The International Monetary Fund has issued the following press release:
Washington, DC : The Executive Board of the International Monetary Fund (IMF) approved a 36-month arrangement under the Extended Credit Facility (ECF) in an amount equivalent to SDR 392.56 million (about US$570.75 million or 280 percent of quota), to help meet Chad’s large balance-of-payments and budgetary needs, including by catalyzing financial support from official donors.
Over the longer term, policies under Chad’s ECF-supported program will help put the economy on a balanced and sustainable path towards inclusive green growth and poverty reduction. It will also contribute to the regional effort to restore and preserve external stability for the Central African Economic and Monetary Union (CEMAC). The Executive Board’s decision will enable an immediate disbursement equivalent to SDR 56.08 million (about US$78.28 million).
At the conclusion of the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, made the following statement:
``The combined shocks of the COVID-19 pandemic, the volatility in oil prices, the heightened insecurity, and a looming food crisis due to climate change have severely stressed Chad’s already vulnerable economy. The macroeconomic outlook has further deteriorated, with greater macroeconomic weaknesses than previously envisaged as well as more acute liquidity needs. As a result, Chad’s public debt has become unsustainable.
``The Chadian economy continues to face significant humanitarian and social demands, including expected increase in food insecurity and poverty, given cuts in priority spending and inadequate rain. In addition, increased number of refugees fleeing social conflicts in neighboring countries complicates the humanitarian situation.
``The authorities’ program, supported by a new three-year Extended Credit Facility arrangement, aims to address these challenges by supporting the recovery from the pandemic, promoting poverty reduction, advancing the authorities’ structural reform agenda, and restoring debt sustainability.
``Restoring debt sustainability is based on a three-pronged strategy, underpinned by a multi-year fiscal consolidation program, significant donor support, and deep debt restructuring under the G20 Common Framework. In this respect, finalizing a possible debt workout with all creditors as soon as possible will be critical. The debt operation should be accompanied by a growth-friendly fiscal consolidation, based on a balanced mix of revenue mobilization and expenditure rationalization.
``Adoption of structural reforms in a timely manner to support inclusive green growth and poverty reduction remains essential. In this respect, reforms should focus on improving the business climate, enhancing governance and tackling corruption, strengthening revenue mobilization and public financial management. Efforts to address weaknesses in the banking sector and promote financial inclusion will also be necessary.’’