Chad: Request for a Three-Year Arrangement Under the Extended Credit Facility

IMF Staff Country Reports, September 16, 2014

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Canonical URL: Chad: Request for a Three-Year Arrangement Under the Extended Credit Facility

Chad is described as a fragile country with weak institutional capacity that needs to manage volatile and exhaustible oil revenues prudently to tackle large development needs.
The country is enjoying a period of domestic political stability, while major regional security issues are imposing significant fiscal costs in both the short and medium term.
Macroeconomic policy in recent years has achieved:
- a gradual tightening of the underlying fiscal policy stance; and
- a sizable increase in public investment.
Satisfactory performance under an SMP in 2013 demonstrated the authorities’ commitment to improved macroeconomic management and set the ground for an upper credit tranche arrangement with the Fund.

The government’s medium-term economic program is anchored by the 2013-2015 National Development Plan (NDP) and aims to:
- reinforce economic growth and make it more inclusive;
- maintain macroeconomic stability; and
- ensure fiscal sustainability.
Given continued heavy dependence on volatile oil revenues that are projected to decline over the long-term and the currently high risk of debt distress, macroeconomic policy targets include:
- a sustained fiscal adjustment;
- a buildup of liquidity buffers; and
- economic diversification.
The reform agenda to underpin these objectives focuses on:
- strengthening public financial and debt management; and
- improving the business environment.

The authorities request a three-year arrangement under the Extended Credit Facility (ECF) in the amount of SDR 79.92 million (120 percent of quota) in support of their medium-term economic program.
The ECF arrangement is expected to:
- address the country’s protracted balance of payments problems resulting from a trend reduction in oil revenues;
- maintain adequate international reserves coverage; and
- play a catalytic role for bilateral and multilateral assistance to Chad.
The accompanying memorandum of economic and financial policies specifies the objectives of the program and the policy actions the government envisages to undertake during 2014–17.

Subjects: Commodities, External debt, Oil, Oil, gas and mining taxes, Public debt, Public financial management (PFM), Taxes
Keywords: Africa, authorities' memorandum, Chad, Chadian authorities, Chadian authority, CR, ECF arrangement, FDI inflow, fund assistance, gas and mining taxes, GDP, government, ISCR, Oil, Sub-Saharan Africa

Source: Chad: Request for a Three-Year Arrangement Under the Extended Credit Facility (September 16, 2014).