Since independence from France in 1960, Chad, a landlocked country in Central Africa, has been plagued by instability and conflict arising from tensions between different religious and ethnic factions.
President Idriss Deby Itno and his party, the Patriotic Salvation Movement, have dominated Chadian politics since ascending to power in 1990. Deby won the 1996 elections—the first multi-party elections held in Chad—as well as the 2001, 2006, and 2011 elections. The electoral processes during these elections have, however, been controversial. President Deby’s party won the legislative elections of February 2011, with 118 of the 188 seats in the National Assembly (however these results were contested amidst accusations of fraud). The party in power also won the local elections held on January 2012, however opposition parties won the majority of votes in Moundou, the main economic hub of the south, as well as Bebedjia, an important city in Chad’s oil region.
Chad joined the list of oil-producing countries in 2003, and its economy has become heavily dependent on oil. Prior to the oil era, the Chadian economy was predominately agrarian, with per capita gross domestic product (GDP) estimated at around $220 in 2001-2002—less than half of the average in Sub-Saharan Africa. In 2013, per capita GDP rose to approximately $1,226. The upsurge in revenue from oil production led to a substantial increase in public spending on social programs aimed at reducing poverty and improving health, however between 2003 and 2011the decline in the poverty rate from 55% to 47%, was more than offset by population growth. Consequently, the total population affected by poverty in Chad increased by 15%.
Throughout 2014, macroeconomic performance remained stable with some acceleration in economic growth despite the government’s temporary suspension of the Chinese National Petroleum Company (CNPC) and delays in oil production. Real GDP increased by 7.3% in 2014, from 5.7% in 2013 mainly due to gains in the oil sector and higher agricultural production following a high rainfall and rural public investments. On the fiscal front, the non-oil primary deficit (NOPD) fell from 20.1% of non-oil GDP in 2012 to 17.5% in 2013 and it is estimated to fall further to 16.4% in 2014 as security spending and oil revenues decline compared to 2013. Fiscal revenue decreased by 5.4% due to the oil price collapse in the second half of 2014. By contrast, non-oil revenue performance was slightly above expectations at 11.4%.
Fiscal stance efforts were accompanied by the International Monetary Fund (IMF) Staff Monitored Program, which began in July 2013 and completed satisfactorily in December 2013. The Extended Credit Facility (ECF) was approved by the IMF Board in August 2014. A satisfactory implementation of the ECF over the following six months remains the main condition to achieving the Heavily Indebted Poor Countries (HIPC) Completion Point and is currently under evaluation.
In 2015, oil revenues are likely to fall further given the full-year effect of low oil prices. The 2015 budget was built on the assumption that the price of a Chadian oil barrel would remain stable at $65 per barrel. Budget forecasts predict a 20% cut in domestically financed investments and transfers, a 50% cut in goods and services expenditures compared with the 2014 Budget Law 2014, and a remaining financing gap of 177 billion CFA. Less optimistic oil and non-oil revenue projections, however, would suggest a financing gap in 2015 of 217 billion CFA (4% of non-oil GDP). This calculation incorporates the potential savings in debt service when Chad reaches the HIPC completion point in April 2015, but does not include the fiscal impact of Chad’s ongoing military campaign against Boko Haram which is expected to be financed through the United Nations Security Council. To close the residual financing gap, the authorities are trying to obtain an additional rescheduling of oil advance repayments (from a remaining balance of 140 billion CFA) and budget support from donors.
Higher food prices following moderate levels of agricultural production in 2013 and the closure of the border with Nigeria (linked to concerns about Ebola and Boko Haram) led to a slight acceleration of the inflation rate in 2014 at 1.7% against 0.2% in 2013. Public debt indicators in Chad have remained relatively stable in recent years, however the risk of debt distress is still high in light of the fact that in 2014, an advance of $1.3 billion was taken on oil sales to finance the purchase of shares (25%) by the State in the largest oil consortium operating in Chad. Reaching the HIPC Completion Point, which is expected to be achieved this year, will decrease the external debt by about $1 billion.
In January 2015, Chadian troops entered Cameroon and Nigeria to combat Boko Haram, the latter threatening to cut most of its export and import trade routes. Parliament subsequently approved legislation authorizing this military intervention in Cameroon. More than 3,400 refugees crossed Lake Chad following Boko Haram’s occupation of the city of Baga in early January, adding to the half a million refugees and internally displaced already registered in the country due to the conflicts in Sudan and the Central African Republic. The deepening crisis in Libya has further strengthened the Boko Haram insurgency in Nigeria with associated spillover to Cameroon, Chad, and Niger. While the Chadian army seems to have achieved some military success, it is extremely difficult to assess how long this campaign will last given the entrenchment of Boko Haram in northern Nigeria and the recent presidential elections.
Growing social resentment turned into protests in Ndjamena, Moundou and Sarh in early November 2014, when citizens and students protested against fuel shortages and high cost of living. They also supported a teachers’ strike that sought to claim the delayed payment of their exam premiums.
Chad is ranked 184 out of 187 countries according to the 2014 United Nations Development Program (UNDP) Human Development Index (HDI). Despite improvements in school attendance and access to potable water, many Chadians still face severe deprivation and most of the Millennium Development Goals will not be met by 2015. Between 2003 and 2011, Chad achieved moderate but significant progress in overall poverty reduction, with the national poverty rate falling from 55% to 47% during the period. However, the extreme poverty rate in Chad, using $1.25 per day poverty line, has significantly decreased during this period from 61.3% to 36.1%. Progress on non-monetary poverty has been modest. In fact, despite improvements in school attendance and access to clean drinking water, many Chadians still face severe deprivation across a range of basic needs.
Last Updated: Apr 15, 2015