Population 10.74 million
GDP 9.723 US$ billion
@rating
country
Business climate
assessment
| 2010 | 2011 | 2012(e) | 2013(f) | |
|---|---|---|---|---|
|
GDP growth (%)
|
13 |
1.7 |
6 |
3 |
|
Inflation (yearly average) (%)
|
-2.1 |
1.9 |
5.5 |
4 |
|
Budget balance (% GDP) *
|
-30.6 |
-27.9 |
-28 |
-29 |
|
Current account balance (% GDP)
|
-36.6 |
-24.2 |
-16.3 |
-17.6 |
|
Public debt (% GDP)
|
25.8 |
27 |
23.4 |
24.2 |
| (e) Estimate (f) Forecast * Primary balance, excluding oil | ||||
STRENGTHS
- Oil production since 2003, operations starting at new fields from 2014
- Infrastructure development
- Development potential in agricultural sector
WEAKNESSES
- Excessive dependence on oil
- Agriculture sensitive to weather conditions, risk of food insecurity
- Business climate discourages the emergence of the private sector
- Geographic isolation
- Country faced with regional security threats
Risk assessment
Slight slowdown in 2013
Growth accelerated in 2012 due to a rebound in agricultural production resulting from the return of favourable weather conditions, the recovery in activity at an oil plant operated by a Chinese company, and the start of operations at new electricity and cement production units. Activity is, however, likely to slow in 2013 due to a drop in oil production. This deceleration is expected to be partially offset by the development of the cotton segment and cross-border trade in livestock (second largest export item, far behind oil). In the medium term, development of the Djermaya industrial zone, construction of new transport infrastructure (projects financed in large part by China) and, above all, the start of operations at new oil fields are set to increase the country’s growth potential. Oil production, especially, could reach an average of 160 000 barrels a day in the next five years, compared to 120 000 in 2012. Inflation, after surging again in 2012, because of firm domestic demand fuelled notably by wage rises, is expected to fall slightly in 2013, despite a probable rise in fuel prices.
Oil dependence and weak fiscal discipline
Dependence on oil is likely to remain high (40% of GDP, 75% of government revenue and 90% of exports in 2011) due to the discovery of new fields and limits on the expansion of the industrial sector (small size of local market, low availability of credit, lack of skilled labour and infrastructure). High oil prices drove government revenues upwards, but the government is having difficulty controlling the pace of public spending, which is tending to accelerate rapidly compared to the initial Budget Act. Public investment planning is still inadequate and public procurement procedures are costly. The public accounts are especially exposed to a reversal in the oil market with prices at high levels. The current account deficit is expected to rise in 2013 due to a slight drop in the barrel price and in volumes exported (operations at the new fields are not due to start until 2014). Sales of livestock will continue to climb, while those of cotton will increase slightly, with an end to the collapse in cotton prices (-40% in 2012) and a rise in output, subject to the weather. Higher production at the oil refinery is, however, likely to result in a lower energy bill. Loans from China, aid from donors and foreign direct investments in the oil sector should enable coverage of the current account deficit.
Relations with the IMF are difficult. The cou
ntry has not achieved its fiscal objectives and this was the main obstacle to renewed debt relief under the HIPC initiative. Although moderate, the risk of debt distress remains very sensitive to an oil price shock. However, if productivity at the new wells is confirmed, oil exports will need to be revised upwards over the long term.
Political situation fairly stable but regional security threats increasing
President Idriss Déby, in office since 1996 and re-elected in April 2011 during elections boycotted by the opposition, has a large majority in the National Assembly. He is holding tightly the reins of power but the government is having to contend with social unrest, as evidenced by the sporadic public sector strikes since July 2012. Discontent could again be triggered by the probable rise in fuel prices. Meanwhile, interethnic rivalries have not gone away. Externally, the country is enjoying more peaceful relations with Sudan since the peace agreement signed with that country in January 2010 (rebel attacks between 2006 and 2009). However, repercussions from the Libyan crisis (including the return of several thousand Chadians) are making themselves felt still and the country is faced with growing security threats resulting from increased trafficking and terrorism in the Sahel region.
