IMF Executive Board Completes First Review Under the ECF Arrangement

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The FINANCIAL — The Executive Board of the International Monetary Fund (IMF) on April 27 completed the first review of Chad’s economic performance under the program supported by an Extended Credit Facility (ECF) arrangement. It also approved the authorities’ request for an augmentation of access by SDR 26.64 million (40 percent of the country’s quota).

Completion of the review enables the immediate disbursement of SDR 19.97 million (about US$27.7 million), including SDR 6.66 million (about US$9.2 million) from the augmentation. This brings total disbursements under the arrangement so far to SDR 33.28 million (about US$46.2 million).

The Board granted waivers for the nonobservance of the performance criteria on net domestic government financing and on poverty-reducing social spending, according to IMF.

In addition, the Board also agreed that Chad has taken the steps necessary to reach the completion point under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative. This decision on the HIPC completion point is contingent upon the Executive Board of the World Bank concluding that Chad has reached the completion point under the Enhanced HIPC Initiative, after which a joint press release will be issued.

Chad’s three-year ECF arrangement in the amount equivalent to SDR 79.92 million (about US$110.9 million), was approved by the Board on August 1, 2014.

Following the Executive Board’s discussion on Chad, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, said:

“Despite the collapse in oil prices, the deterioration of regional security, and the attendant influx of refugees, performance under the Fund-supported economic program has been broadly satisfactory in 2014. In particular, the non-oil primary deficit target, the main fiscal anchor of the program, was achieved and progress on the structural agenda was in line with program objectives, with a continued focus on strengthening public financial management.

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“The macroeconomic outlook for 2015 and the medium term is significantly affected by the prospects of lower oil revenues. The authorities have responded decisively, including by undertaking a sizable fiscal adjustment under the revised 2015 budget awaiting parliamentary approval, while protecting poverty-reducing spending. The revised budget is to be financed by domestic financing sources, the rescheduling of oil sale advances, and budget support from international partners as well as an augmentation of access under the current arrangement under the Fund’s Extended Credit Facility.

“Chad has made commendable progress in increasing the transparency of oil revenue flows and achieved full compliance with the standards of the Extractive Industries Transparency Initiative. Further efforts, however, are needed to keep pace with structural changes in the oil sector. The structural reform agenda remains focused on improving public financial management and removing obstacles to private sector development, economic diversification, and inclusive growth.

“The external debt burden will fall significantly after reaching the HIPC completion point, releasing resources for investment and poverty reduction. However, Chad remains at high risk of debt distress and prudent fiscal and borrowing policies remain essential.”


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