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IMF staff conclude visit to Chad

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IMF staff conclude visit to Chad

The IMF team would like to thank the Chadian authorities and other counterparts for their hospitality, excellent cooperation and frank and constructive discussions.

WASHINGTON DC, United States of America, October 9, 2021 / APO Group / –

Chad’s economic and financial situation and its medium-term outlook have steadily deteriorated due to a series of long-lasting shocks since the start of the pandemic, coupled with delays in donor assistance caused by insufficient progress in discussions on debt treatment; Following financing assurances in support of debt processing by the Creditors’ Committee for Chad under the common framework in June 2021, a strong commitment from private creditors is urgently needed to unlock IMF financing. which would catalyze substantial public funding for Chad; The Chadian government reiterated its firm commitment to an ambitious reform package agreed with IMF staff in January 2021, subject to IMF Board approval.

An International Monetary Fund (IMF) mission led by Edward Gemayel visited N’Djamena from October 5 to 9, 2021. Mr. Vitaliy Kramarenko, Deputy Director of the IMF’s Africa Department, participated in the political discussions. The mission took stock of macroeconomic and financial developments, discussed progress on government reform priorities, and reviewed government efforts to intensify ongoing discussions on debt treatment with private sector creditors. A commitment from major private sector creditors is needed to establish a credible process is underway towards appropriate debt treatment, which is required for the IMF Executive Board’s consideration of Chad’s request for an agreement. extended credit facility.

At the end of his visit, Mr. Gemayel made the following statement:

“The economic and financial situation and the outlook have continued to deteriorate since the start of the pandemic. The combined and lasting shocks of the COVID-19 pandemic, volatile oil prices, climate change, terrorist attacks and delays in donor support continue to rock the Chadian economy. Real GDP is estimated to contract 0.8% in 2020 and is expected to grow a meager 1% this year, below pre-COVID forecasts as well as initial expectations regarding the impact of the pandemic. The significant and sustained downward revision reflects (i) the decline in investments, particularly in the oil sector, (ii) the disruption of economic activities and (iii) the significant reductions in spending in 2021, in particular the reduction in social services.

“Due to the significant deterioration in the economic outlook, servicing the external debt has become unaffordable and the debt unsustainable. Insufficient progress in debt treatment discussions delayed official financing. A clear path to restoring debt sustainability and mobilizing sufficient financing, including debt service relief, are essential preconditions for an IMF-backed program, which is expected to catalyze significant support from governments. donors. As these conditions have not yet been met, official funding dried up in 2021. As a result, the government was forced to cut essential social and development spending. 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, poor access to basic services, and health and education indicators. among the worst in the world. To help cope with the situation, the Chadian authorities have decided to spend their share of the recent SDR allocation to meet urgent social needs.

“While official bilateral creditors have provided assurances of financing, a credible process towards appropriate debt treatment by the private sector on its willingness to negotiate debt treatments consistent with the parameters of the proposed IMF-supported program n has not yet been established. The official creditors of the Creditors Committee for Chad within the framework of the common framework for the treatment of debt beyond the DSSI (common framework), in their declaration of June 16, provided the IMF with assurances of official financing. . However, discussions with private sector creditors have been delayed.

“Not only will an IMF-backed program provide the urgently needed financing, it will also give a strong impetus to the authorities’ medium-term reform agenda reflected in the January 2021 staff level agreement. structural reforms aimed at strengthening the government’s capacity to strengthen social services, invest in human capital and infrastructure, begin to build resilience to climate change and promote private sector development. The mobilization of domestic revenues, the improvement of public finance management, governance and anti-corruption measures, as well as the reduction of administrative formalities are the main commitments of the program. Coordinated and timely donor support for budget and project financing as well as capacity development are essential for the success of the authorities’ program.

“The mission was received by President Mahamat Idriss Deby, Prime Minister Padacké Pahimi, and met Mr. Tahir Hamid Nguilin, Minister of Finance and Budget, Mr. Issa Doubragne, Minister of the Economy, Planning of the Development and International Cooperation, Mr. Idriss Ahmat Idriss, the national director of the BEAC, and other senior officials, as well as representatives of international development partners.

“The IMF team would like to thank the Chadian authorities and other counterparts for their hospitality, excellent cooperation and frank and constructive discussions.

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