- After increasing to 4.9 percent in 2023, growth is expected to moderate this year, reflecting a slight decline in oil production and the impact of floods.
- Following a decline in 2023, inflation is expected to increase significantly in 2024 on account of higher fuel and food prices before moderating over the medium term.
- The authorities are encouraged to pursue ongoing efforts to enhance sustainability of public finances and increase their contribution to development objectives.
- As the authorities are finalizing their National Development Plan for the next five years, the IMF staff team discussed with them a number of medium-term macroeconomic challenges Chad is facing. The team made recommendations aimed at increasing resilience against climate change, improving the business climate, strengthening governance, and reducing gender disparities.
Washington, DC: An International Monetary Fund (IMF) team, led by Mr. Édouard Martin, Mission Chief for Chad, visited N'Djamena to hold discussions on the 2024 Article IV consultation from October 3–15, 2024. Mr. Vitaliy Kramarenko, Deputy Director of the IMF African department, joined the mission for policy discussions. The Article IV discussions will continue in the coming days.
At the conclusion of the discussions, Mr. Martin issued the following statement:
"Chad's economic activity grew by 4.9 percent in 2023, driven by a rebound in agricultural production, an increase in public investment, and higher oil production. After declining in 2023 (to 4.2 percent from 8.3 percent at end-2022) owing to a slowdown in food prices, year-over-year inflation went back up to 8.7 percent at end-August 2024, reflecting a rebalancing in domestic fuel prices and a rebound in food prices during a particularly difficult lean season.
"The overall fiscal balance deteriorated substantially in 2023—to -2.7 percent of non-oil GDP from +4.9 percent in 2022. Non-oil revenue increased steadily as a result of tax administration reforms while current expenditures remained elevated, reflecting in part spending pressures related to the arrival of refugees from Sudan and the large use of emergency spending procedures (Dépenses avant ordonnancement, DAOs).
"The banking sector remains undercapitalized. At end-December 2023, the sector's capital adequacy ratio was below the regulatory minimum, while non-performing loans amounted to 31.5 percent of total loans. The mission emphasized the need to promptly finalize and start implementing restructuring plans for the two systemic public banks.
"Looking ahead, the outlook for 2024-25 remains broadly favorable but subject to significant risks. The economy is expected to decelerate this year owing to a slight decline in oil production and the impact of floods. Despite a further decline in oil production, growth would increase to 3.4 percent in 2025 owing to better agricultural crops and livestock activity. Reflecting substantial increases in food and fuel prices, inflation would increase to 8.8 percent year-over-year at end- 2024 before gradually declining over the medium term. Risks include a possible intensification of regional conflicts, large fluctuations in oil prices, and an increase in climate-change related events, such as the recent floods.
"Despite a further decline in oil revenue, the overall fiscal balance would somewhat recover in 2024. Non-oil revenue would increase significantly, reflecting further tax administration reforms, the increase in domestic fuel prices, and the renewal of telecommunications licenses. Current spending would decline, reflecting the phasing out of one-off spending related to the political transition and the election and the progress in reducing the use of emergency spending procedures.
"With oil revenue expected to further decline over the medium term, discussions focused on measures to further improve domestic non-oil revenue mobilization, including through digitalization, and contain current expenditure, including the wage bill and transfers to the energy sector. The mission also encouraged the authorities to ensure that budget allocations for social spending (e.g., health, education, women, and environment) are actually spent and to reform public procurement to increase the efficiency of public investment.
"The authorities are finalizing their National Development Plan, which will articulate the policies and reforms the government intends to implement over the next five years to meet its development objectives. In this context, the mission discussed the key medium-term macroeconomic challenges that Chad is facing. It stressed the importance of ensuring a sustainable and inclusive development, which will notably require mobilizing concessional financing and grants to finance investment in key areas and taking measures to promote the development of the private sector and the diversification of the economy. It also made recommendations aimed at increasing resilience against climate change, improving the business climate, strengthening governance, and reducing gender disparities.
"The IMF team would like to thank the Chadian authorities and other counterparts for their hospitality, excellent cooperation, and candid and constructive discussions."
The mission met with Mr. Mahamat Idriss Déby Into, President of the Republic of Chad; Mr. Tahir Hamid Nguilin, Minister of State for Finance, Budget, Economy and Planning; Ms. Ndolenodji Alixe Naïmbaye, Minister of Hydrocarbons, Mines, and Geology; Mr. Patalet Kanabe Marcelin, Minister of Water and Energy]; Mr. Idriss Ahmat Idriss, National Director of the regional central bank (BEAC); and other senior officials, as well as representatives of the private sector, civil society and international development partners.
