (gross public debt minus stock of liquid financial assets) to enhance asset-liability management and shock insurance. - Recommendation to accumulate 5 percent of GDP in precautionary liquid financial assets based on oil price shock simulations. - Operational rule: target a non-oil primary deficit (NOPB) between -4 and -5 percent of non-oil GDP to ensure convergence of net debt toward the 28 percent of GDP anchor. - Once converged, the NOPB that stabilizes net public debt is estimated to be between -4 and -5 percent of non-oil GDP. *Source: International Monetary Fund.* ### 6. Chad would need to build on the fiscal consolidation efforts started in 2024 to reach ### 6. Chad would need to build on the fiscal consolidation efforts started in 2024 to reach this operational target over the medium term ### Fiscal consolidation and medium-term fiscal framework - The end of the political transition provides an opportunity to implement a robust fiscal framework that balances fiscal prudence with mobilizing resources for the new authorities’ investment agenda. - Successful implementation of fiscal consolidation measures in 2024 already marks a strong start; continuing on this path is essential. - Establishing and adhering to a clear fiscal public debt target can: - mitigate boom-bust cycles, - move towards long-term fiscal sustainability, - more effectively mobilize resources to fund large development needs. ### Institutional and structural reforms for effective implementation - Effective implementation hinges on structural reforms to strengthen key institutions and includes reforms in: - fiscal planning, - risk management, - expenditure control, - revenue administration. - Overcoming political and economic resistance requires: - understanding Chad’s political economy, - contextually tailored policies, - strategic policy sequencing, - transparent communication. ### Country engagement strategy: priorities and rationale - The IMF’s strategy for Chad focuses on fostering stability and inclusive economic growth. - A “pivotal moment” is identified where leadership and society recognize the need for change; recent presidential election could signal such a moment. - Fund engagement priorities while transition completes: - capacity building, - policy dialogue, - consensus-building, - contingency planning, - transition to a new financing program. ### Country overview and vulnerabilities (key statistics) - Population: around 18 million people. - Poverty: over 30 percent of the population living in absolute poverty. - Demographics: around 70 percent of the population is under 24. - Human Development Index ranking: 189th out of 193 countries. - Economic structure: economy leans heavily on oil, which accounts for a significant portion of GDP and exports. - Political timeline: - Death of President Idriss Déby in 2021 led to an 18-month transition, - Transition extended by a further 18 months, - Presidential elections held in May 2024; transitional President Mahamat Déby won the election (results disputed by the opposition), - Parliamentary and local elections scheduled for December 2024 mark the end of the transition period. ### Drivers of fragility and constraints to reform - Key drivers of fragility and conflict: - Political Structures: centralized power, patronage networks, reliance on oil. - Ethnic Divide: North-South ethnic and religious differences. - Urban-Rural Divide: disparities in access to resources and services. - Climate Change Challenges: floods, drought, shrinking Lake Chad. - Farmer-Herder Conflicts: competition for land and water; population growth. - Security Issues: regional instability from Sudan, Libya, and neighboring conflicts. - Constraints during the transition: - Authorities prioritized stability over ambitious reforms, - Ethnic and regional tensions complicate consensus, - Capacity issues: high staff turnover and weak infrastructure impede progress. ### Recommended policies and sequencing - Reforms must be locally driven; immediate priorities include: - fiscal consolidation, - financial sector policies, - governance improvements. - Medium- and long-term priorities: - human capital development, - climate resilience, - private sector growth and economic diversification. - IMF role: - continue technical assistance (TA), - build capacity, - engage in dialogue to support reforms, - upcoming discussions on a Fund-supported financing program offer an opportunity to deepen dialogue. - Collaboration with international partners (World Bank, AfDB, NGOs) is essential for implementation. ### Risks - Near-term risks: - political instability, - security concerns, - governance issues, - economic shocks, - capacity constraints, - social unrest. - Medium- to long-term risks: - challenges in economic diversification, - human capital development, - climate-related concerns, - ongoing conflicts. - The observed cycle in Chad-Fund relations underscores risks of IMF engagement. ### Capacity development (CD) strategy: context and objectives - Post-May 2024 authorities’ priorities: socioeconomic development, strengthening governance, enhancing business environment. - Progress noted in mobilizing non-oil revenue and containing non-priority spending; further efforts required to rebuild fiscal buffers. - CD strategy prioritizes TA in: - Public Financial Management (PFM), - Revenue Administration, - National Statistics, - Expenditure Control, - Debt Management. - Specific CD objectives: - implement the 2022-2027 PFM strategy (SRFP), - strengthen non-oil revenue mobilization via revenue administration reforms, - prepare and implement a Medium-Term Debt Management Strategy (MTDS), - improve statistical capacity for macroeconomic analysis and policy planning. ### CD traction, achievements, and implementation challenges - PFM and revenue administration TA: two long-term experts providing local TA; new long-term experts in tax administration recently appointed. - Achievements include: - re-establishment of an independent Court of Accounts, - establishment of a joint tax-customs committee, - regular production of public debt forecasts and scenarios via a Public Debt Dynamics Tool (TA by ICD), - GDP rebasing to 2017 for data from 2005 until 2022, - CPI rebased to 2019, - resolution of large discrepancies between BEAC and INSEED external sector numbers; unified BOP data covering 2018-2022 expected to be published in the coming months. - Implementation lags reflect: - limited absorptive capacity, - inter-departmental coordination challenges, - high turnover of government staff. ### CD priorities, projects in execution, budgets, and providers (Key project indicators) - Public Financial Management - Traction: implementation of the 2022-2027 PFM reform strategy (SRFP); TSA and IFMIS (SIGFIP) deployment ongoing; PIMA and C-PIMA conducted in 2022. - Projects in Execution: 8 - Total Budget (Mio. USD): 2.4 - Providers: AFRITAC Central, FAD - Going Forward: further TA to implement SRFP, create a Treasury single account, improve financial reporting and auditing, implement SOE governance legislation. - Revenue Administration - Traction: digitization milestones include e-payment platform for custom taxes (February 2024) and e-invoicing/reporting of VAT (since July 2024); ASYCUDA World used by over 90 percent of custom offices; joint tax-customs committee established; IT interconnection with Cameroon under development; GPFP project started February 2024. - Projects in Execution: 4 - Total Budget (Mio. USD): 2.3 - Providers: AFRITAC Central, FAD - Going Forward: continue tax revenue and base broadening efforts, strengthen fiscal control, enforce tax/customs laws, modernize IT systems, expand digital tools; supported by GPFP. - Expenditure Control - Traction: some progress on fuel and diesel price revision; lagging implementation on market pricing of energy and wage bill control. - Projects