The Executive Board of the International Monetary Fund (IMF) on Friday (December 23rd) approved the completion of the first and second reviews under the Extended Credit Facility (ECF) for Chad, paving the way for a disbursement of approximately $149.3 million.
This funding brings total disbursements under the agreement to approximately $224 million.
The three-year ECF arrangement was approved on December 10, 2021 for a total amount of approximately $570.75 million (or 280 percent of Chad’s quota), with the objective of helping Chad meet its significant balance of payments and budget financing needs, in particular by stimulating financial support from official donors.
According to a statement by Kenji Okamura, Deputy Managing Director of the IMF and Acting Chairman of the Executive Board, made following the Board’s deliberations, “Chad continues to face considerable challenges. Rising oil revenues have improved the government’s cash position, but the pandemic remains a concern as poor harvests last year, Russia’s war on Ukraine and recent floods have exacerbated insecurity eating”.
The IMF Board believes that “over the medium term, the situation should gradually improve as reforms accelerate. Oil and non-oil GDP growth is expected to increase. After a surge from higher food prices in 2022, inflation is expected to ease gradually over the medium term.
Furthermore, “the debt treatment agreement concluded with official and private creditors under the G20 Common Framework, the first of its kind, provides Chad with adequate protection against downside risks and will reduce the risk of debt distress to a moderate level by the end of the program, as required by the IMF policy on exceptional access”.
As recommendations, the financial institution considers, among other things, that it is essential to continue the reforms to stimulate growth, fight against poverty and increase resilience. Fiscal consolidation efforts remain essential to ensure Chad’s debt sustainability and create the fiscal space required to meet its considerable investment and social spending needs.
Therefore, the Chadian authorities should continue to implement measures aimed at improving domestic revenue mobilization, containing the wage bill and rationalizing non-priority expenditure, such as subsidies for petroleum products and electricity.
The IMF forecasts a growth rate of 2½% in 2022 and 3½% in 2023, thanks to the revival of oil and non-oil production. The average inflation rate is expected to increase to 5.3% in 2022, due to mounting food price pressures from poor 2021 harvests, the impact of war in Ukraine and recent floods, before receding gradually over the medium term.
By OMA Newsletter N° 991 of 26/12/2022
Article published under the direction of Dr. Najib Kettani
The OMA, NGO with an Intercontinental vocation
For the development of cultural exchanges
Valuing human potential
The promotion and consolidation of Africa’s development, and
Inter-African integration
