Chad WT/TPR/S/174 
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I. ECONOMIC ENVIRONMENT 
(1) MAIN FEATURES OF THE ECONOMY  
1. Located more than 1,000 kilometres from the Atla ntic Ocean, the Republic of Chad is a large 
(1,284 million km2) land-locked Central African country, with  approximately 8.5 million inhabitants.  
It has common borders with Libya to the north, S udan to the east, the Central African Republic to the 
south and, to the west, Cameroon, Nigeria and Nige r – three countries with which it shares the waters 
of Lake Chad.  The capital city of N'Djamena lies at the confluence of the Chari and Logone rivers. 
2. Since its independence in August 1960, Chad  has suffered a succession of socio-political 
crises which have impeded its economic and social deve lopment.  In 2005, more than two thirds of the 
population were living below the poverty line (less than US$1 per day), whilst 32 pour cent suffered 
from malnutrition.1  The male literacy rate stands at 41 per cent and the female rate at 13 per cent.  
Chad faces other serious problems, such as drought, deforestation and desertification.  In 2001, an 
invasion of locusts caused dramatic crop losses and presented a threat to livestock.  The above partly explains why the share of agriculture in GDP ha s significantly declined since 1998 (Table I.1).  
Livestock, cotton and a number of food products form the basis of this sector, which provides 
employment for over 80 per cent of the population.  The country's GDP structure has been considerably affected by the launch in 2003 of pe troleum activities, which now account for about one 
third of GDP.  The manufacturing sector is still in a fledgling stage, although crafts activities are 
relatively well developed.  Services represent ar ound 34 per cent of GDP; trade and government 
services being the main activities and business services developing gradually as an offshoot of petroleum activities.  The major infrastructure e ndeavours undertaken since 2004 should ensure the 
strengthening of transport and telecommunications services. 
3. The Poverty Reduction Strategy Paper (PRSP) is  t h e  m a i n  f r a m e  o f  reference for Chad's 
development partners and, in Oc tober 2006, was in process of being revised.  Chad's PRSP classifies 
rural development as a priority sector, which denot es the key role attributed to agriculture in 
combating poverty.
2  The Law on the management of oil reve nue (Box I.1) requires oil export revenue 
to be reserved for social projects rather than the general State budget.  The rural sector should 
therefore be a priority beneficiary of a substantial pe rcentage of oil revenue.  Chad is eligible for the 
Heavily Indebted Poor Countries (HIPC) Initiative.3  The country's total debt remains high at 
US$1.6 billion4, with a debt-service ratio of 12.4 per cent of exports of non-factor goods and services 
in 1999 and of 1.5 per cent in 2006.  The r esources released under the HIPC Initiative should, 
according to the PRSP, be allocated as a priority to vulnerable groups. 
                                                      
1 United Nations Development Programme (2005).  According to the UNDP, in 2005, Chad ranked 
173rd (out of 177 countries) in the human development index. 
2 Ministry of Planning, Development and Cooperation (2003a). 
 3 Chad reached the "decision point " in May 2001, but, in Octobe r 2006, had not yet reached the 
Initiative's "completion point".  Further information is available from the IMF (2006). 
4 Total long-term debt (maturity of more than one year). Consulted at: 
http://devdata.worldbank.org/externa l/CPProfile.asp?CCODE=TCD&PTYPE=CP. WT/TPR/S/174 Trade Policy Review 
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Table I.1 
Chad in figures, 1998, 2000 and 2003-2005 
 1998 2000 2003 2004 2005a 
Population (million) 7. 1 7.5 8.1 8.3 8.5 
GDP (CFAF billion, at current prices)      
   Total  1,028 986 1,582 2,332 3,104 
   Oil 1.7  2 227 920 1 452 
Share of GDP at current prices (per cent)      
   Agriculture, livestock, forestry and fishing 39.1 40.7 32.5 22.9 20.9 
      Agriculture 24.4 19.6 13.8 10.1 10.7 
        Food crops 21.7 16.9 12.6 8.6 9.6 
        Cotton and other industrial agriculture 2.6 2.7 1.2 1.5 1.1 
      Livestock rearing 11.8 17.8 15.2 10.6 8.3 
      Forestry and fishing 2.9 3.3 3.5 2.1 1.9 
   Oil 0.2 0.2 11.8 38.2 45.7 
   Manufacturing 4.1 2.4 2.5 1.7 1.5 
      Cotton lint 2.1 0.5 1.0 0.4 0.5 
      Other industries 2.0 1.9 1.5 1.3 1.0 
   Crafts 6.7 6.2 5.4 3.4 3.1 
   Electricity and water 0.6 0.6 0.5 0.3 0.3 
   Services 45.0 46.3 43.5 28.7 26.5 
      Construction and public worksb 1.4 1.7 1.5 2.5 2.1 
      Transport and telecommunications 3.0 2.8 2.6 1.9 1.8 
      Trade 21.9 20.5 19.9 13.3 10.8 
      Public sectors 9.6 11.9 11.4 7.9 6.8 
      Other services 9.2 9.4 8.1 5.6 5.0 
a Estimates.  
b Including petroleum development works. 
Source : Bank of Central African States (BEAC) (2006), Études and Statistiques  (Studies and statistics ), No. 290, page 39;  
BEAC (2003), Rapport annuel  (Annual report), page 41;  and IMF, Staff Reports , various editions. 
 
