February 2, 2023

IMF warns Chad’s economy is in turmoil, debt is unsustainable and country may face ‘serious negative social and security consequences’

Abebe Aemro Selassie
Abebe Aemro Selassie

The International Monetary Fund on Tuesday warned that the economy of Chad is in turmoil with an unsustainable debt portfolio, adding that the central African nation may face “serious negative social and security consequences.”

In a strongly worded statement, the IMF African Department Director Abebe Aemro Selassie, said the debt treatment from Chad’s private creditors is “crucial to its economic recovery.”

Zambia Minister of Finance Situmbeko Musokotwane and Head of IMF’s African Department Abebe Aemro Selassie participate in a Governor Talk during the 2022 Spring Meetings at the International Monetary Fund. IMF Photo/Allison Shelley 19 April 2022 Washington, DC, United States Photo ref: 651A8225.cr3

“Chad’s economic and financing situation continues to worsen following the combined shocks of the COVID-19 pandemic, oil price decline, climate change, and terrorist attacks. IMF staff and the Chadian authorities have continued a close dialogue on economic policies. Recent discussions confirm growing concerns about financing difficulties, forcing the government to cut critical social and development outlays, which, unless soon reversed, could have serious negative social and security consequences,” Selassie wrote.

He said Chad’s debt is assessed as unsustainable, warning that a “debt treatment is therefore critical and would pave the way for the IMF’s Executive Board to approve financing in support of Chad’s program of carefully targeted fiscal adjustment and reforms that were agreed with IMF staff in January.” It would also open the door for the provision of significant financial support by other development partners.

He wrote, “Official creditors in the Creditor Committee for Chad under the Common Framework for Debt Treatments beyond the DSSI (Common Framework), have, in their statement of June 16, supported Chad’s envisaged IMF-supported program and committed to negotiate debt restructuring terms accordingly. Comparable treatment from Chad’s private creditors is now necessary.

“A credible debt restructuring process with private creditors is needed to unlock the official financing that Chad urgently needs. A strong commitment from private creditors on their willingness to negotiate such debt treatments consistent with the parameters of the envisaged IMF-supported program without further delay would boost Cha’s economic recovery and poverty reduction efforts.

“The IMF’s Managing Director has also endorsed the call by the Creditor Committee for private creditors to commit to negotiate such debt treatment without delay. The international community will be monitoring developments closely and looks forward to concrete progress in the engagement between Chad and its private creditors in the coming days.”

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