IMF Executive Board Approves an Additional US$68.49 Million Disbursement for Chad and Notes Cancellation of its Extended Credit Facility (ECF) Arrangement

IMF News, July 22, 2020

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Canonical URL: IMF Executive Board Approves an Additional US$68.49 Million Disbursement for Chad and Notes Cancellation of its Extended Credit Facility (ECF) Arrangement

Disbursement approved: SDR 49.07 million (about US$ 68.49 million or 35 percent of quota).
This is the second RCF disbursement in three months.
Total IMF emergency support to Chad since the outbreak of the pandemic: SDR 133.19 million (US$183.60 million).
ECF arrangement: noted cancellation; it was to expire at end-September 2020.
Relevant dates: July 22, 2020; first RCF dated April 14, 2020.

Purpose: to address urgent balance of payment needs stemming from the COVID-19 pandemic and provide essential COVID-19-related health expenditure.
Situation driving the request:
- The twin Covid-19 pandemic and terms of trade shocks have worsened Chad’s economic outlook since the first RCF in April 14, 2020.
- Fiscal and external positions have worsened, reflecting reduced export proceeds and lower oil and non-oil revenues, and higher than expected spending to contain the COVID-19 crisis.
- Containment measures adopted by authorities included a curfew and closure of markets and non-essential stores; these proved successful in containing the pandemic spread but further depressed the economy.

Health and mitigation measures taken or planned by the authorities:
- Upgrading the health system.
- Scaling up health-related spending.
- Measures to help businesses and households absorb the adverse impact of the pandemic.
- Steps to ensure transparency and accountability in the use of COVID-related resources, including an ex-post audit of crisis-related spending and the publication of crisis-related procurement contracts.
Role of the RCF disbursement:
- Provide timely support to fill an urgent financing need.
- Support implementation of the authorities’ additional measures to address the COVID-19 crisis and mitigate its severe impact.
- Catalyze donor support.

Assessment of outlook and risks:
- “The macroeconomic outlook has further deteriorated, with greater economic contraction and higher balance of payments and budgetary financing needs. The risk to the outlook is tilted to the downside.”
Short-term policy guidance:
- Temporarily relax the fiscal deficit to allow scaling up of health care spending and to accommodate the impact of the sharp drop in oil prices.
- Strengthen transparency and monitoring of emergency resources.
Medium-term policy guidance:
- Once the crisis abates, gradually unwind the temporary emergency measures.
- Fiscal adjustment will be needed in the medium term, especially since oil prices are expected to remain low, including by allowing temporary expenditure measures to expire.
- Continue to refrain from non-concessional borrowing consistent with commitments under the DSSI and the terms of the World Bank’s Sustainable Development Financing Policy.

This is the second disbursement under the Rapid Credit Facility (RCF) to address the external financing needs arising from the COVID-19 pandemic, bringing total emergency support to SDR 133.19 million (US$183.60 million).
The Executive Board also notes the cancellation of the ECF arrangement that was to expire at end-September 2020.

Press Release No. 20/268 — July 22, 2020, International Monetary Fund