in Execution: 2 - Total Budget (Mio. USD): 0.3 - Providers: AFRITAC Central, FAD - Going Forward: contain the wage bill and emergency spending; understand energy subsidy size and plan gradual removal of inefficient subsidies; promote renewable energies to improve electricity generation efficiency. - Debt Management - Traction: progress developing government securities markets; Public Debt Dynamics Tool in operation; MTDS TA ongoing. - Projects in Execution: 2 - Total Budget (Mio. USD): 0.3 - Providers: AFRITAC Central, MCM, FAD - Going Forward: AFRITAC mission to cover debt management and treasury cash management in coordination with AfDB; roadmap to modernize debt management system; ensure SYGADE is fully effective and connected to SIGFIP. - Statistics - Traction: multiple projects to strengthen external sector and national accounts; GDP rebased to 2017 (2017–2022), CPI rebased to 2019; external sector discrepancies resolved. - Projects in Execution: 8 - Total Budget (Mio. USD): 1.4 - Providers: AFRITAC Central, ICD, STA - Going Forward: enhance capacity for macroeconomic analysis and forecasting; improve quality and timeliness of national accounts, government finance, and balance of payments data; planned milestones include production of quarterly GDP numbers and publication of a unified BOP covering 2018-2022. ### CD delivery, risks, and mitigation - Main risks to CD effectiveness: - limited absorptive capacity and authorities' demand misalignment, - risk of stretched absorption given available CD supply from Fund and partners, - high turnover of officials. - Mitigations: - align CD delivery closely with authorities’ demand and monitor commitment, - use field-based long-term experts to ensure knowledge transfer, - coordinate with development partners (World Bank, African Development Bank, French Development Agency, European Union) to align content and schedules and avoid redundancies, - maintain ongoing evaluation of CD interventions to revise and adjust projects. *IMF staff summary based on the provided chapter content.* ### Annex IX. Data Issues ### Annex IX. Data Issues ### Data adequacy assessment (Table IX.1) - Questionnaire-based sector assessments (median ratings as reported): - National Accounts: B - Prices: B - Government Finance Statistics: C - External Sector Statistics: D - Monetary and Financial Statistics: B - Inter-sectoral Consistency: C - Overall median rating: C - Data quality dimensions (selected): - Coverage: National Accounts B; Prices B; Government Finance Statistics C; External Sector Statistics D; Monetary and Financial Statistics B - Granularity: Government Finance Statistics (operations) B; Government Finance Statistics (public debt) C; Monetary and Financial Statistics (MFS) D; Monetary and Financial Statistics (FSI) B - Consistency: noted C and D in some sector pairings - Frequency and Timeliness: National Accounts B; Prices B; Government Finance Statistics C; External Sector Statistics D; Monetary and Financial Statistics B - Definitions of ratings (as provided): - A: The data provided to the Fund is adequate for surveillance. - B: The data provided to the Fund has some shortcomings but is broadly adequate for surveillance. - C: The data provided to the Fund has some shortcomings that somewhat hamper surveillance. - D: The data provided to the Fund has serious shortcomings that significantly hamper surveillance. ### Rationale for assessment and changes since prior consultation - Main rationale: Data weaknesses—particularly regarding balance of payments (BoP) data—partially affect staff’s ability to conduct in-depth analysis of macroeconomic and financial developments and risks. - Change since last Article IV consultation: - Overall data provision capacity has deteriorated from previous assessment B to C. - National statistics: - National accounts were rebased using 2017 as the new base year. - CPI was rebased using 2019 as the new base year; rebasing required several iterations to address inconsistencies. - Fiscal data: - Improvements in revenue and expenditure statistics and in producing the TOFE. - Most fiscal data, including the TOFE, are provided to staff only during missions and often require follow-up to ensure consistency. - Monetary statistics: - Persistent shortcomings remain, including significant delays in preparation. - Balance of payments: - Last published BoP data for Chad are from 2018; data from 2013 to 2018 are still considered preliminary. - BEAC trade data (imports and exports) differ significantly from official GDP numbers provided by the national statistics office. - Authorities indicated all trade data (from 2005) will be revised with IMF technical assistance to improve consistency. ### Corrective actions and capacity development priorities - Immediate priorities: - Prompt implementation of recommendations from the recent Fund TA mission on external data to address trade-data differences between BEAC and the national statistics office. - Better implementation of existing recommendations, including on national accounts and BoP statistics. - Staff engagement: - Staff regularly discuss data issues with the authorities during missions and coordinate to identify data-related capacity development priorities. ### Use of non-official data and other data gaps - Use of alternative data sources in the Article IV consultation: - Financial account estimates enhanced using data and projections from a leading foreign oil company to estimate Foreign Direct Investment more accurately. - Data estimates on climate change, income and gender inequality, and digitalization provided by other institutions, including the World Bank. - Other data gaps: - Large gaps remain in climate change and income and gender inequality data. ### Data Standards and dissemination - Chad participates in the Enhanced General Data Dissemination System (e-GDDS) and has published data on its National Summary Data Page since July 2022. - Common Indicators Required for Surveillance: entries reported as of November 2024; several data series exhibit irregular reporting and delays (details summarized in the source). ### Relevant debt- and financial-data implications for surveillance (selected factual highlights from the same chapter) - GDP rebasing: - New GDP estimates are about 45 percent higher in nominal terms (on average for 2021–2022) compared with previous estimates. - Example: for 2021, the debt-to-GDP ratio was 57.4 percent with previous GDP estimates and is now 40.6 percent after rebasing. - Re-evaluation drivers: agricultural sector value added revised up by 74 percent in 2022; oil sector value added revised up by 23 percent. - Public and publicly guaranteed (PPG) debt dynamics: - Gross public debt decreased from 40.6 percent of GDP at end-2021 to 31.5 percent of GDP at end-2022. - At end-2023, outstanding PPG external and domestic debt stood at nearly US$6 billion, 30.3 percent of GDP. - Domestic arrears and Treasury securities: - Domestic arrears: CFAF 491 billion (5.2 percent of GDP) at end-2021; CFAF 164 billion (1.5 percent of GDP) at end-2022; remained roughly unchanged nominally and decreased to 1.2 percent of GDP by end-July 2024. - Treasury securities stock: CFAF 333 billion (3.8 percent of GDP) in 2019 to CFAF 767 billion (6.6 percent of GDP) in 2023. - Anticipated increase in 2024: CFAF 112 billion (0.4 percent of GDP). - Market composition and yields: - Shift from T-bills to T-bonds: T-bonds share rose from 54 percent in 2021 to 84 percent of the public security portfolio at end-July 2024. - Average spread between T-bill and T-bond yields widened from 0.8 percent in 2021 to 3.4 percent in 2024 (average January–July). - Interest rates (average over 2024): T-bill rates 7.5 percent; T-Bonds 11.7 percent. - Regional market concentration: Cameroonian banks hold 56 percent of outstanding Chadian paper; regional market showing signs of saturation with low subscription rates and increased failed auctions. - External debt composition: - IMF debt accounted for 31 percent of total external debt in 2023, up from 15 percent in 2019. - Debt to private creditor Glencore has been substantially settled following accelerated repayments in 2022–2023. - Non-Paris Club bilateral debt has increased due to a new loan from the Abu Dhabi Fund for Development in 2023. - Recent/contemporaneous financing secured in 2024 includes concessional loans from the European Investment Bank, the French Treasury, the Hungarian Development Bank, and a new loan of US$500 million from the Abu Dhabi Fund for Development for budget support. *Source: Annex IX. Data Issues, 1tcdea2024001-print-pdf (IMF staff report content as provided).