Chad Economic Outlook
- The costs involved in combatting jihadi movements and the continuing low world price of oil mean that economic growth, which was already negative in 2016, will again be so in 2017.
- The economic, financial and security environments are particularly difficult, and the extension of structural reforms seems essential if macroeconomic stability is to be maintained in 2017.
- Encouraging an entrepreneurial economy could contribute to greater economic resilience because of the greater diversity of sources of growth, income and jobs that it might generate.
Chad’s economy depends heavily on oil and continues to be hit by the worldwide drop in its price and the security risks to production resulting from the activities of jihadist movements and the Boko Haram sect. These continuing sources of instability have further weakened the country’s budgetary situation, its external position and short-term growth prospects. The financial costs of its military commitment and care of refugees continue to weigh upon the public purse. The lessening of activity recorded in 2016 could therefore continue in 2017, in particular because of a marked drop in activity in both the oil and non-oil sectors.
Although the economic and financial context is anything but favourable, implementation of the programme supported by the Extended Credit Facility (ECF) has made satisfactory progress. Approval of the conclusions of the Third and Fourth Reviews of the programme enabled the country to benefit from financial help in November 2016. This budgetary assistance supplements help provided the same year by the African Development Bank, the European Union, France and the World Bank. Confronted by the drastic fall in state revenues and the resulting financial crisis, the government also adopted a set of measures to strengthen fiscal consolidation and streamlining, in particular through an ongoing effort in the collection of non-oil receipts and their greater safeguarding. Trade unions are however maintaining their opposition to this governmental emergency plan and condemn the negative effects on people’s well-being. In this uncertain economic and financial climate, prudent management of the debt appears essential to keeping it viable in the light of present acute volatility of the price of oil.
Chad depends heavily on the exploitation of limited natural resources and has to look to diversify its sources of growth and income. It envisages implementing three successive national development plans, which will allow it to fall under the “emerging” category by 2030. Accordingly, industrialisation is essential to this strategy, which will enable moving progressively into sectoral transformation and diversification. At the same time it will promote social integration and greater capital accumulation thanks to the development of an entrepreneurial culture, in particular amongst women and young people. For this strategy to succeed the country will need to have considerable financial resources available, though these will be hard to assemble under present conditions.