Box I.1 (cont'd) Box I.1:  Oil revenue management in Chad  
In 1999, Chad entered into an  agreement with the World Bank  on the Chad-Cameroon Petroleum 
Development and Pipeline Project (Chapter IV(3)).  The agreement provided that income from this project 
was to be managed in a transparent manner and allocated mainly to poverty reduction projects.   The 1999 
Law on the management of oil revenue and its implementing regulations have codified the provisions contained in the agreement.  One of the implem enting regulations establishes a mechanism whereby 
revenue must be allocated to priority sectors;  any oil revenue surplus over and above the forecasted 
amounts is required to be paid  into a stabilization account. 
The Law provides that revenue from oil sales, net of administrative costs and debt-servicing charges, must 
be transferred to Chadian banks in  the following proportions:  10 per cent to be placed in trust in the Fonds 
des générations futures (Future Generations Fund), with the remaining 90 per cent distributed as follows:  
5 per cent for expenditure on development in the Doba oilfield;  80 per cent for education, health and social 
services, rural development, water resource management and infrastructure projects;  and 15 per cent to the 
Treasury current account.  Under the Law, only the Collège de contrôle et de surveillance des ressources 
pétrolières  – CCSRP (Oil Revenue Control and Supervision Board), made up of representatives of the 
Government, Parliament, Supreme Court and civil society, may make withdrawals from the Future 
Generations Fund.  
By the end of  2005, Chad had received transfers under the project totalling US$343.2 million, 
US$36.2 million of which had been paid into the Future Generations Fund.  Of the remaining 
US$307 million, US$245.6 million have been allocated to programmes funding road construction and rehabilitation, health and education.  Payments totalling US$15.3 million have been made to the oilfield and 
US$46 million to the 
general bud get. Chad WT/TPR/S/174 
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4. Chad is a member of the Central African Ec onomic and Monetary Community (CAEMC).  Its 
monetary unit is the CFA franc (franc of the Fina ncial Cooperation in Centra l Africa), which is the 
common currency of States members of the Central African Monetary Union (CAMU), one of the two 
unions making up the CAEMC.  The CFA franc is currently tied to the euro at a fixed parity: 
CFAF 1,000 = €1.52449017.5  The issuing body is the Bank of Central African States (BEAC), which 
manages the common monetary a nd exchange-rate policies of CAMU Member States, including 
Chad.6 
5. On 1 June 1996, Chad accepted Article VIII of the IMF's Articles of Agreement.7  The major 
common exchange restriction on CAEMC member countries concerns the outflow of capital to third 
countries (CAEMC non-members), which is subject  to administrative controls (backed up by 
substantiating documents) by the Ministry  responsible for finance and the BEAC.8  F u r t h e r m o r e ,  
export earnings and revenue from invisible transactions must be declared to the Ministry responsible for finance;  transactions involving an amount exceeding CFAF 5 million must be domiciled with a 
bank approved by the CAEMC and repatriated and surrendered to the BEAC (Chapter III(3)). 
                                                     
