Updated: March 4, 2021
The executive board of the International Monetary Fund (IMF) on Friday approved the release of $38.8 million to Chad, part of $310.5 million loan secured in 2017 under the extended credit facility arrangement.
An extended credit facility allows the borrowing country to take out money over an extended period of time rather than reapplying for a loan each time it needs money. In effect, a credit facility lets a country take out an umbrella loan for generating capital over an extended period of time.
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The release of funds, which brings total disbursements under the ECF arrangement to SDR196.28 million (about US$271.7 million), came after the IMF executive board completed the fifth review of Chad’s economic program.
IMF concluded that performance under the ECF arrangement has been broadly satisfactory as the program is supported by CEMAC-wide efforts to maintain an appropriate monetary policy stance, and suggested that improving governance remains a key element of the country’s strategy to revive the private sector while efforts to raise non-oil revenue, especially through improvements in the tax and customs administration will need to be continued.
“Chad’s performance under the Fund’s ECF-supported program has been broadly satisfactory, reflecting strong commitment by the authorities despite a challenging environment, including security concerns and a tense social situation,” Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair of the IMF board, said in a statement.
“Good progress on the structural reform agenda has been made, despite some delays. Looking ahead, it is essential that the authorities continue to pursue prudent fiscal policy, particularly in the run up to the upcoming elections, create sufficient fiscal space for increased social and development spending, and pay down domestic debt and arrears.
He added: “Fiscal consolidation efforts should give emphasis to strengthening domestic revenue mobilization, particularly by reducing exemptions and improving VAT collection, controlling the wage bill, and strengthening public financial management. Effort to contain public debt vulnerabilities should be sustained by reducing domestic debt and strictly adhering to the zero limit on non-concessional borrowing.
“Accelerating the implementation of structural reforms to enhance the business climate and improve governance is necessary to boost economic recovery. In addition, developing and implementing a clearance strategy for domestic arrears and addressing public banks vulnerabilities is also essential.
“Chad’s program is supported by the implementation of supportive policies and reforms by the regional institutions in the areas of foreign exchange regulations and monetary policy framework and to support an increase in regional net foreign assets, which are critical to the program’s success.”