This is the second disbursement under the Rapid Credit Facility (RCF), to address urgent balance of payment needs stemming from the COVID-19 pandemic; the Chadian economy continues to be severely impacted by the twin Covid-19 pandemic and terms of trade shocks, which led to a weaker than previously envisaged economic outlook; the additional RCF disbursement will provide timely support to fill an urgent financing need to contain the economic impact of the pandemic and provide essential COVID-19-related health expenditure.
The Executive Board of the International Monetary Fund (IMF) today approved a disbursement under the Rapid Credit Facility (RCF) for SDR 49.07 million (about US$ 69.49 million or 35 percent of quota).
This is the second disbursement in three months, under the RCF, to address the external financing needs arising from the COVID-19 pandemic, bringing Chad’s total IMF emergency support since the outbreak of the pandemic to SDR 133.19 million (US$183.60 million). The Executive Board also notes the cancellation of the ECF arrangement, which was to expire at end-September 2020.
The twin Covid-19 pandemic and terms of trade shocks have worsened Chad’s economic outlook since the first RCF in April 14, 2020. Since then, the authorities have adopted containment measures (including a curfew and closure of markets and non-essential stores), which proved successful in containing the pandemic spread. However, these had the unavoidable consequence of further depressing the economy. Fiscal and external positions have also worsened, reflecting reduced export proceeds and lower oil and non-oil revenues, in addition to the higher than expected spending to contain the COVID-19 crisis.
The Chadian authorities continued to take strong actions to upgrade the health system and contain the economic impact of the pandemic. Additional measures have been taken since the first RCF to help businesses and households absorb the adverse impact of the pandemic. The IMF’s second RCF will provide a timely support for the implementation of the authorities’ additional measures, to address the COVID-19 crisis and mitigate its severe impact. The authorities are also taking steps to ensure transparency and accountability in the use of COVID-related resources, including an ex-post audit of crisis-related spending and the publication of crisis-related procurement contracts.
Following the Executive Board discussion of Chad’s request, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:
“The twin Covid-19 pandemic and terms of trade shocks continue to severely impact the Chadian economy. The macroeconomic outlook has further deteriorated, with greater economic contraction and higher balance of payments and budgetary financing needs. The risk to the outlook is tilted to the downside.
“In response to the shocks, the authorities continue to implement strong measures to halt the community spread of the virus and mitigate the impact of the crisis. Key measures focus on scaling up health-related spending, protecting the most vulnerable and supporting households and businesses. The authorities will also strengthen transparency and monitoring of emergency resources.
“To help save lives and support those most affected by the pandemic, the authorities will temporarily relax the fiscal deficit to allow for the scaling up of health care spending and to accommodate the impact of the sharp drop in oil prices. The IMF emergency assistance will support the authorities’ policy response and catalyze donor support.
“Once the crisis abates, the authorities should stand ready to gradually unwind the temporary emergency measures. Fiscal adjustment will be needed in the medium term, especially since oil prices are expected to remain low, including by allowing temporary expenditure measures to expire.
“Public debt vulnerabilities remain high and the authorities should continue to refrain from non-concessional borrowing consistent with their commitments under the DSSI and the terms of the World Bank’s Sustainable Development Financing Policy.”Distributed by APO Group on behalf of International Monetary Fund (IMF).