Press Release No. 15/560

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

December 14, 2015

The Executive Board of the International Monetary Fund (IMF) today completed the second review of Chad’s economic performance under the program supported by an Extended Credit Facility (ECF)¹ arrangement. Completion of the review enables the immediate disbursement of the equivalent of SDR 20.65 million (about US$28.7 million). This brings total disbursements under the arrangement to the equivalent of SDR 53.93 million (about US$75.1 million).

The Board also approved the authorities’ request for waivers for the 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, and for the non-observance of the performance criterion on the non-accumulation of domestic payment arrears on the basis of corrective actions taken.

Chad’s three-year ECF arrangement was approved by the Executive Board on August 1, 2014 (see Press Release No. 14/381) 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 by the Executive Board, bring total access to SDR 106.56 million (about US$148.4 million).

Following the Executive Board’s discussion on Chad, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, made the following statement:

“Macroeconomic outcomes in Chad have been significantly impacted by two external shocks, namely, the collapse in oil prices and the deterioration of regional security. As a result, growth has slowed sharply, while fiscal spending has been cut in response to the large shortfall in oil receipts. Performance under the Fund-supported economic program has been broadly satisfactory, as most performance criteria have been met, in particular the non-oil primary deficit target—the main fiscal anchor of the program—and the structural reform agenda has progressed in line with program objectives.

“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). This strategy is underpinned by an emergency action plan with measures aimed at rationalizing transfers and subsidies and 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 and the contingency plan in the event of shortfalls or delays in those receipts be implemented. Despite the positive impact of having reached the HIPC completion point, Chad remains at high risk of debt distress and prudent fiscal and borrowing policies remain essential.

“Continued progress in improving transparency of oil revenue is crucial, especially given the recent significant changes in the oil sector. The structural reform agenda remains focused on improving public financial management and removing obstacles to private sector development, economic diversification, and inclusive growth.”

¹ An ECF arrangement is a lending arrangement that provides sustained program engagement over the medium to long-term in case of a protracted balance of payments need.