The IMF Executive Board completes Article IV consultations with Chad in 2024

The IMF Executive Board completes Article IV consultations with Chad in 2024

December 9, 2024

Washington, DC: The Executive Board of the International Monetary Fund (IMF) has concluded Article IV consultations with Chad.⁽¹⁾

Chad’s post-pandemic recovery gained momentum in 2023, with growth rising to 4.9 percent. Non-oil activity grew by 4.5 percent thanks to a recovery in agricultural production and a significant increase in government investment. Oil GDP rose 7.6 percent as shut-in oil fields were brought back into operation. After easing in 2023 (to 4.2 percent from 8.3 percent at the end of 2022), annualized inflation rose to 8.7 percent at the end of August 2024, reflecting an adjustment in fuel prices and a recovery in food prices. The external current account balance returned to a deficit of 0.7 percent of GDP in 2023 as oil prices fell and increased public investment boosted imports.

After widening significantly in 2023 (to 11.9 percent of non-oil GDP), the non-oil primary deficit declined to 4.2 percent of non-oil GDP in the first seven months of 2024, reflecting reduced use of emergency spending procedures, spending restrictions, and financing constraints. Total public debt fell to 34.2 percent of GDP in 2023 as sustained high oil prices boosted government revenues. The pro-cyclical fiscal stance in 2023 and the first few months of 2023 led to a depletion of liquidity buffers, with government deposits falling from 3.4 percent of GDP at the end of 2022 to 1.1 percent at the end of July 2024.

Economic growth is forecast to slow to 3.1 percent in 2024 due to the impact of recent floods and a slight decline in oil production, but will recover in the medium term thanks to continued public investment and structural reforms. Inflation is expected to remain temporarily high in 2024 and gradually move closer to the BEAC’s 3 percent target over the medium term as food and fuel prices moderate. Further fiscal consolidation efforts, focused on mobilizing non-oil revenues and streamlining non-priority expenditures, will help reduce the non-oil primary deficit to 8 percent of non-oil GDP in 2024, 7.2 percent in 2025, and 5 percent year-on-year. medium term Public debt is projected to stabilize at around 32 percent of GDP, while net debt is projected to decline gradually to 27½ percent of GDP by 2029, reflecting a gradual build-up in fiscal reserves of 5 percent of GDP. Risks to the outlook are material and tilted to the downside, and include potential delays in the implementation of fiscal consolidation measures, a larger-than-expected decline in oil prices, increased inflows of Sudanese refugees, and further increases in the frequency and severity of climate change-related events.

Evaluation of the executive board⁽²⁾

The executive directors agreed with the content of the staff evaluation. They noted the negative impact of recent major shocks, including historic floods and the continued influx of refugees from Sudan, on Chad’s economic growth and already challenging food security situation. In this regard, they welcomed the authorities’ resumption of cooperation with the Fund and their commitment to promoting economic and social development, in particular by expanding access to public services, strengthening public administration and improving the business environment. Directors encouraged the authorities to work with the IMF and other development partners to finalize their new National Development Plan (PND) and formulate macroeconomic policies and reforms to achieve these goals.

Directors stressed that a sound and sustainable fiscal policy aimed at creating the necessary fiscal space for social and investment spending should be a key component of the PND. They emphasized the importance of anchoring the fiscal stance at the net debt target and building up fiscal reserves, which would also increase resilience to shocks. The directors urged the authorities to accelerate structural reforms to digitize tax administration, strengthen public finance and investment management, and improve the governance of state-owned enterprises.

Directors called for increased efforts to strengthen the financial sector. They emphasized the importance of accelerating the adoption and implementation of restructuring plans to improve the operational and financial performance of the two systemic state banks and ensure their recapitalization.

Directors agreed on the importance of diversifying the economy to reduce dependence on the oil sector and stressed that reforms to strengthen the business environment, improve governance and reduce gender gaps are essential to achieve sustainable and inclusive growth in the medium term. To strengthen the business environment, they encouraged the authorities to introduce governance and anti-corruption policies, along with measures to improve education, increase access to basic infrastructure, and promote formalization and financial inclusion. Directors also emphasized the importance of improving women’s educational outcomes and increasing women’s labor force participation to accelerate growth and reduce poverty.

Directors noted that the increasing frequency of climate shocks underscores the importance of advancing Chad’s adaptation strategy. They emphasized the need to integrate climate change into the PND to strengthen the capacity to manage public investments and to revive the High Inter-Ministerial Committee on the Environment to strengthen policy coordination and facilitate access to international climate finance.

Directors emphasized that improving the quality and timely delivery of economic statistics is essential for better information for surveillance and economic analysis. They welcomed the capacity development strategy and called for close alignment of delivery planning with authorities’ requirements and continued coordination with other technical assistance providers.

Subsequent Article IV consultations with Chad are expected to follow the standard 12-month cycle.

Chad. Selected economic indicators, 2023-25

Population (millions, 2023):	18.3		Quota (million SDRs):		140.2
GDP per capita ($USD, 2023):	1051		Quota (percentage of the total):		0.03
Main products and exports:	crude oil; Animal husbandry		Poverty rate (percent, 2022):		38.7
Main export markets:	USA; Nigeria
			2023 year	2024 year	2025 year
			Prel.	project	project
Output (annual percentage change)
GDP in constant prices			4.8	3.2	3.4
Oil GDP			7.6	-0.5	-1.4
Non-oil GDP			4.5	3.7	4.2
Prices (annual percentage change)
Consumer price index (average for the period)			4.1	8.7	4.4
Public finances (percentage of non-oil GDP)
Income and grants			18.6	20.2	19.6
Costs			20.4	20.4	20.7
General fiscal balance (liabilities)			-1.8	-0.1	-1.1
Non-oil primary balance (based on liabilities)			-11.2	-7.5	-6.8
Total debt (as a percentage of GDP)			30.3	29.5	29.5
Money and credit (annual percentage change)
Credit to the economy			11.0	9.0	9.5
Big money			14.6	10.3	10.8
External sector (percentage of GDP)
Current account balance, including official transfers			-0.7	-1.3	-4.2
Foreign debt			16.1	15.8	17.0
Sources: Chadian authorities and IMF staff estimates and forecasts.

(1) In accordance with Article IV of the IMF Charter, the IMF conducts bilateral negotiations with members, as a rule, every year. A team of staff visits the country, collects economic and financial information, and discusses the country’s economic developments and policies with officials. After returning to headquarters, the staff prepares a report that forms the basis for discussion by the Executive Committee.

(2) After the discussion is complete, the managing director, as chairman of the board, summarizes the views of the executive directors, and this summary is passed on to the country’s authorities. An explanation of any qualifiers used during summaries can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .