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(Ecofin Agency) – The International Monetary Fund (IMF) expects Chad’s real GDP to contract by 1.1% in 2021. This is the conclusion of a mission conducted between January 12-18, 2022 in the country.
“Chad’s macroeconomic developments have been adversely impacted by a series of adverse and long-lasting shocks. These include the COVID-19 pandemic, oil price volatility and a significant deterioration in the output of the oil sector, security attacks, and climate change and food insecurity,” the IMF statement reads.
As a reminder, Chad recently reached a deal with mining company Glencore on more than $1 million in debt and secured the equivalent of $570.75 million in IMF pledges, but still faces an unstable political landscape. Also, the upcoming legislative and presidential elections risk weighing on the state budget. However, despite this rather tense context, “steps are being taken to meet the structural benchmarks slated for the first half of 2022. These relate to tax exemptions, and transparency in the oil sector and public procurement contracts,” IMF explained.
The institution commends the Chadian authorities for launching a pilot program to decentralize wage bill management as part of the integrated financial management system. It is a “step in the right direction to improve public financial management,” but additional efforts are needed to fast-track tax revenue administration, IMF says.
Another challenge concerns the loss of tax revenue due to profit shifting by multinationals and the wealthy. In a report jointly published last November with Public Service International, and Global Alliance for Tax Justice, Tax Justice Network revealed that Chad lost $1.9 billion to tax evasion and avoidance in 2021. This is nearly 1.9 times the country’s budget in 2020.
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