IMF says Chad faces eco­nomic chal­lenges

The Pak Banker - - COMPANIES/BOSS -

An In­ter­na­tional Mon­e­tary Fund (IMF) mis­sion led by Mauri­cio Vil­la­fuerte vis­ited N'Dja­mena from March 7-22, 2016 to hold dis­cus­sions on the third re­view of the govern­ment's eco­nomic pro­gram sup­ported un­der the Ex­tended Credit Fa­cil­ity (ECF) ar­range­ment and con­duct the 2016 Ar­ti­cle IV con­sul­ta­tion. The ECF ar­range­ment was ap­proved in Au­gust 2014.

At the con­clu­sion of the mis­sion, Mr. Vil­la­fuerte said, "eco­nomic ac­tiv­ity con­tin­ues to be strongly af­fected by two ex­ter­nal shocks: the sharp and per­sis­tent de­cline in oil prices and the de­te­ri­o­ra­tion in se­cu­rity con­di­tions at the re­gional level. Against this ad­verse back­drop, real GDP growth in 2015 is es­ti­mated at 1.8 per­cent, in­clud­ing a 2.9 per­cent con­trac­tion in non-oil GDP.

Real GDP is pro­jected to de­cel­er­ate fur­ther in 2016, mainly on ac­count of the oil sec­tor. In­fla­tion has been volatile, in par­tic­u­lar with re­spect to food and im­ported con­sumer goods, due to poor har­vests caused by un­fa­vor­able rain­fall and to trans­porta­tion dif­fi­cul­ties as­so­ci­ated with the se­cu­rity prob­lems. Av­er­age in­fla­tion in 2015 is es­ti­mated at 3.6 per­cent (against 1.7 per­cent in 2014), com­pared to a re­gional tar­get of 3 per­cent. "Dis­cus­sions on eco­nomic poli­cies fo­cused on both short and medium-term is­sues. The mis­sion and the govern­ment re­viewed the 2016 bud­get in light of re­cent de­vel­op­ments in oil prices and growth, and dis­cussed op­tions for en­sur­ing that the bud­get can be im­ple­mented with pri­or­ity so­cial spend­ing pro­tected.

At the same time, the au­thor­i­ties are de­vel­op­ing a com­pre­hen­sive strat­egy for man­ag­ing and clear­ing ex­pen­di­ture ar­rears ac­crued in 2015. In ad­di­tion, low oil prices and re­cent struc­tural changes in the sec­tor re­quire an en­hance­ment of oil rev­enue mon­i­tor­ing and re­port­ing. For the medium term, the mis­sion stressed the need to main­tain pru­dent fis­cal poli­cies to en­sure eco­nomic sta­bil­ity and debt sus­tain­abil­ity.

The mis­sion un­der­scored the im­por­tance of pur­su­ing poli­cies sup­port­ive of sus­tained and in­clu­sive growth, as well as job cre­ation. To this end, it is es­sen­tial to foster growth be­yond the oil sec­tor and di­ver­sify the econ­omy through struc­tural re­forms aimed at im­prov­ing the busi­ness en­vi­ron­ment and the qual­ity of pub­lic spend­ing. "Dis­cus­sions will con­tinue in com­ing weeks on the quan­ti­ta­tive per­for­mance and on poli­cies and struc­tural re­forms go­ing for­ward. Ex­ec­u­tive Board con­sid­er­a­tion of the Ar­ti­cle IV con­sul­ta­tion and the third re­view of the ECF ar­range­ment is ex­pected to take place in June. "The mis­sion met with the Prime Min­is­ter, the Pres­i­dent of the Na­tional As­sem­bly, the Min­is­ter of Fi­nance and Bud­get, the Min­is­ter of Plan, the ad in­terim Na­tional Di­rec­tor of BEAC for Chad, and other min­is­ters, as well as se­nior govern­ment of­fi­cials, rep­re­sen­ta­tives of the pri­vate sec­tor, and tech­ni­cal and fi­nan­cial part­ners of Chad.

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