Country Report Chad March 2009

Outlook for 2009-10

The president, Idriss Deby, will continue in his efforts to defeat rebel groups militarily. The newly formed rebel alliance, Union des forces de la resistance (UFR), will be subject to defections and in-fighting, but as long as it endures it will pose a significant military threat. An expanded UN military force in Chad, MINURCAT2, is not due to be fully operational until October 2009 at the earliest. 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 expected continuation of the drop in oil output, the Economist Intelligence Unit now forecasts that real GDP will contract by a 1% in 2009 and by 0.5% in 2010, when increased construction activity is expected to offset declining oil output to some extent.

The political scene

The UFR has elected Timane Erdimi, who is a nephew and former aide of MrDeby, as its leader. Mr Erdimi has declared relations to be good between himself and another prominent rebel leader with whom he has reportedly clashed in the past, Mahamat Nouri. On January 14th the UN Security Council authorised 5,200 UN peacekeepers to replace the 3,500-strong EU force (EUFOR) currently stationed in Chad and the Central African Republic when its mandate expires on March 15th.

Economic policy

In January household budgets in the capital, N'Djamena, and other cities were severely stretched by an abruptly imposed ban on the sale and use of charcoal. The environment minister, Ali Souleyman Dabye, claimed that the measure had been taken in order to protect the country's natural resources. The country's main labour organisation, Union des syndicats du Tchad (UST), called for its members to down tools on February 9th in protest against the ban on charcoal and the high cost of living.

The domestic economy

Total oil production declined during 2008 to an average of 127,000 barrels/day (b/d) from 144,000 b/d in 2007. The main challenge to production levels was the large amount of water and sediment in the oil deposits, which requires a large number of high-maintenance wells.

Foreign trade and payments

In its Article IV consultation with Chad, completed in February, the IMF welcomed the government's commitment to fiscal adjustment but expressed concern about the over-optimistic assumptions on oil prices and defence spending that underpin it.

This report covers the following industry codes:
SIC Code: 60;1
NAICS Code: 52;11