* ### 7. The debt treatment under the G20 Common Framework has been implemented and ### 7. The debt treatment under the G20 Common Framework has been implemented and has significantly reduced short-term risks. ### Implementation and immediate effects - Following the Memorandum of Understanding signed with the Chadian authorities in December 2022, Glencore reprofiled part of the debt service to ensure total Chad’s external debt service-to-revenue ratio falls below 14 percent in 2024. - Under a currency-based approach used when the Glencore agreement was reached, the external debt service-to-revenue ratio is projected to fall below the 14-percent threshold in 2024; under a residency basis, the ratio is projected to slightly exceed this threshold. - Integration of CFAF-denominated loans from non-residents into the DSA’s external debt perimeter reclassified about US$400 million in liabilities as external debt: - External debt stock increased by US$401 million at end-2023, representing a 15-percent increase from the currency-criteria numbers. - This inclusion translates into additional external debt service for 2024 of about US$20 million, equivalent to 0.6 percent of government revenue. - Recent creditor outcomes and status: - A debt restructuring agreement with Belgium Credendo has been signed to settle the arrears in 2025 and 2026. - The proposed restructuring of the large debt to Libya has yet to be ratified. - Discussions for debt restructuring with Congo and for undisbursed debt cancellation with Equatorial Guinea are ongoing. - Arrears with Cameroon are expected to be settled soon. - Debt to the BDEAC has been characterized by significant irregular debt service payments and arrears; discussions are ongoing concerning future repayments. ### Public debt and debt service (end-2023 figures and near-term service) - Total debt stock: US$5,885; 30.3 percent of GDP. - Total debt service 2023: US$1,008; 34.2 percent of GDP. - Debt service 2024: US$651; 13.1 percent of GDP. - Debt service 2025: US$638; 2.8 percent of GDP. - External debt stock: US$3,132; 16.1 percent of GDP. - External debt service 2023: US$3,245; 92.4 percent of GDP. - External debt service 2024: US$467; 2.2 percent of GDP. - External debt service 2025: US$396; 1.8 percent of GDP. - Multilateral creditors (end-2023): - Stock: US$1,227; 6.3 percent of GDP. - Debt service 2023: 20.9 percent of GDP. - Debt service 2024: US$610.3; 9.0 percent of GDP. - Debt service 2025: US$914; 10.5 percent of GDP. - IMF: - Stock: US$959; 4.9 percent of GDP. - Debt service 2023: 16.3 percent of GDP. - PRGT Outstanding Credit: US$708; 3.7 percent of GDP; 12.0 percent of GDP (debt service? as presented). - SDR Position: US$251; 1.3 percent of GDP; 4.3 percent of GDP (debt service? as presented). - World Bank IDA: US$151; 0.8 percent of GDP; 2.6 percent of GDP. - African Development Bank: US$91; 0.5 percent of GDP; 1.5 percent of GDP. - International Fund for Agricultural Development: US$26; 0.1 percent of GDP; 0.4 percent of GDP. - Bilateral creditors (end-2023): - Stock: US$1,080; 5.6 percent of GDP. - Debt service 2023: 18 percent of GDP. - Debt service 2024: US$460.2; 0.2 percent of GDP. - Debt service 2025: US$1,080.5; 94.0 percent of GDP (table formatting ambiguous but numbers preserved as presented). - Paris Club: US$118; 0.6 percent of GDP. - o/w France: US$106; 0.5 percent of GDP; 1.8 percent of GDP. - Non-Paris Club: US$962; 5.0 percent of GDP; debt service entries: 16410.2, 1010.5, 860.4 (preserved exactly as presented). - o/w Libya: US$294; 1.5 percent of GDP; 5.0 percent of GDP. - o/w China: US$259; 1.3 percent of GDP; 4.4 percent of GDP. - o/w UAE: US$150; 0.8 percent of GDP; 2.5 percent of GDP. - o/w Regional Bilateral Creditors: US$101; 0.5 percent of GDP; 1.7 percent of GDP. - Commercial creditors: - Stock: US$375; 1.9 percent of GDP. - Debt service 2023: US$6.4; 3 percent of GDP; 31.9 percent (?) as presented. - Debt service 2024: US$191; 1.6 percent of GDP. - Debt service 2025: US$222; 1.1 percent of GDP; US$1450.6 also shown in table (preserved exactly). - o/w Glencore Energy: US$364; 1.9 percent of GDP; 6.2 percent of GDP. - o/w Mega International (Taiwan, PoC): US$8; 0.0 percent of GDP; 0.1 percent of GDP. - Other international creditors: - Stock: US$449; 2.3 percent of GDP. - Debt service 2023: US$7.6; 3.3 percent of GDP. - Debt service 2024: US$30.2; 4.5 percent of GDP. - Debt service 2025: US$450.2; 47.0 percent of GDP; US$470.2 also shown (preserved exactly). - o/w Development Bank of the Central African Countries: US$260; 1.3 percent of GDP; 4.4 percent of GDP. - o/w Islamic Development Bank: US$101; 0.5 percent of GDP; 1.7 percent of GDP. - o/w Arab Bank for Economic Development in Africa: US$72; 0.4 percent of GDP; 1.2 percent of GDP. - Domestic debt (end-2023): - Stock: US$2,754; 14.2 percent of GDP. - Debt service 2023: US$473; 64.1 percent of GDP (?) as presented. - Debt service 2024: US$1,840; 40.9 percent of GDP. - Debt service 2025: US$2,421; 1.1 percent of GDP. - Public securities (end-2023): - Stock: US$1,275; 6.6 percent of GDP. - Debt service 2023: 21.7 percent of GDP. - Debt service 2024: US$1,370.7; 16.0 percent of GDP. - Debt service 2025: US$160.1; 80.0 percent of GDP. - Treasury Bills (net): Stock US$233; 1.2 percent of GDP; debt service entries include 4.0, 10.0, 0.0, -80.0 (preserved exactly). - Bonds: Stock US$1,042; 5.4 percent of GDP; debt service entries: 17.7, 1360.7, 160.1, 160.1 (preserved exactly). - Other Domestic Debt: Stock US$1,201; 6.2 percent of GDP; debt service entries: 20.4, 460.2, 440.2, 700.3 (preserved exactly). - Commercial Bank domestic: Stock US$404; 2.1 percent of GDP; debt service entries: 6.9, 460.2, 440.2, 430.2 (preserved exactly). - BEAC 3/: Stock US$798; 4.1 percent of GDP; debt service entries: 13.6, 00.0, 00.0, 270.1 (preserved exactly). - Arrears: Stock US$277; 1.4 percent of GDP; debt service 2023: 4.7; 1810.9; debt service 2024: 1240.6; debt service 2025: 1640.7 (preserved exactly). (Note: table entries preserved exactly as presented in source, including formatting ambiguities.) ### Macroeconomic forecast framework and key assumptions - The DSA incorporates a rebasing of GDP estimates, about 45 percent higher in nominal terms, mechanically reducing all debt-to-GDP ratios. - Real GDP growth: - 2023 actual: 4.9 percent (higher than previously projected 3.5 percent). - Non-oil growth: expected to decline to 3.7 percent in 2024, rebound to 4.2 percent in the medium term. - Oil production assumptions: - 2023 level: around 55 million barrels (compared to 52 million barrels in the previous DSA). - Production expected to peak in 2029, then gradually decline. - Brent oil prices assumed to fall from US$82 per barrel in 2023 to below US$70 by 2028. - External current account: - Expected to widen, reaching 1.3 percent of GDP in 2024 and 4.2 percent in 2025, before averaging 3 percent over the medium term. - Fiscal performance: - Non-oil primary deficit moderated to 3.9 percent of non-oil GDP during the first seven months of 2024 (down