By Modupe Gbadeyanka
The Executive Board of the International Monetary Fund (IMF) on Friday, June 30, 2017, approved a three-year arrangement under the Extended Credit Facility (ECF) for Chad for $ 312.1 million, or 160 percent of Chad’s quota to support the country’s stabilization and recovery strategy.
This approval brings an end to the previous ECF arrangement.
A statement by the world lender said policies under the new arrangement are expected to catalyse further support from Chad’s external partners.
The ECF-supported program aims to help Chad restore macroeconomic stability and lay the foundation for robust and inclusive growth. It will also contribute to the regional effort to restore and preserve external stability for the Central African Economic and Monetary Union (CEMAC).
It was disclosed that with the new approval, $48.8 million will be immediately disbursed to Chad, while the remaining amount will be phased over the duration of the program, subject to semi-annual reviews.
Commenting on the development, First Deputy Managing Director and Acting Chair of the IMF, Mr David Lipton, noted that, “Chad’s macroeconomic and financial performances have deteriorated significantly over the past two years, against the backdrop of low oil prices, tense regional security situation, and a heavy external commercial debt burden. In 2016, real non-oil GDP contracted by 6 percent, following a 2.9 percent reduction in 2015.
“The new three-year arrangement under the ECF will support the authorities’ strategy towards macroeconomic stabilization in the short term and a robust, equitable, and sustainable recovery.
“The program, supported by the new ECF arrangement, aims at stabilizing the fiscal and external position as well as reestablishing debt sustainability, through the restructuring of external commercial debt, prudent fiscal policies, and the resumption of growth.”
He said further that, “The authorities are committed to preserving the fiscal adjustment achieved so far and to improving the mobilization of non-oil revenue, which requires measures to broaden the tax base, and strengthen tax and customs administrations.
“Achieving debt sustainability and stabilizing the fiscal position hinge on reducing the burden of external debt service. To this end, the authorities are committed to restructure the debt with Chad’s major external commercial creditor, and have appointed financial and legal advisors to help them through the process. These efforts would serve to ensure the protection of poverty-reducing social spending and allow the phased clearance of arrears thereby supporting growth.”
“Structural reforms to improve public financial management and diversify the economy are key elements of the program. This includes improving budgetary practices and strengthening cash management and forecasting. Fostering long-term growth will require greater diversification of the economy. The authorities are committed to boost competitiveness by improving the business environment and addressing supply side bottlenecks. The new National Development Plan, which is expected to be released soon, will constitute a milestone in that regard.
“Continued strong implementation of the ECF-supported program will be critical to catalyze financial support from international partners to more effectively tackle development needs and support economic growth.
“The success of Chad’s program will depend in part on the implementation of supportive policies and reforms by the regional institutions,” he stated.
Adedapo Adesanya