Press Release: IMF Executive Board Completes Second Review under the Extended Credit Facility Arrangement for Chad and Approves US$28.7 Million Disbursement

IMF News, December 14, 2015

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Canonical URL: Press Release: IMF Executive Board Completes Second Review under the Extended Credit Facility Arrangement for Chad and Approves US$28.7 Million Disbursement

The Executive Board completed the second review of Chad’s economic performance under the program supported by an Extended Credit Facility (ECF) arrangement.
Completion of the review enables the immediate disbursement of the equivalent of SDR 20.65 million (about US$28.7 million).
This disbursement brings total disbursements under the arrangement to the equivalent of SDR 53.93 million (about US$75.1 million).

The Board approved the authorities’ request for waivers for:
- Non-observance of the performance criterion on the non-accumulation of non-concessional external debt, on the basis of the minor nature of the non-observance.
- Non-observance of the performance criterion on the non-accumulation of domestic payment arrears, on the basis of corrective actions taken.
Performance under the Fund-supported economic program has been described as broadly satisfactory, with most performance criteria met, in particular the non-oil primary deficit target—the main fiscal anchor of the program.

Chad’s three-year ECF arrangement was approved by the Executive Board on August 1, 2014 for an amount equivalent to SDR 79.92 million (about US$111.3 million).
An augmentation of access of 40 percent of quota was approved in April 2015, bringing total access to SDR 106.56 million (about US$148.4 million).

Two external shocks have significantly impacted macroeconomic outcomes in Chad:
- The collapse in oil prices.
- The deterioration of regional security.
Consequences cited:
- Growth has slowed sharply.
- Fiscal spending has been cut in response to the large shortfall in oil receipts.
With oil receipts expected to be permanently lower, Chad has adjusted its medium-term fiscal strategy.
The draft 2016 budget targets an additional tightening of the underlying fiscal policy stance (i.e., excluding one–off election–related and security spending that will be financed by extraordinary receipts).
The strategy is underpinned by an emergency action plan with measures aimed at:
- Rationalizing transfers and subsidies.
- Supporting non-oil tax revenue collections.
Social spending will continue to be protected, remaining one of the program’s quantitative targets.

Since projected exceptional receipts from asset sales are an important financing source for the 2016 budget:
- It is critical that expenditures be phased prudently.
- The contingency plan in the event of shortfalls or delays in those receipts must be implemented.
Despite having reached the HIPC completion point, Chad remains at high risk of debt distress.
- Prudent fiscal and borrowing policies remain essential.
Continued progress in improving transparency of oil revenue is crucial, especially given recent significant changes in the oil sector.
The structural reform agenda remains focused on:
- Improving public financial management.
- Removing obstacles to private sector development, economic diversification, and inclusive growth.

Press Release No. 15/560 — December 14, 2015 — IMF COMMUNICATIONS DEPARTMENT