IMF Staff Concludes Visit to Chad

IMF News, March 30, 2022

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IMF mission led by Edouard Martin visited N’Djamena from March 16–30, 2022 for discussions on the first review under the ECF-supported program approved on December 10, 2021.
New 36-month ECF arrangement in an amount of SDR 392.56 million (about US$570.75 million or 280 percent of quota) to help meet Chad’s large balance-of-payments and budgetary needs and to catalyze financial support from official donors.
The mission’s statement reflects IMF staff views and the mission will not result in a Board discussion; discussions will continue to reach understandings that could be submitted for approval to the Executive Board.

Overall real GDP contracted by 0.3 percent in 2021.
Oil production fell by 3 percent in 2021, driven by production difficulties experienced by a major oil company.
Average annual inflation in 2021 was -0.8 percent.
Poor 2021-22 crop and inadequate rainfall led to pressures on cereal prices; food prices increased by 6 percent y-o-y in January.
Non-oil activity constrained by scarring effects of the COVID-19 pandemic and adverse weather conditions due to climate change.
Pressures on food security are expected to be aggravated by the war in Ukraine.

Performance under the program was uneven: two of the three end-December 2021 quantitative performance criteria were met.
The quantitative criterion on the non-oil primary balance was missed owing to expenditure overruns on military equipment and on the wage bill, reflecting security and social tensions.
Progress on structural reforms: two structural benchmarks met; reforms covered by three other benchmarks expected to be finalized in the coming weeks.
Structural reform priorities discussed for 2022–23 include:
- Strengthening public financial management and domestic revenue mobilization.
- Enhancing governance and transparency.
- Improving the business environment.

2022 growth projection: 2.3 percent (after contraction the last two years), driven by recovery in both oil and non-oil production.
Inflation outlook: expected to rise to about 4 percent on average in 2022, driven by food prices.
Key risks to the outlook:
- Possible resurgence of the pandemic and further delays in vaccination.
- Security concerns.
- Domestic debt rollover risk.
- Possible delays in implementing reforms.
- Continued volatility in oil prices.

Discussions focused on measures to strengthen public finances.
Recommendations and policy guidance:
- Intensify efforts to increase domestic revenue mobilization.
- Contain overall spending needs, including the wage bill, while protecting social spending.
- Use additional oil revenue, given high oil price volatility, to rebuild liquidity buffers and reduce government reliance on domestic borrowing from the constrained banking system.

In the context of the 2022 humanitarian response plan, authorities prepared a framework to provide assistance to the most vulnerable until the lean season.
Assistance by the World Food Program and the Food and Agriculture Organization noted.
Use of the SDR allocation will contribute to implementing the humanitarian plan by allowing authorities to rebuild a sufficient stock of cereals.

Authorities are continuing discussions on a debt treatment with external creditors in the context of the G20 Common Framework.
Rapid finalization of a debt treatment under the G20 Common Framework and significant donor support are key for restoring debt sustainability.
Debt treatment discussions will need to be finalized prior to the upcoming program review.

IMF press release, March 30, 2022.