An International Monetary Fund (IMF) staff team led by Said Bakhache
visited N’Djamena during March 22–April 4, 2017 to assess recent economic
developments in Chad and performance under the current financial and
economic program supported by the IMF’s Extended Credit Facility (ECF)
approved in August 2014. Discussions were also held on the government’s
interest in a new program.
At the conclusion of the mission, Mr. Bakhache issued the following
statement:
“Economic activity continues to be strongly affected by two external
shocks: the sharp and persistent decline in oil prices and regional
security challenges. These, together with high external debt service burden
from commercial debt, have put significant strains on budgetary resources.
Sharp reduction in government expenditures, together with significant
investment cuts and layoffs by oil companies, has had strong spillover on
the rest of the economy. Non-oil output contracted significantly for a
second year in a row and inflation was negative last year.
“The banking system has been adversely affected by the slowdown of activity
and buildup of government arrears to private contractors, and has limited
capacity to provide new financing to the government. A comprehensive
stabilization and reform strategy, with support from both internal and
external stakeholders, is urgently needed to turnaround the economy.
Against this backdrop, the government expressed interest to replace the
existing ECF arrangement with a new program.
“Discussions with the authorities focused on policies to revive the economy
in a sustainable way. The mission and the government reviewed the fiscal
outcome for 2016 and early 2017 in light of recent developments. For the
period ahead. the mission underscored the importance of better mobilizing
non-oil revenues, keeping spending in line with budgetary resources while
safeguarding social spending and boosting public investment over the medium
term. The staff team noted that maintaining external debt sustainability,
including by keeping debt service manageable, is essential to maintain
economic stability. IMF staff stressed the need for a transparent and
predictable framework for domestic arrears clearance based on the outcome
of an audit of all domestic arrears and a plan that could be executed
within budgetary means. This would be important to help revitalize private
sector activity and improve conditions in the banking sector. In addition,
discussions were also held on the government’s plans for greater
transparency in oil sector, improving public financial management and
budget execution.
“The government and IMF staff agreed that there is a need to move away from
the reliance on oil and diversify economic activity. To this end, the staff
discussed the government’s plans for diversification, including plans to
improve the business climate and competitiveness, which would support
sustainable and inclusive growth and job creation.
“Significant progress was made on the discussions towards a new IMF
program. Discussions will continue in the coming weeks including at the IMF
and World Bank Spring Meetings in Washington D.C.
“The IMF staff team met with the Prime Minister, the Minister of Finance
and Budget, the Minister of Economy and Planning, the National Director of
BEAC for Chad, and other ministers, as well as senior government officials,
representatives of the private sector, civil society and labor unions, and
technical and financial partners of Chad.
“IMF staff express their gratitude to the authorities for their warm
reception and the open and constructive discussions.”
