Chad: Selected Issues

This Selected Issues paper reviews the impact of Chad’s procyclical fiscal policies on fiscal sustainability and macroeconomic outcomes and proposes a fiscal framework to anchor fiscal policy over the medium term. This framework combines a debt target aimed at ensuring that Chad’s risk of debt distress remains moderate and a financial asset floor to maximize its economic stabilization and shock insurance properties, while maintaining feasibility and flexibility to mobilize critical development spending. The proposed anchor could be monitored through a net debt target set at 28 percent of gross domestic product (GDP), to ensure that debt does not exceed a maximum threshold set at 42 percent of GDP even in the face of significant shocks, while the floor on liquid financial assets could be set at 5 percent of GDP. IMF propose a gradual convergence path—which balances prudence and mobilizing critical development spending—aimed at ensuring net debt remains at the target by 2029. The successful implementation of this framework will require accelerated progress on structural reforms and commitment from the Chadian authorities at the highest level.