May 30, 2024

Chad’s economy broadly positive, recovering well, but spending pressures emerging, IMF says

The International Monetary Fund (IMF) said on Thursday the economy of Chad in central Africa was recovering well although some spending pressures were beginning to emerge.

“Economic activity is expected to continue to recover and the macroeconomic outlook remains broadly positive. The non-oil economy is projected to grow at 3 percent this year backed by higher public investment and domestic arrears repayment as well as the pick-up in cotton and livestock,” said Edward Gemayel who led an IMF mission to Chad between February 6 and February 12, 2020.

Gemayel said oil GDP is expected to grow by 7.5 percent as a result of new extraction technologies as well as additional production from new fields.

Inflation last year was in negative territory (-1 percent annual average), reflecting subdued food and transport prices and is projected to remain below 3 percent this year, he said.

The IMF team was N’Djamena, the capital of Chad, to take stock of the latest economic and financial developments, and follow-up on the implementation of the authorities’ structural reform agenda.

Gemayel “preliminary data suggest that performance under the IMF-supported program was broadly satisfactory in 2019, with fiscal performance on track. Both non-oil and oil revenues exceeded projections.

He said domestic investments exceeded the end-year target due to security spending, while banking sector liquidity has improved, reflecting higher deposit collection, but vulnerabilities remain in some banks.

“Spending pressures are emerging, which could undermine the hard-won fiscal adjustment efforts implemented since the 2014-15 economic crisis. Maintaining fiscal discipline in the run up to the parliamentary and presidential elections is critical for macroeconomic stability and maintaining a sustainable debt position. To this end, the authorities’ efforts should continue to focus on strengthening domestic revenue mobilization, streamlining exemptions, improving VAT collection, controlling the wage bill, increasing social spending, and clearing domestic arrears. Staying the course with the reform agenda is equally important, including in the banking sector,” Gemayel added.

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