from 11.2 percent in 2023). - Overall fiscal balance turned into a deficit in 2023 due to higher-than-expected investment despite stable revenue. - Baseline scenario fiscal targets and reforms: - Increase non-oil tax revenues by at least 1.3 percent of non-oil GDP by 2029 through tax administration reforms. - Reduce current spending by 1.8 percent of non-oil GDP by 2029 (wage bill reduction; phasing out water and electricity subsidies and transition-related transfers). - Medium-term operational target: non-oil primary fiscal deficit of 4-5 percent of non-oil GDP. - Net debt converges towards and stabilizes at approximately 28 percent of GDP. - Assumes steady accumulation of deposits: from 1.6 percent of GDP at end-2023 to 5.1 percent of non-oil GDP at end-2029. - Assumes concessional external borrowing of about 2 percent of non-oil GDP per year on average in the baseline. - Projects average grants and projects disbursements of 2.1 percent of non-oil GDP in the baseline. - No-adjustment scenario: - Continual high spending leads to accumulation of domestic arrears: about 0.7 percent of non-oil GDP per year on average, with the stock reaching 5 percent of GDP by the end of the period. - Growth is progressively slowed (about 1 percentage point difference in 2029 in the non-oil sector versus the baseline). - External financing limited; additional external budget support assumed on non-concessional terms (about 4 percent of non-oil GDP per year on average). - Grants and project support assumed to average 1.5 percent of non-oil GDP. - Domestic debt is expected to decline relative to GDP and stabilize at about 10 percent of GDP over the medium to long term. ### Debt-carrying capacity, stress tests, and climate costs - Composite Indicator (CI) classifies Chad as having Weak debt-carrying capacity (CI Score 2.34). - CI components and contributions preserved exactly: - CPIA coefficient 0.39 * 2.72 = 1.05 (45% contribution). - Real growth coefficient 2.7 * 2.32 = 0.06 (3% contribution). - Import coverage of reserves coefficient 4.05 * 28.15 = 1.14 (49% contribution). - Import coverage of reserves^2 coefficient -3.99 * 7.92 = -0.32 (-14% contribution). - Remittances coefficient 2.02 * 1.07 = 0.02 (1% contribution). - World economic growth coefficient 13.52 * 2.86 = 0.39 (16% contribution). - CI Score 2.34 (100%); CI rating Weak. - External debt burden high-risk thresholds (as presented): - PV of external debt-to-GDP ratio: 30 percent. - PV of debt-to-exports ratio: 140 percent. - Debt service-to-exports ratio: 10 percent. - Debt service-to-revenue ratio: 14 percent. - Stress tests relied upon: - Six standard stress tests plus a customized oil commodity price shock. - Commodity price shock: one-standard deviation decline in oil prices from 2024-2029, corresponding to a 58 percent fall in the price of oil. - Natural disaster shock: one-off 10 percentage points of GDP shock to the external debt-to-GDP ratio in the first year; real GDP growth shock of 1.5 percent; exports growth shock of 3.5 percent. - Climate finance needs (as presented by Chad’s NDC and adaptation estimates): - Mitigation: approximately US$6.7 billion (about 35 percent of 2024 GDP) to reduce emissions by 19.3 percent by 2030. - Adaptation: around US$5 billion (about 26 percent of 2023 GDP) by 2030 to enhance resilience. - Authorities committed to financing US$1.2 billion (6.2 percent of 2023 GDP) domestically toward these efforts. ### Debt sustainability assessment and risk judgment - Chad continues to be assessed as presenting a “high risk” of external debt distress, unchanged from the December 2022 DSA. - 2023 developments: - PV of external debt-to-GDP ratio improved substantially in 2023, thanks to accelerated repayments to Glencore. - External debt service remains elevated, particularly under the extended debt coverage that includes foreign-held CFAF-denominated debt. - Scenario outcomes: - Baseline scenario: declining trend in external debt is expected to be reversed but not drive debt service above the threshold if additional debt is contracted on concessional terms; external debt service-to-revenue remains below 14 percent from 2025 onwards, eventually leading to a moderate risk of distress. - No-adjustment scenario: widening fiscal deficit increases debt service, causing external debt service-to-revenue to exceed the 14-percent threshold from 2027 onwards. - Given uncertainty over the realism of the baseline scenario and risk of deterioration into the no-adjustment scenario if fiscal prudence and reforms fail to materialize, staff judgement maintains the assessment of high risk of external debt distress. *Source: IMF staff report chapter provided in the supplied content.* ### 20. Chad’s overall risk of public debt distress also remains high. In 2022 and 2023, total ### Chad’s overall risk of public debt distress also remains high ### Debt trajectory and scenarios - Total public debt declined rapidly in 2022 and 2023, with reductions in both domestic and external debts. - Baseline projection: debt is expected to stabilize at about 30 percent of GDP over the next 10 years. - Domestic debt share: approximately 10 percent of GDP. - External debt share: approximately 20 percent of GDP. - As external debt becomes more concessional, debt service progressively declines, producing a moderate risk assessment of overall public debt distress in the baseline. - No-adjustment scenario: - Higher budget deficits would lead to further debt accumulation. - The PV of total public debt-to-GDP ratio would breach the 35 percent high-risk benchmark in 2029 and continue to rise over the long term. - Because of the wide divergence between the baseline and the no-adjustment scenario, judgement is applied to maintain the overall public debt distress risk assessment as high. ### Shocks and vulnerabilities - Commodity price shock (main vulnerability for overall public and external debt): - Adverse scenario analysis indicates a commodity price shock could cause a significant deterioration in outstanding debt stock and debt service in the baseline. - The external debt service-to-revenue ratio would exceed the risk threshold at multiple times, exacerbating liquidity pressure. - The public debt-to-GDP ratio would exceed its benchmark in the near future by 2026 and remain well above thereafter. - Natural disaster shock: - In the baseline scenario, the stress from a natural disaster shock could be contained: debt stock would significantly increase after the shock, but additional debt service would remain limited. - In the no-adjustment scenario, any shocks, including the natural disaster shock, would dramatically increase both domestic and external debt, leading to higher debt and debt service ratios over the entire forecast period and jeopardizing debt sustainability. ### Sustainability assessment and policy implications - Overall, debt remains sustainable under the baseline. - Given the anticipated decline in oil export revenue over the medium to long term, implementation of prudent fiscal policies is essential to significantly reduce debt and debt service and the risk of distress. - Recent improvement in fiscal policy and commitments by the authorities help establish an appropriate framework to preserve debt sustainability and promote accelerated economic development. - Risks to sustainability: - Persistent elevated spending, as projected in the no-adjustment scenario, would increase the stock of debt in an uncontrolled manner, breaching all risk thresholds. - Uncertainties persist about whether the recommended fiscal prudence and implementation of essential reforms will fully materialize. - Conclusion: the baseline scenario involves debt remaining sustainable over the entire forecast horizon, conditional on prudent fiscal policies and reform implementation. *Source: IMF staff analysis (content unit).