IMF Staff Completes Mission to the Republic of Chad for Discussions on the Third Review of the Extended Credit Facility Arrangement and the 2023 Article IV Consultation

IMF News, May 10, 2023

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Canonical URL: IMF Staff Completes Mission to the Republic of Chad for Discussions on the Third Review of the Extended Credit Facility Arrangement and the 2023 Article IV Consultation

Mission led by Édouard Martin visited N'Djamena from April 27 to May 10, 2023.
Purpose: discussions on the third review under the Extended Credit Facility (ECF) arrangement approved on December 10, 2021, and the 2023 Article IV consultation.
This mission will not result in a Board discussion; discussions will continue over the next few weeks with a view to reaching understandings that could be submitted for approval by the IMF Executive Board.

36-month ECF arrangement in the amount of SDR 392.56 million (about US$570.75 million or 280 percent of quota).
The arrangement aims to address Chad's substantial fiscal and balance of payments needs and to catalyze financial support from official donors.
First and second reviews concluded by the IMF Executive Board on December 22, 2022, allowing for the disbursement of 112.16 million SDRs (about $149.3 million).

Growth in 2022 was higher than expected, owing mainly to higher oil production.
- Drivers of higher oil production: recovery of wells formerly owned by ESSO following 2021 disruptions; restart of formerly Glencore fields following acquisition by Perenco; higher-than-expected production by China National Petroleum Corporation.
Non-oil sector growth was affected by floods, which negatively impacted agricultural production and exacerbated pressure on food prices.
Food prices rose 16 percent year-on-year, pushing headline inflation to 8.3 percent year-on-year in December 2022.
The current account balance improved more than expected, essentially reflecting higher oil exports.
Program performance at end-December 2022:
- Only two of the five end-December 2022 quantitative performance criteria were met.
- Non-oil fiscal deficit and net domestic financing performance criteria were notably missed due to significant civil and military spending overruns, partly reflecting security tensions and floods.
- Four structural benchmarks were met; authorities are working to implement the reforms covered by the other two benchmarks.

Outlook described as favorable but subject to significant risks, including the conflict in Sudan, climate risks, and oil price volatility.
Key projections:
- Growth expected to increase to 4 percent in 2023.
- Oil production expected to increase significantly (to 6.3 percent).
- Non-oil sector growth expected to increase to 3.5 percent in 2023, owing mainly to recovery of agricultural production following the 2022 floods.
- Inflation would remain elevated.

Fiscal policy and public finances:
- Continue progress in domestic revenue mobilization.
- Improve control and increase efficiency of budget spending, in particular the wage bill.
- Prioritize social expenditures.
- Budgetary procedures should be followed more rigorously; use of emergency expenditure procedures (DAOs) should be limited to emergencies.
- Given high volatility of oil prices, use part of oil revenues to rebuild liquidity reserves and reduce the stock of expensive treasury securities.
Structural reforms to be implemented in 2023-24:
- Strengthen management of public finances and state-owned enterprises (SOEs).
- Mobilize domestic revenue.
- Improve governance and transparency in the energy sector.
- Improve the business environment.
Article IV consultation discussions:
- Policies and reforms to ensure medium- and long-term growth sustainability.
- Measures to build resilience to climate change and reduce gender disparities.

Mission met with: Mr. Saleh Kebzabo, Prime Minister; Mr. Tahir Hamid Nguilin, Minister of Finance, Budget, and Public Accounts; Mr. Moussa Batraki, Minister of Economic Prospects and International Partners; Mr. Haliki Choua, Minister Secretary General of the Government; Mr. Djerassem Le Bemadjiel, Minister of Hydrocarbons and Energy; Mr. Ms. Wanledom Robertine, Minister of Commerce and Industry; other senior officials; representatives of the private sector, civil society and international development partners.
IMF staff expressed thanks for hospitality, excellent cooperation, and frank and constructive discussions.

IMF Press Release No. 23/143