Country Report Chad December 2008

Outlook for 2009-10

The security situation in Chad is expected to remain extremely fragile. The likely deployment of a strengthened international peacekeeping force from March 2009 will improve security in the country's refugee camps and elsewhere, but is expected to encounter hostility from government and rebel forces alike. Technical problems and lower investment will cause oil output to decline slightly in 2009-10, when world prices are set to be sharply lower. Economic policy will continue to be erratic and characterised by retrospective revisions and off-budget spending. Ongoing insecurity will hit agricultural output. Combined with the steep drop in global oil prices, this means that real GDP growth will remain slow, at 1% in 2009 and 1.2% in 2010.

The political scene

The various armed rebel factions have tried to overcome their damaging mutual antipathies by uniting in November as the Union des forces de la resistance. The EU military contingent in Chad (EUFOR) is due to be replaced on the expiry of its mandate in March 2009 by an enlarged, UN-backed peacekeeping force. Diplomatic ties with Sudan have been restored. The death in government custody of an opposition leader and former minister, Ibni Oumar Mahamat Saleh, has been acknowledged by a commission of inquiry.

Economic policy

A draft budget for 2009, published in November, provides for expenditure totalling CFAfr914bn (US$2bn) and projects revenue at CFAfr855bn, yielding a deficit of CFAfr59bn. The government has announced plans to enlarge the tax base to offset the expected decline in fiscal oil receipts. However, current expenditure, especially on public-sector wages, is set to be maintained or increased, presumably to avoid provoking social unrest. A new finance minister, Gata Ngoulou, was appointed in late September.

The domestic economy

Consumer prices in the capital, N'Djamena, declined by 3% month on month in October, although year-on-year inflation remained rapid, at 10%. Oil output fell slightly in the first half of 2008, but government royalties were up, buoyed by record-high world oil prices. The construction of a Chinese-funded oil refinery started in October.

Foreign trade and payments

The World Bank formally suspended co-operation with the Chadian authorities, primarily in response to their failure to manage oil revenue as agreed. The IMF, in contrast, has maintained relations with Chad, sending a delegation to the country in November to establish the basis for future financial support.

This report covers the following industry codes:
SIC Code: 47;13;15
NAICS Code: 48;211;23