* ### 24. The authorities concurred with staff’s assessment that debt remains sustainable and ### 1tcdea2024001-print-pdf - 24. The authorities concurred with staff’s assessment that debt remains sustainable and ### Authorities’ assessment and policy stance - The authorities concurred with staff’s assessment that debt remains sustainable and reiterated commitment to implement a prudent fiscal policy and to contract external debt on concessional terms only. - They highlighted efforts to reduce external debt following the restructuring of part of the external debt in 2022. - Policy objectives and limits: - Maintain the external debt service-to-revenue ratio below the 14-percent threshold. - Continue contracting new loans only on concessional terms. - Limit net sovereign domestic issuance to approximately CFAF 15 billion per year due to regional securities market saturation. - Authorities remain committed to improving revenue mobilization and controlling spending through continued implementation of structural reforms. ### Indicators and projections for external debt (Baseline Scenario, selected items) - External debt (nominal), percent of GDP: 21.6 (2021); 17.9 (2022); 16.1 (2023); 15.8 (2024); 17.0 (2025); 19.0 (2026); 20.3 (2027); 21.6 (2028); 23.3 (2029); 21.3 (2034); 20.6 (2044); 20.2; 20.8. - Change in external debt: 0.6 (2021); -3.8 (2022); -1.7 (2023); -0.4 (2024); 1.2 (2025); 2.0 (2026); 1.3 (2027); 1.3 (2028); 1.7 (2029); -0.5 (2034); 0.2; Identified net debt-creating flows: -2.7 (2021); -7.7 (2022); -2.5 (2023); -0.9 (2024); 1.2 (2025); 1.0 (2026); 0.1 (2027); 1.1 (2028); 1.9 (2029); 1.7 (2034); 2.6; 0.0; 1.2. - Net FDI (negative = inflow): -2.3 (2021); -1.7 (2022); -1.9 (2023); -1.7 (2024); -2.5 (2025); -2.2 (2026); -2.1 (2027); -0.7 (2028); -0.1 (2029); 0.4 (2034); 0.9; -2.5; -0.8. - Endogenous debt dynamics contribution (examples): -2.0 (2021); -0.8 (2022); -0.9 (2023); -0.1 (2024); 0.0 (2025); -0.6 (2026); -0.5 (2027); -0.7 (2028); -0.7 (2029); -0.7 (2034). - Residual: 3.3 (2021); 3.9 (2022); 0.8 (2023); 0.5 (2024); 0.0 (2025); 1.0 (2026); 1.2 (2027); 0.2 (2028); -0.2 (2029); -2.2 (2034); -2.4; 0.1; -0.7. - Sustainability indicators (selected): - PV of PPG external debt-to-GDP ratio (selected years): 12.4; 11.4; 11.4; 12.3; 12.9; 13.5; 14.6; 15.2; 14.7. - PV of PPG external debt-to-exports ratio (selected years): 41.2; 40.3; 45.6; 50.7; 55.3; 58.6; 65.8; 84.0; 122.3. - PPG debt service-to-exports ratio (selected years): 6.5; 7.3; 7.6; 7.9; 7.1; 4.8; 5.7; 5.6; 4.1; 7.2; 10.2. - PPG debt service-to-revenue ratio (selected years): 16.3; 16.5; 15.8; 14.8; 12.1; 9.0; 10.2; 9.8; 6.7; 10.3; 10.5. - Gross external financing need (Million of U.S. dollars, selected sequence): 186.3; -767.7; 143.5; 294.3; 671.2; 660.5; 496.9; 830.2; 995.3; 1471.4; 3170.9. ### Public sector debt and fiscal dynamics (Baseline Scenario, selected items) - Public sector debt (percent of GDP): 40.6 (2021); 31.5 (2022); 30.3 (2023); 29.5 (2024); 29.5 (2025); 30.4 (2026); 30.8 (2027); 31.5 (2028); 32.6 (2029); 30.1 (2034); 30.1; 35.4; 30.8. - Change in public sector debt: 0.6 (2021); -9.2 (2022); -1.1 (2023); -0.8 (2024); 0.0 (2025); 0.9 (2026); 0.5 (2027); 0.7 (2028); 1.1 (2029); -0.1 (2034); 0.3. - Identified debt-creating flows: 1.0 (2021); -7.7 (2022); -1.7 (2023); -0.5 (2024); 0.2 (2025); 0.5 (2026); 0.3 (2027); 0.4 (2028); 0.9 (2029); 0.1 (2034); 0.5; -0.5; 0.1. - Primary deficit and components: - Primary deficit: 0.8 (2021); -4.6 (2022); 0.4 (2023); -1.1 (2024); -0.4 (2025); 1.3 (2026); 0.8 (2027); 0.9 (2028); 0.8 (2029); 1.2 (2034); 1.6; -0.2; 0.7. - Revenue and grants (percent of GDP): 11.5 (2021); 16.3 (2022); 15.1 (2023); 16.7 (2024); 16.5 (2025); 14.7 (2026); 15.1 (2027); 15.1 (2028); 15.3 (2029); 14.8 (2034); 14.0; 12.3; 15.3. - Primary (noninterest) expenditure (percent of GDP): 12.3 (2021); 11.7 (2022); 15.5 (2023); 15.6 (2024); 16.1 (2025); 16.0 (2026); 15.9 (2027); 16.0 (2028); 16.2 (2029); 16.0 (2034); 15.6; 12.0; 16.0. - Automatic debt dynamics: -1.0 (2021); -4.3 (2022); -0.9 (2023); -0.9 (2024); -0.5 (2025); -1.0 (2026); -1.0 (2027); -1.3 (2028); -1.2 (2029); -1.2 (2034); -1.1. - Sustainability indicators (selected): - PV of public debt-to-GDP ratio (examples): 26.5; 25.0; 23.9; 23.6; 23.4; 23.4; 23.9; 24.0; 24.2. - PV of public debt-to-revenue and grants ratio (selected): 175.5; 149.4; 144.4; 160.7; 155.1; 154.9; 155.6; 162.2; 173.5. - Debt service-to-revenue and grants ratio: 19.7 (2021); 21.6 (2022); 26.5 (2023); 35.6 (2024); 47.8 (2025); 56.0 (2026); 52.7 (2027); 49.0 (2028); 43.7 (2029); 46.9 (2034); 65.3. - Gross financing need (percent of GDP): 4.3 (2021); 0.1 (2022); 3.2 (2023); 4.9 (2024); 7.5 (2025); 9.5 (2026); 8.7 (2027); 8.3 (2028); 7.5 (2029); 8.2 (2034); 10.7. ### Stress tests, sensitivity analysis, and risks - Stress-test framework: - The external DSA and public DSA present a range of alternative scenarios, bound tests, and tailored tests (including natural disaster and commodity price shocks). - The most extreme shock for several indicators is driven by commodity-price and export shocks in scenarios shown. - Additional financing needs generated by stress-test shocks are assumed to be covered by PPG external MLT debt in the external DSA; default terms of marginal debt are based on baseline 10-year projections. - Selected sensitivity and threshold outcomes (summarized patterns from tables/figures): - Under alternative scenarios and bound tests, key indicators (Debt service-to-exports ratio; Debt service-to-revenue ratio; PV of debt-to-exports ratio; PV of debt-to-GDP ratio) show material increases under Natural Disaster and Commodity Price shocks. - Table 3 and Table 4 report multiple scenario paths where several bold values (breaches of thresholds/benchmarks) occur under adverse scenarios (historical averages, natural disaster, declines in exports, combinations of shocks). - Figures highlight that the most extreme shocks for Debt Service-to-Revenue Ratio and PV of Debt-to-Exports Ratio are associated with commodity price and exports shocks respectively. ### Key macroeconomic and fiscal assumptions (selected) - Real GDP growth (percent): 0.3 (2021); 4.1 (2022); 4.8 (2023); 3.2 (2024); 3.4 (2025); 4.5 (2026); 3.8 (2027); 4.3 (2028); 3.7 (2029); 3.2 (2034); 3.5; 2.0; 3.5. - GDP deflator in US dollar terms (change in percent): 12.6 (2021); 1.7 (2022); 2.7 (2023); 5.2 (2024); 4.0 (2025); 2.1 (2026); 1.9 (2027); 1.7 (2028); 2.5 (2029); 2.5 (2034); 2.6; -0.7; 3.1. - Effective interest rate (percent): 2.2 (2021); 1.9 (2022); 2.1 (2023); 2.6 (2024); 3.4 (2025); 1.0 (2026); 0.8 (2027); 0.6 (2028); 0.5 (2029); -0.1 (2034); 0.1; 3.0; 0.7. - Growth of exports of G&S (US dollar terms, percent): 33.4 (2021); 35.4 (2022); -7.5 (2023); 1.5 (2024); -4.8 (2025); 3.6 (2026); 1.9 (2027); 4.9 (2028); 2.3 (2029); 3.3 (2034); 2.4; 4.5; 2.0. - Growth of imports of G&S (US dollar terms, percent): 14.8 (2021); -0.2 (2022); 9.1 (2023); 3.5 (2024); 5.0 (2025); 4.4 (2026); -1.4 (2027); 3.6 (2028); 3.2 (2029); 2.5 (2034); 2.7; 1.7; 2.9. - Grant element of new public sector borrowing (percent, selected): 42.7; 41.5; 44.2; 42.0; 43.8; 44.1; 43.6; 41.1; 43.4. - Government revenues (excluding grants, percent of GDP): 10.8 (2021); 15.5 (2022); 14.6 (2023); 15.1 (2024); 14.6 (2025); 12.8 (2026); 13.2 (2027); 13.1 (2028); 13.4 (2029); 12.6 (2034); 11.7; 10.7; 13.3. - Aid flows (Million of US dollars, selected): 233.3 (2021); 198.9 (2022); 178.0 (2023); 857.4; 1155.9; 1366.2; 1322.1; 1452.1; 1581.8; 1627.9; 3388.9. - Grant-equivalent financing (percent of GDP, selected): 0.7 (2021); 0.8 (2022); 0.5 (2023); 2.8; 3.3; 3.7; 3.4; 3.5; 3.6; 3.1; 3.4; 3.3. - Nominal GDP (Million of US dollars, selected): 16881; 17867; 19241; 20885; 22472; 23991; 25364; 26914; 28598; 39685; 71167.4. - Nominal dollar GDP growth (percent, selected): 12.9 (2021); 5.8 (2022); 7.7 (2023); 8.5 (2024); 7.6 (2025); 6.8 (2026); 5.7 (2027); 6.1 (2028); 6.3 (2029); 5.9 (2034); 6.2; 1.3; 6.8. ### Key takeaways and policy implications drawn from the content - Debt is assessed as sustainable under the baseline, conditional on: - Maintaining concessional external borrowing and keeping external debt service-to-revenue ratio below the 14-percent threshold. - Containing domestic issuance to approximately CFAF 15 billion per year to avoid regional securities market saturation. - Continued improvements in revenue mobilization and spending control via structural reforms. - Risks are concentrated in commodity-price and export-related shocks; stress tests show these shocks can materially raise debt and debt-service indicators, implying continued vigilance and contingency planning are warranted. - Reliance on grant-equivalent and concessional financing underpins the favorable baseline; deviations toward more commercial financing or larger adverse shocks could lead to breaches of debt thresholds in several scenarios. *Source: Country authorities; and staff estimates and projections (excerpts from the provided PDF content).