Africa > Chad

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Ms. Annalisa Fedelino, Mr. Gerd Schwartz, and Marijn Verhoeven
This paper assesses whether the scaling up of aid and the resulting increase in government spending that is needed to meet the Millennium Development Goals (MDGs) would be hampered by wage bill ceilings that are often part of government programs supported by the IMF's Poverty Reduction and Growth Facility (PRGF). Based on country case studies for 2003-05, the paper suggests that, in the past, wage bill ceilings have not restricted the use of available donor funds. Yet the paper offers a number of suggestions for further enhancing the flexibility of wage bill conditionality in PRGF-supported programs to respond to higher aid flows that may result in the future.
Mr. Dhaneshwar Ghura and Benoît Mercereau
This paper provides empirical evidence that the propensity for political instability in the Central African Republic (C.A.R.) has been increased by low tax revenues and deteriorations in the terms of trade. The direct effect of political instability on economic growth is not statistically significant, once account is taken of domestic investment, and economic growth in neighboring countries. The policy implications are: (i) mobilization of domestic revenues to pay public employees' salaries and provide basic social services would lower the probability of coups; (ii) economic diversification would reduce the propensity for adverse terms of trade shocks to fuel coups; and (iii) neighboring countries' efforts to resolve conflicts and achieve sustained growth would be beneficial for the C.A.R.'s economic performance.
International Monetary Fund
Chad has succeeded in recent years in broadly maintaining macroeconomic stability and a high growth rate of economic activity. There has been a significant effort to formulate the detailed modalities for the use of oil revenues so as to ensure that oil revenues are used transparently and efficiently in the fight against poverty. It is essential to maintain an appropriate fiscal expenditure policy. Executive Directors urge the government to sustainably improve public expenditure management. Improving non-oil fiscal revenue performance is essential for eventually attaining fiscal sustainability.