IMF Executive Board Approves New US$ 312.1 Million Arrangement Under the Extended Credit Facility (ECF) for Chad and Cancels the Current Arrangement

IMF News, June 30, 2017

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Canonical URL: IMF Executive Board Approves New US$ 312.1 Million Arrangement Under the Extended Credit Facility (ECF) for Chad and Cancels the Current Arrangement

Executive Board approved a three-year arrangement under the Extended Credit Facility (ECF) for Chad for SDR 224.32 million (about US$ 312.1 million, or 160 percent of Chad’s quota).
The Board’s decision notes the cancellation of the previous ECF arrangement.
An amount equivalent to SDR 35.05 million (about US$ 48.8 million) will be immediately disbursed to Chad.
The remaining amount will be phased over the duration of the program, subject to semi-annual reviews.

Support the authorities’ stabilization and recovery strategy to restore macroeconomic stability and lay the foundation for robust and inclusive growth.
Contribute to the regional effort to restore and preserve external stability for the Central African Economic and Monetary Union (CEMAC).
Policies under the new arrangement are expected to catalyze further support from Chad’s external partners.

Reestablish debt sustainability through restructuring of external commercial debt, including engagement with Chad’s major external commercial creditor and appointment of financial and legal advisors.
Preserve fiscal adjustment achieved to date and improve mobilization of non-oil revenue by broadening the tax base and strengthening tax and customs administrations.
Protect poverty-reducing social spending and allow phased clearance of arrears while supporting growth.
Structural reforms to improve public financial management, including improving budgetary practices and strengthening cash management and forecasting.
Diversify the economy and boost competitiveness by improving the business environment and addressing supply side bottlenecks.
Implementation of the new National Development Plan, expected to be released soon, is highlighted as a milestone.
Reduce reliance on domestic financing to ease liquidity pressure on banks.

Immediate disbursement: SDR 35.05 million (about US$ 48.8 million).
Remaining disbursements: phased over the three-year program, subject to semi-annual reviews.
Continued strong implementation of the ECF-supported program is critical to catalyze financial support from international partners.

Economic activity contracted sharply in 2016, for the second year in a row.
Drivers of deterioration: low oil prices, tense security situation and refugee crisis, heavy burden of servicing external commercial debt, and the impact of sharp fiscal adjustment in 2015 and 2016.
Non-oil primary deficit fell from 16.2 percent of non-oil GDP in 2014 to 4.4 percent in 2016.
Following a 2.9 percent reduction in 2015, real non-oil GDP contracted by 6 percent in 2016.
Consumer prices declined by about 1 percent on average in 2016.
Large domestic arrears and fiscal consolidation contributed to a contractionary cycle in non-oil activity, non-oil revenue, and government spending.

Maintain fiscal prudence by preserving fiscal adjustment and reallocating resources for domestic arrears clearance, investment, and social spending.
Reestablish debt sustainability by restructuring external commercial debt.
Improve non-oil revenue mobilization over the medium-term.
Reduce reliance on domestic financing to ease liquidity pressure on banks.
Structural reforms to improve public financial management and boost competitiveness.
Support regional stabilization efforts as part of the coordinated approach outlined at the Yaoundé Heads of States summit in December 2016.

Mr. David Lipton, First Deputy Managing Director and Acting Chair, emphasized that the ECF will support the authorities’ strategy towards macroeconomic stabilization in the short term and a robust, equitable, and sustainable recovery, and that success will depend in part on implementation of supportive policies and reforms by regional institutions.

IMF Press Release No. 17/257, June 30, 2017.