IMF Staff Concludes Visit to Chad

IMF News, October 8, 2021

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Real GDP is estimated to have contracted by 0.8 percent in 2020.
Real GDP is expected to grow by a meager 1 percent in 2021.
The economic and financing situation and the outlook have steadily worsened since the beginning of the pandemic.
Combined and long-lasting shocks cited: the COVID-19 pandemic, oil price volatility, climate change, terrorist attacks, and delays in donor support.
Drivers of the downward revision in prospects: (i) lower investments, especially in the oil sector, (ii) disruptions of economic activities, and (iii) significant expenditure cuts in 2021, including reduced social services.
As a result of deteriorating prospects, external debt service became unaffordable and debt unsustainable.

Following financing assurances in support of a debt treatment from the creditor committee for Chad under the Common Framework in June 2021, a strong commitment of private creditors is urgently needed to unlock IMF financing.
A commitment from key private sector creditors is needed to establish that a credible process is in train toward a suitable debt treatment, which is required for IMF Executive Board consideration of Chad’s request for an Extended Credit Facility arrangement.
Insufficient progress on debt treatment discussions has delayed official financing and contributed to official financing drying up in 2021.
Official creditors in the Creditor Committee for Chad under the Common Framework provided the IMF with official financing assurances in their statement of June 16.
Discussions with private sector creditors have been delayed; a credible process toward a suitable debt treatment by the private-sector on their willingness to negotiate debt treatments consistent with the parameters of the envisaged IMF-supported program is yet to be established.

Because official financing dried up in 2021, the government was forced to cut critical social and development outlays.
The continuation of this situation could have serious social consequences in an already poor and fragile country, with unfavorable social indicators, including a rising poverty rate, low access to basic services, and health and education indicators among the worst in the world.
To help address the situation, the Chadian authorities have decided to spend their share of the recent SDR allocation to address pressing social needs.

The Chadian government re-iterated its strong commitment to an ambitious reform package agreed with IMF staff in January 2021, subject to IMF Board approval.
An IMF-supported program is expected to catalyze significant donor support and provide urgently needed financing.
The program contains structural reforms aimed at:
- enhancing the government’s capacity to strengthen social services,
- invest in human capital and infrastructure,
- start building resilience to climate change,
- promote private sector development.
Core program commitments include domestic revenue mobilization, amelioration of public financial management, governance and anti-corruption measures, and reduced red tape.
Coordinated and timely donor support for budget and project financing as well as capacity development are essential for the success of the authorities’ program.

An IMF mission led by Edward Gemayel visited N’Djamena during October 5-9, 2021.
Mr. Vitaliy Kramarenko, Deputy Director of the IMF’s African department, participated in policy discussions.
The mission took stock of macroeconomic and financial developments, discussed progress on government’s reform priorities, and reviewed the government’s efforts to intensify ongoing discussions on debt treatment with private sector creditors.
The mission was received by President Mahamat Idriss Deby, Prime Minister Padacké Pahimi, and met with:
- Mr. Tahir Hamid Nguilin, Minister of Finance and Budget,
- Mr. Issa Doubragne, Minister of Economy, Development Planning and International Cooperation,
- Mr. Idriss Ahmat Idriss, the National Director of BEAC,
- other senior officials, and representatives of international development partners.

“The economic and financing situation and the outlook have steadily worsened since the beginning of the pandemic.”
“A clear path toward restoration of debt sustainability and mobilization of sufficient financing, including debt service relief, are key pre-requisites for an IMF-supported program, which is expected to catalyze significant donor support.”
“Not only will an IMF-supported program provide urgently needed financing, but it will also provide strong impetus to the authorities’ medium-term reform agenda reflected in the staff-level agreement of January 2021.”
“The IMF team would like to thank the Chadian authorities and other counterparts for their hospitality, excellent cooperation, and candid and constructive discussions.”

Press Release No. 21/293, October 8, 2021, IMF Communications Department.