* ### 2.5 percentage points of GDP in ### 2.5 percentage points of GDP in ### DSA Results — No-Adjustment Scenario (External Debt Sustainability Framework) - Table: Chad: External Debt Sustainability Framework, No-Adjustment Scenario, 2021-2044. - External debt (nominal) / of which: public and publicly guaranteed (PPG) (In percent of GDP): - 2021: 21.6 - 2022: 17.9 - 2023: 16.1 - 2024: 15.8 - 2025: 16.1 - 2026: 18.9 - 2027: 21.3 - 2028: 23.9 - 2029: 26.5 - 2034: 33.4 - 2044: 64.7 - Historical average: 20.2 - Projections average: 25.0 - Change in external debt: - 2021: 0.6 - 2022: -3.8 - 2023: -1.7 - 2024: -0.4 - 2025: 0.3 - 2026: 2.8 - 2027: 2.3 - 2028: 2.6 - 2029: 2.6 - 2034: 1.5 - 2044: 3.1 - Identified net debt-creating flows: - 2021: -2.7 - 2022: -7.7 - 2023: -2.5 - 2024: -0.9 - 2025: 0.9 - 2026: 1.3 - 2027: 1.3 - 2028: 2.2 - 2029: 3.2 - 2034: 2.0 - 2044: 3.4 - Historical average: 0.0 - Projections average: 1.7 - Components of identified flows (selected): - Non-interest current account deficit: - 2021: 1.6; 2022: -5.2; 2023: 0.4; 2024: 0.9; 2025: 3.2; 2026: 3.7; 2027: 3.3; 2028: 2.7; 2029: 2.9; 2034: 1.1; 2044: 0.7; Historical average: 1.9; Projections average: 2.2 - Deficit in balance of goods and services: - 2021: 5.6; 2022: -3.9; 2023: 1.5; 2024: 1.9; 2025: 4.0; 2026: 4.4; 2027: 4.1; 2028: 3.4; 2029: 3.5; 2034: 2.0; 2044: 1.7; Historical average: 6.1; Projections average: 3.1 - Exports (percent of GDP): - 2021: 27.4; 2022: 35.1; 2023: 30.1; 2024: 28.2; 2025: 25.1; 2026: 24.5; 2027: 23.8; 2028: 23.7; 2029: 22.8; 2034: 19.6; 2044: 13.3 - Imports (percent of GDP): - 2021: 33.1; 2022: 31.2; 2023: 31.6; 2024: 30.1; 2025: 29.1; 2026: 29.0; 2027: 27.9; 2028: 27.1; 2029: 26.3; 2034: 21.5; 2044: 15.1 - Net current transfers (negative = inflow): - 2021: -5.5; 2022: -3.6; 2023: -3.0; 2024: -2.6; 2025: -2.3; 2026: -2.1; 2027: -1.9; 2028: -1.7; 2029: -1.5; 2034: -1.0; 2044: -0.5; Historical average: -5.6; Projections average: -1.6 - Net FDI (negative = inflow): - Presentation in source shows formatting issues but entries include: -2.3 -1.7 -1.9 -1.7 -2.5 -2.2 -2.2 -0.8 -0.2 0.2 0.8 -2.5 -0.8 - Endogenous debt dynamics: - 2021: -2.0; 2022: -0.8; 2023: -0.9; 2024: -0.1; 2025: 0.2; 2026: -0.1; 2027: 0.2; 2028: 0.2; 2029: 0.5; 2034: 0.7; 2044: 1.9 - Contribution from nominal interest rate: - 2021: 0.4; 2022: 0.4; 2023: 0.4; 2024: 0.4; 2025: 0.6; 2026: 0.4; 2027: 0.6; 2028: 0.9; 2029: 1.1; 2034: 1.7; 2044: 3.9 - Contribution from real GDP growth: - 2021: -0.1; 2022: -0.8; 2023: -0.8; 2024: -0.5; 2025: -0.4; 2026: -0.5; 2027: -0.5; 2028: -0.6; 2029: -0.6; 2034: -1.0; 2044: -2.0 - Contribution from price and exchange rate changes: formatting in source shows "-2.3-0.4-0.5 ..." with ellipses. - Residual: - 2021: 3.3; 2022: 3.9; 2023: 0.8; 2024: 0.5; 2025: -0.6; 2026: 1.5; 2027: 1.0; 2028: 0.4; 2029: -0.6; 2034: -0.5; 2044: -0.3; Historical average: 0.1; Projections average: -0.1 - of which: exceptional financing: -0.7; -1.1; -0.2; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0; 0.0 (by year from 2021) - Sustainability indicators (selected): - PV of PPG external debt-to-GDP ratio (memorandum): 12.4; 12.1; 12.3; 14.9; 17.3; 19.7; 22.2; 30.9; 62.9 - PV of PPG external debt-to-exports ratio: 41.2; 43.1; 48.9; 60.7; 72.7; 83.3; 97.3; 158.0; 471.6 - PPG debt service-to-exports ratio: 6.5; 7.3; 7.6; 7.9; 7.6; 5.8; 8.6; 10.2; 11.1; 22.0; 68.2 - PPG debt service-to-revenue ratio: 16.3; 16.5; 15.8; 14.8; 13.1; 11.3; 15.7; 18.6; 19.4; 34.7; 80.6 - Gross external financing need (Million of U.S. dollars): - 2020: 186.3; 2021: -770.0; 2022: 145.8; 2023: 294.6; 2024: 588.8; 2025: 679.3; 2026: 786.5; 2027: 1137.3; 2028: 1437.9; 2029: 1986.7; 2034: 6558.4 - Key macroeconomic assumptions (selected): - Real GDP growth (in percent): 2021: 0.3; 2022: 4.1; 2023: 4.8; 2024: 3.2; 2025: 2.9; 2026: 3.5; 2027: 2.7; 2028: 3.2; 2029: 2.5; 2034: 3.2; 2044: 3.5; Historical average: 2.0; Projections average: 3.1 - GDP deflator in US dollar terms (change in percent): 12.6; 1.7; 2.8; 5.2; 4.0; 2.1; 1.9; 1.8; 2.5; 2.2; 2.4; -0.7; 2.6 - Effective interest rate (percent): 2.2; 1.9; 2.1; 2.6; 4.4; 2.8; 3.5; 4.3; 4.8; 5.6; 6.7; 3.0; 4.3 - Growth of exports of G&S (US dollar terms, in percent): 33.4; 35.4; -7.6; 1.5; -4.8; 3.5; 1.4; 4.7; 1.3; 3.1; 2.3; 4.5; 1.7 - Growth of imports of G&S (US dollar terms, in percent): 14.8; -0.2; 9.2; 3.5; 3.2; 5.4; 0.6; 2.1; 2.1; 2.2; 2.3; 1.7; 2.1 - Government revenues (excluding grants, in percent of GDP): 10.8; 15.5; 14.6; 15.1; 14.6; 12.7; 13.0; 12.9; 13.1; 12.4; 11.3; 10.7; 13.1 - Aid flows (in Million of US dollars): 233.3; 198.9; 178.0; 443.1; 455.7; 571.4; 504.4; 606.7; 662.7; 848.6; 1437.7 - Grant-equivalent financing (in percent of GDP): entries include 2.0; 1.9; 2.2; 2.0; 2.2; 2.2; 2.2; ...; 2.1 (formatting in source includes ellipses) - Nominal GDP (Million of US dollars): 16881; 17867; 19250; 20889; 22349; 23623; 24720; 25955; 27279; 35490; 61804.1 - Nominal dollar GDP growth: 12.9; 5.8; 7.7; 8.5; 7.0; 5.7; 4.6; 5.0; 5.1; 5.5; 6.0; 1.3; 5.7 - Memorandum items (selected): - PV of external debt (percent of GDP): 12.4; 12.1; 12.3; 14.9; 17.3; 19.7; 22.2; 30.9; 62.9 - In percent of exports: 41.2; 43.1; 48.9; 60.7; 72.7; 83.3; 97.3; 158.0; 471.6 - PV of PPG external debt (in Million of US dollars): 2387.5; 2534.7; 2741.8; 3518.5; 4271.9; 5124.6; 6063.2; 10967; 38870.9 - (PVt-PVt-1)/GDPt-1 (in percent): 0.8; 1.0; 3.5; 3.2; 3.4; 3.6; 3.5; 6.9 - Non-interest current account deficit that stabilizes debt ratio: 1.0; -1.4; 2.1; 1.2; 2.9; 0.9; 1.0; 0.2; 0.3; -0.4; -2.4 ### Public Sector Debt Sustainability Framework — No-Adjustment Scenario - Table: Chad: Public Sector Debt Sustainability Framework, No-Adjustment Scenario, 2021-2044. - Public sector debt (In percent of GDP): - 2021: 40.5 - 2022: 31.3 - 2023: 30.2 - 2024: 29.4 - 2025: 28.0 - 2026: 30.6 - 2027: 33.0 - 2028: 35.7 - 2029: 38.6 - 2034: 55.1 - 2044: 102.8 - Historical average: 35.4 - Projections average: 39.6 - of which: external debt (percent of GDP): matches external DSA entries (21.6; 17.9; 16.1; 15.8; 16.1; 18.9; 21.3; 23.9; 26.5; 33.4; 64.7; historical 20.2; projections 25.0) - Change in public sector debt: - 2021: 0.6; 2022: -9.2; 2023: -1.1; 2024: -0.8; 2025: -1.4; 2026: 2.6; 2027: 2.3; 2028: 2.8; 2029: 2.9; 2034: 3.7; 2044: 5.7 - Identified debt-creating flows: - 2021: 1.0; 2022: -7.7; 2023: -1.7; 2024: -0.5; 2025: -1.1; 2026: 2.2; 2027: 2.2; 2028: 2.5; 2029: 2.7; 2034: 3.9; 2044: 6.0; Historical average: -0.5; Projections average: 2.3 - Primary deficit: - 2021: 0.8; 2022: -4.6; 2023: 0.4; 2024: -1.1; 2025: 0.2; 2026: 2.6; 2027: 2.5; 2028: 2.9; 2029: 2.9; 2034: 4.0; 2044: 5.7; Historical average: -0.2; Projections average: 2.6 - Revenue and grants (percent of GDP): - 