IMF

Republic of Chad

Representation of the Republic of Chad before the International Monetary Fund

School: Tecnológico de Monterrey, Campus Ciudad de México

Committee: International Monetary Fund

Topic: External Debt Sustainability and Development

Country: Republic of Chad

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Official Name: Republic of Chad “République du Tchad / Jumhuriyat Tshad “

Type of Government: Republic

Capital: N'Djamena

Chief of State: President Lt. Gen. Idriss Deby Itno

Head of Government: Prime Minister Emmanuel Nadingar

International Affiliations: ACP, AfDB, AU, BDEAC, CEMAC, FAO, FZ, G-77, IAEA, IBRD, ICAO, ICRM, IDA, IDB, IFAD, IFC, IFRCS, ILO, IMF, Interpol, IOC, ITSO, ITU, ITUC, MIGA, NAM, OIC, OIF, OPCW, UN, UNCTAD, UNESCO, UNIDO, UNOCI, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO

Currency:  Communauté Financière Africaine Franc (XAF)

GDP: $19.69 billion USD

GDP Per capita: $1900 USD

Area: 1.284 million sq Km.

Population: 10,975,648 inhabitants

Official Language: French (official), Arabic (official), Sara (in south); more than 120 different languages and dialects.

Religion: Muslim 53.1%, Catholic 20.1%, Protestant 14.2%, animist 7.3%, other 0.5%, unknown 1.7%, atheist 3.1%.

Inflation rate: 6.5% (2010)

Overseas Stock: US$ 1.93 billion

Trade Balance:  US$ -2.986 billion

External Debt: US$ 1.743 billion

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School: Tecnológico de Monterrey, Campus Ciudad de México
Committee: International Monetary Fund
Topic: External Debt Sustainability and Development
Country: Republic of Chad

Document issued by the Chadian Ministry of Foreign Affairs

Debt manageability is a topic that requires a deep analysis of the States’ internal economic management and the impact of decisions taken by one country in a global context. The correct use of additional resources from debt acquired by a State must be any country’s priority.

As a member of the African Union (AU), the International Monetary Fund (IMF) and the World Bank (WB), Chad has received intensive and continuous economic support from these multilateral institutions in recent years. Since its independence in 1960, Chad has been benefited by various humanitarian programs that have tried to boost economic development and improve the quality of life of its population by reducing the poverty and corruption rates while increasing education opportunities, as well as infrastructure and health services.

Since 2003, oil extraction and export have had a positive impact in the economy, producing higher revenues and adding a greater support to national finances. It has also attracted foreign direct investment to the country, mostly directed towards refineries and extraction platforms .

Chad has enjoyed better economic conditions in the last years as a result of two specific programs : the Heavily In debt Poor Countries Initiative (HIPC) and the Poverty Reduction and Growth Facility (PRGF). Furthermore, as a benefit of the HIPC program, Chad became eligible to receive a 170.1 million-dollar debt relief from in 2000. This benefit has been composed by  78.8 % of multilateral loans, 20.6% bilateral loans provided by the Paris Club countries and only 0.6 percent of private initiatives.

The different strategies and international programs implemented in Chad have helped the country in the establishment of public policies for development, especially oriented towards the achievement of the Millennium Development Goals (MDG) for 2015. Moreover, these measures, carried out under expert assessment from international institutions such as the IMF,  have enhanced the overall economic growth of our country and contributed to the improvement of public services.

Since 2001, Chad’s foreign debt as a fraction of its GDP has been higher than its half. However, by 2009 the country achieved its lowest debt rate so far. In that year, foreign debt only represented  24% of its GDP. However, the vulnerability of Chad’s debt remains severely high, a situation which was triggered by the acquisition of two large non concessional external bilateral loans  . The main creditors of Chad are the International Development Association (IDA) and the African Development Bank, (ADB) which have agreed to maintain the totality of the debt in the public sphere and not to make contracts with private banks. These decisions have driven the long-term vulnerability trend downwards.

In order to support such tendency, the Republic of Chad has committed in three specific points.

1. Reduce the number and amount of loans acquired, trying to adjust local spending to the available budget without external help. In other words, not to acquire any additional loans.

2. Achieve the amortization of those loans as scheduled with creditors. These responsible actions will avoid paying higher interests, therefore reducing the total amount of money paid.

3. Redirect resources towards the construction of the  Chad-Cameroon Pipeline Project, a common infrastructure program with Cameroon. This pipeline will allow to extend the network of oil pipes with neighboring nations.

By carrying out these measures, Chad will be able to achieve financial sustainability. However, there are certain obstacles jeopardizing the completion of these goals. Among them are the fiscal targets established by the PRGF, which have not been accomplished despite the 2008 deadline.

Evidence of this unfixed situation is the 2010 measure of the World Bank Country Policy Institutional Assessment (CPIA), in which Chad got 2.62 out of a maximum of 6 .

In order to improve, the Republic of Chad has established attainable proposals for this topic.

a) Invite those nations that have not joined CPIA yet, to consider doing so as an initial step towards the transformation of their internal financial structure. Otherwise, countries that reject this initiative will continue facing constantly economic issues out of a global context that will have further  long-run repercussions.

b) Reevaluate the internal Income state of the nations, identifying where are the opportunity areas that can substitute debt as a source of resources. One attainable option is to reform  fiscal policies to expand the contribution basis and not increasing taxes rates.

c) Establish as official an annual update of the debt payment schedule according to the progress of seeking for new income resources and the negotiation of those loans acquired with the institutions.

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