OREANDA-NEWS. March 23, 2016. An International Monetary Fund (IMF) mission led by Mauricio Villafuerte visited N’Djamena from March 7–20, 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 (see Press Release No. 14/381).

At the conclusion of the mission, Mr. Villafuerte issued the following statement:

“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.

“The mission expresses its gratitude to the authorities for their warm reception and the open and constructive discussions.”