2021: 11.5; 2022: 16.3; 2023: 15.1; 2024: 16.7; 2025: 16.2; 2026: 14.3; 2027: 14.7; 2028: 14.6; 2029: 14.8; 2034: 14.3; 2044: 13.3; Historical average: 12.3; Projections average: 14.8 - of which: grants: 0.7; 0.8; 0.5; 1.6; 1.6; 1.6; 1.7; 1.7; 1.7; 1.9; 2.0 - Primary (noninterest) expenditure (percent of GDP): - 2021: 12.3; 2022: 11.7; 2023: 15.5; 2024: 15.6; 2025: 16.4; 2026: 17.0; 2027: 17.2; 2028: 17.5; 2029: 17.7; 2034: 18.3; 2044: 19.0; Historical average: 12.0; Projections average: 17.4 - Automatic debt dynamics: - -1.0; -4.3; -0.9; -0.9; -0.1; -0.5; -0.3; -0.4; -0.1; -0.1; 0.4 - Contribution from interest rate/growth differential: -1.8; -4.3; -1.0; -0.9; -0.1; -0.5; -0.3; -0.4; -0.1; -0.1; 0.4 - of which: contribution from average real interest rate: -1.7; -2.7; 0.4; 0.1; 0.7; 0.4; 0.5; 0.7; 0.7; 1.5; 3.6 - of which: contribution from real GDP growth: -0.1; -1.6; -1.4; -0.9; -0.8; -0.9; -0.8; -1.0; -0.9; -1.6; -3.3 - Other identified debt-creating flows: - 2021: 1.3; 2022: 1.2; 2023: -1.2; 2024: 1.4; 2025: -1.2; 2026: 0.1; subsequent years mostly 0.0 - Privatization receipts (negative): 0.0; 0.0; 0.6; 0.0; 0.0... - Recognition of contingent liabilities: 0.2; 0.0; 0.0; 0.0; 0.4; 0.4... - Debt relief (HIPC and other): -0.2; -0.3; -0.2; 0.0... - Deposit accumulation/withdrawals: 1.3; 1.4; -1.6; 1.4; -1.6; -0.2... - Residual: - 2021: -0.4; 2022: -1.4; 2023: 0.6; 2024: -0.3; 2025: -0.2; 2026: 0.3; 2027: 0.1; 2028: 0.3; 2029: 0.2; 2034: -0.1; 2044: -0.4; Historical average: 1.3; Projections average: 0.0 - Sustainability indicators (selected): - PV of public debt-to-GDP ratio: 26.4; 25.7; 24.2; 26.6; 29.0; 31.6; 34.4; 52.6; 100.9 - PV of public debt-to-revenue and grants ratio: 174.7; 153.4; 149.1; 185.3; 197.4; 216.5; 231.9; 368.5; 758.5 - Debt service-to-revenue and grants ratio: 19.7; 21.6; 26.5; 35.6; 44.7; 44.2; 44.5; 44.1; 42.8; 123.0; 307.4 - Gross financing need: 4.3; 0.1; 3.2; 4.9; 7.5; 9.0; 9.1; 9.3; 9.2; 21.6; 46.6 - Key macroeconomic and fiscal assumptions (selected): - Real GDP growth (in percent): same series as external DSA. - Average nominal interest rate on external debt (in percent): 2.0; 2.0; 2.1; 2.5; 4.3; 2.8; 3.6; 4.3; 4.8; 5.6; 6.7; 3.0; 4.3 - Average real interest rate on domestic debt (in percent): -6.1; -9.4; 5.2; 0.3; 2.3; 2.5; 1.8; 1.4; 0.6; 1.7; 2.2; 1.6; 1.4 - Inflation rate (GDP deflator, in percent): 8.5; 14.2; 0.1; 4.4; 3.3; 1.8; 2.1; 1.8; 2.5; 2.2; 2.4; 1.1; 2.4 - Growth of real primary spending (deflated by GDP deflator, in percent): -6.8; -1.1; 38.7; 4.2; 8.0; 6.9; 4.1; 4.9; 3.7; 3.8; 3.7; 3.4; 4.7 - Primary deficit that stabilizes the debt-to-GDP ratio: 0.2; 4.5; 1.5; -0.3; 1.6; 0.0; 0.2; 0.1; 0.0; 0.3; 0.0; 2.1; 0.3 - PV of contingent liabilities (not included in public sector debt): 0.0 across years shown. ### Stress Tests and Alternative Scenarios (No-Adjustment Scenario, 2024-2034) - Figures present indicators of Public and Publicly Guaranteed External Debt and Public Debt under alternative scenarios for 2024-2034. - Notes and assumptions: - All additional financing needs generated by shocks under stress tests are assumed to be covered by PPG external MLT debt in the external DSA. - Default terms of marginal debt are based on baseline 10-year projections. - The most extreme stress test is defined as the test that yields the highest ratio in or before 2034. - Example indicators shown: Debt Service-to-Revenue Ratio, PV of Debt-to-Exports Ratio, PV of Debt-to-GDP Ratio, Debt Service-to-Exports Ratio, PV of Debt-to-Revenue Ratio under commodity price and export shocks. - Terms and parameters cited in figures (selected): - Avg. grace period: 16 (presumably months or years as in figure context) - Avg. nominal interest rate on new borrowing in USD: 5.0% - Shares of marginal debt: 100% in one panel - Most extreme shock examples: Exports; Commodity price - Borrowing assumptions: additional financing assumed to be PPG external MLT; domestic financing allowed in public DSA for shock coverage. ### IMF Relations, Financial Position, and Technical Assistance (Selected) - Membership Status: Joined: July 10, 1963; Article VIII. - Quota and holdings: - Quota: 140.20 (SDR Million) representing 100.00 percent of quota. - IMF's Holdings of Currency (Holdings Rate): 136.93 (97.67) - Reserve Tranche Position: 3.29 (2.35) - SDR Department: - Net cumulative allocation: 188.00 (100.00) - Holdings: 2.01 (1.07) - Outstanding Purchases and Loans: - RCF Loans: 133.19 (95.00) - ECF Arrangements: 361.86 (258.11) - Latest financial commitments (selected arrangements): - ECF Dec 10, 2021 – Jun 21, 2024: Amount Approved (SDR Million) 392.56; Amount Drawn 168.24 - ECF Jun 30, 2017 – Jul 22, 2020: 224.32; Drawn 196.28 - ECF Aug 01, 2014 – Jun 29, 2017: 140.20; Drawn 98.34 - Overdue Obligations and Projected Payments to Fund (Forthcoming, SDR Million): - Principal (2024–2028): 12.01; 62.68; 74.78; 77.11; 89.03 - Charges/Interest (2024–2028): 1.73; 6.40; 6.40; 6.40; 6.41 - Total (2024–2028): 13.74; 69.08; 81.18; 83.51; 95.43 - Implementation of HIPC Initiative — Enhanced Framework: - Decision point date: May 2001 - Assistance committed by all creditors (US$ Million): 170.12 - Of which: IMF assistance (US$ million): 18.02 (SDR equivalent 14.26) - Completion point date: Apr 2015 - Disbursement of IMF assistance (SDR Million): Assistance disbursed to the member 14.26; Interim assistance 8.55; Completion point balance 5.71; Additional disbursement of interest income 2.77; Total disbursements 17.03 - Catastrophe Containment and Relief (CCR) disbursements: - Oct 02, 2020: 2.00 committed and disbursed - Apr 01, 2021: 4.06 committed and disbursed - Oct 06, 2021: 4.06 committed and disbursed - Exchange rate arrangement: - BEAC common currency is the CFA franc; peg since January 1, 1999 at EUR 1 = CFAF 655.957. - Article IV Consultations: - Chad is on the standard 12-month cycle. Last Article IV consultation concluded on July 3, 2019. - Technical assistance received since January 2023 (as of November 2024) — selected entries include missions and topics with dates: - FAD – AFC: Strengthening cash and debt management, November – December 2024 - FAD/MCM – AFC: Debt and cash management coordination, November – December 2024 - STA: SUT compilation, backcasting and quarterly national accounts, October – November 2024 - ICD: Macroframework Foundations Tool mission 2, October 2024 - FAD – AFC: Follow-up revenue forecasting, September 2024 - MCM: Sovereign debt portfolio risk management, April 2024 - STA – AFC: Government Finance Statistics – Coverage expansion, April 2024 - Additional missions listed through 2023 and 2024 covering VAT, customs, public sector debt statistics, SIGFiP accounting, and more. - Relations with the World Bank — selected active or pipeline projects and commitment amounts (USD Million): - Chad Connectivity and Integration Project: P180915, 200, Pipeline - Chad Digital Transformation Project: P180000, 92.2, Pipeline - Chad Adaptive and Productive Safety Nets Project: P502142, 120, Active - Chad Agribusiness and Rural Transformation Project: P179238, 150, Active - N’Djamena Urban Resilience Project: P177044, 150, Active - Additional active projects and amounts shown in table. *Sources: Country authorities; and staff estimates and projections.* ### 1. Our Chadian authorities would like to express their appreciation to the IMF Executive ### Our Chadian authorities would like to express their appreciation to the IMF Executive Directors, Management, and staff for the continued support to Chad. ### Humanitarian, security, and demographic pressures - Recent floods impacted close to 1.8 million people (10 percent of the population). - Refugees from Sudan are estimated by UN OCHA at more than 700,000 people, in addition to returnee Chadians and refugees from other neighboring countries. - Total number of persons in need of emergency assistance currently stands at 6 million, requiring a budget of about $1.125 billion. - Financing gap in support of the refugees from Sudan and other internally displaced people amounts to 602.5 million dollars. - Authorities implementing a National Response Plan (NRP) to address pervasive food insecurity; refugees include well-trained professionals contributing skills and knowledge. ### Recent economic developments and near-term outlook - Real GDP growth: 4.9 percent expansion in 2023; projected to decline to 3.2 percent in 2024; projected to rise to 3.4 percent in 2025. - Inflation: accelerated to 12.1 percent in July 2024 (y-o-y); projected to decline to 8.7 percent at end-year 2024 (from 4.1 percent in 2023); projected to decelerate to 4.4 percent in 2025 and 3.5 percent in 2026. - Current account expected to deteriorate in 2024 due to lower oil exports and widen further with anticipated increase in foreign direct investment in the oil sector. - Economy remains dependent on the oil sector; slight contraction of oil output and weaker non-oil growth underpin 2024 slowdown. - Political transition: legislative and local elections scheduled for end-December 2024; Sovereign and Independent National Dialogue (DNIS) led to a new Constitution and generally peaceful presidential election in May 2024. ### Fiscal stance, debt, and public financial management - Non-oil primary balance (NOPB): projected to decline from -12.7 percent of GDP in 2023 to -7.5 percent in 2024; projected to narrow further to -6.8 percent in 2025. - Public debt: expected to decline from 30.3 percent of GDP in 2023 to below 30 percent in 2024 and 2025. - Key fiscal reforms and measures: - Reduction in use of emergency procedures expenditures (DAO) and improved control of the wage bill. - Implementation of Treasury Single Account (TSA) started in 2022 with gradual centralization of government accounts. - Streamlining of tax exemptions to reduce distortions. - Increased social spending in 2024 to address emergency needs and infrastructure. - Commitments and limits: - Annual borrowing limit of CFA 15 billion on the domestic financial market. - 14 percent ceiling for the debt service-to-revenue ratio. - Prioritization of concessional financing. - Institutional strengthening and IT: - Decree governing public debt policy and debt management signed in June 2024. - Plan to upgrade debt management software SYGADE and interconnect with other platforms. - Implementation of Medium-Term Debt Strategy (MTDS) for 2024-26 with AfDB and World Bank technical assistance; interest expressed in IMF technical assistance for debt projection methodologies. ### Financial sector reform priorities - Commitments: - Enforce banks’ compliance with international standards and regional regulations (COBAC). - Complete restructuring and capitalization of two public banks in difficulty: Commercial Bank Tchad (CBT) and Banque Commerciale du Chari (BCC). - Reduce sovereign-banks nexus; develop interbank market, credit bureau, and credit registry. - Recent actions: legal actions against current and former management of CBT and BCC to address irregularities. - Ongoing support: COBAC and IMF assistance to address banking system vulnerabilities. ### Oil sector management and reforms - Audit and governance actions: - Audit on the profitability of Société de Raffinage de N’Djamena (SRN), a joint venture between Chad and China National Petroleum Company (CNPC). - First draft of the audit report for the National Hydrocarbon Company (SHT) expected by end-2024. - Reforms under preparation to enhance company performance and promote local content. - Policy measures and projects: - Review and prompt implementation of reforms to the “5 percent mechanism” designed to channel 5 percent of oil resources to oil producing regions and direct dedicated resources to the central bank. - Feasibility study of a second refinery, an export convention with the Republic of Niger, and construction of a new Chad-Niger oil pipeline. - Litigation: two litigation processes opposing Chad and a private oil company remain pending following the strategic nationalization of ESSO Chad’s assets. ### Structural reforms and diversification - Medium-term priorities (PND 2024-28): - Promote non-oil sector development and inclusive growth. - Improve business environment, economic governance, and public investment efficiency. - Scale up infrastructure in energy, transport, telecommunication, and financial services. - Support private investment and public-private partnerships; establish a public-private consultation framework. - Conduct a three-year mining sector inventory review to improve sector attractiveness. - Governance actions: - Creation of Independent Authority for the Fight Against Corruption in August 2023 replacing Inspectorate General of State (IGE). - New law governing public enterprises adopted in September 2024. - Request for technical assistance from AFRITAC Center to support implementation. ### Gender, climate, and data priorities - Gender: - Authorities prioritize reducing gender gap to improve macroeconomic performance. - October 2024 decree: free access to higher education for women except for institutions requiring an entrance exam. - Fund for women empowerment set up with UNDP support; guided by the National Gender Policy. - Climate: - Notre-Dame Index: Chad identified as the world’s most vulnerable country to climate change. - Total cost of climate initiatives for 2021-2030 estimated at 11.7 billion US dollars. - Commitment to allocate annually 3 percent of GDP to climate actions. - Plans: reactivate High Interministerial Committee of the Environment; review of the CDN expected by end-2024; preliminary evaluations of climate impacts for all public investment projects; eliminate fuel subsidies in due course; reinforce governance of oil and electricity sectors; advance solar and wind energy use, including for agricultural irrigation. - Data quality: - Reforms to ensure high-quality macroeconomic data and quarterly national accounts. - Strengthen coordination between BEAC and INSEED for external sector and monetary data timeliness. - Continued technical assistance from the Fund and development partners welcomed. ### Risks and outlook - Downside risks highlighted: - Slowdown in reforms implementation. - Intensification of refugee flows and security challenges from the conflict in Sudan. - Oil price volatility. - A deeper food and humanitarian crisis from severe floods. - Delays in materialization of development objectives. - Positive prospects: - Development and coming on stream of promising oil fields in the south-east of the country. ### Policy commitments and requests to the IMF - Medium-term fiscal target: reduce the NOPB deficit to 5 percent by 2029. - Policy actions prioritized: strengthen revenue mobilization, advance digitalization, enhance spending efficiency, increase externally financed development projects, upgrade tax and customs administrations (DGI, DGDDI, DGD), expand e-platforms and interconnection with national services to strengthen traceability and revenue collection. - Public investment management reforms: implement SIGFIP accounting module; include all projects in SIGFIP; develop reform roadmap to address partners’ expectations. - Debt management support: capacity building, functional and operational audit of debt management, SYGADE interconnection and dematerialization. - Financial sector reforms: complete bank restructuring/capitalization and implement financial inclusion strategy. - Requests: expressed interest in securing a new UCT program in due course and appreciation for consideration of completion of the 2024 Article IV Consultation. *Source: Chadian authorities’ statement in the context of the 2024 Article IV Consultation.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1tcdea2024001-print-pdf.pdf_