 
5 The CFA franc was anchored to the French franc at a fixed parity (adjusted in 1994) up until the 
introduction of the euro on 1 January 1999, although this did not entail any substantive change as regards arrangements in the franc zone (Decision of the Council of the European Union of 23 November 1998 
concerning exchange rate matters relating to the CFA franc and the Comorian franc (98/683/EC).  This same 
parity applies to the CFA franc (franc of the West Afri can Financial Community), which is the currency of West 
African Economic and Monetary Union (WAEMU) Member States.   
6 Monetary cooperation between Central African Monetary Union (CAMU) member countries and 
France dates back to the colonial era.  It was formaliz ed in 1959 and a new treaty was signed in 1973.  The 
BEAC is the result of the monetary cooperation agreement signed with France on 22 November 1972, 
supplemented by the transactions account convention of 1973. 
7 IMF, Press release No. 96/34, 25 June 1996. 
8 In accordance with Regulation No. 02/00/CEMAC/ UMAC/CM, payments relating to international 
transactions can be made freely and capital movements are free, with a few exceptions  subject to administrative 
controls (certain types of borrowing, loans and transactions relating to foreign movable assets exceeding CFAF 
10 million).  The import and export of gold and precious stones are subject to special regulations:  such 
transactions are free within the CAEMC, but outside  the CAEMC require authorization by the competent 
authorities. In January 2006, the Chadian Government amended the Law on the management of oil revenue.  The 
following changes were introduced:  the definition of priority sectors was broadened to include local 
government and security, with the possibility of making further changes to this definition by decree;  the 
Future Generations Fund was closed and US$36 million transferred to the general State budget;  and the 
share of royalties and dividends allocated to the general State budget was increased from 13.5 to 30 per cent.  These changes led the World Bank Group to suspend all disbursements, new credits and grants to 
Chad. 
In July 2006, the Government of Chad and the Worl d Bank announced the conc lusion of a new agreement 
whereby 70 per cent of Chad
's (oil and non-oil) revenue was to be allocated to priority poverty-reducing 
sectors, including measures to improve governance.  The new agreement lays down specific rules on the 
preparation of the 2007 budget and provides for the development by the Government of a revised Poverty 
Reduction Strategy, with a new medium-term public expenditure framework, by 2008.  Surplus resources 
are to be paid into a stabilization fund.  The Government has also undertaken to strengthen the Oil Revenue 
Control and Supervision Board (CCSRP) to ensure more effective control of projects financed by oil revenues.   
Source : Information provided by the World Bank and the Chadian authorities. WT/TPR/S/174 Trade Policy Review 
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(2) RECENT ECONOMIC DEVELOPMENTS  
6. Severe macroeconomic imbalanc es in the 1980s contributed towards plunging Chad into a 
prolonged recession.  In order to resolve these imba lances and restore growth, structural adjustment 
programmes were set up and, in 1994, the CFA franc was devalued by half.  The reforms did, to a 
certain extent, bring about improved economic pe rformance from 1995 to 2000 (Chart I.1).  The 
period 2001-2004 was marked by rapid economic grow th, boosted as of 2003 by the development of 
the petroleum subsector in spite of repeated dr oughts and the stagnation of world cotton prices. 
 
7. In order to ensure coherence between thei r national budgetary policies and the common 
monetary policy, CAEMC Member States have, si nce 1999, established macroeconomic convergence 
criteria and indicators and set up a multilateral su rveillance system under the responsibility of the 
CAEMC Executive Secretariat.  These criteria cu rrently include:  a positive primary fiscal balance 
(defined as total non-grant revenue minus total expe nditure excluding foreign-fi nanced investment);  
the non-accumulation of domestic or external governm ent arrears;  a total domestic and external 
public debt-to-GDP ratio of not more than 70 per cen t;  and an inflation rate not exceeding 3 per cent.9 
8. Within the framework of its PRSP, as of Oc tober 2004 the Government developed an Action 
plan for the modernization of public finance management (PAMFIP).  The PAMFIP covers budget 
preparation, implementation and control, includi ng services development, vocational training for 
executives, the fight against tax evasion and a broadening of the tax base.10  Fiscal revenue increased 
from 8.3 per cent of GDP in 1999 to 8.9 per cent in 2005 and is estimated to climb to 10.9 per cent of GDP in 2006, mainly owing to oil revenue.  Tariffs levied on imports represent around CFAF 
42 billion annually, a significant share of fiscal revenue.  Furthermore, budgetary outlays, as a 
                                                     
 
9 Directive No. 01/01/UEAC-094-CM-06 establishing macroeconomic criteria and indicators for 
multilateral surveillance. 
10 Republic of Chad (2005). -100.0  0.0 100.0 200.0 300.0 400.0 
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004-10-50510152025303540Chart I.1  
GDP growth rate and GD P per capita, 1993-2004  
GDP per capita 
Growth rate (right-hand scale)Euros a Per cent
a 
Source : ECUs until 1998 and euros as of 1999.  
BEAC, information online.  Cons ulted at:  http://www.beac.int. Chad WT/TPR/S/174 
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percentage of GDP, have declined since 2003 (Table  I.2), reflecting the sharp rise in oil GDP which 
has more than offset increased public investment  expenditure.  On the other hand, expenditure on 
wages and salaries and current government expendi ture on goods and services saw moderate growth 
from 1999 to 2004. The budget deficit excluding grants, which stood at 7.3 per cent in 2005 (3.7 per 
cent including grants), is still significant. 
Table I.2 
Main economic indicators, 1999-2005 
 1999 2000 2001 2002 2003 2004a 2005a 
Real GDP (percentage change) -0 .6 -0.1 11.5 8.5 14.3 34.1 8.4 
Contribution to growth, in real terms 
Agriculture, livestock, forestry and fishing -1.2 -0.9 3.6 -0.2 1.7 -1.7 2.7 
   Agriculture -1.7 -1.4 3.0 -0.7 1.1 -2.0 2.3 
      Food crops -2.1 -1.0 2.8 -0.8 2.0 -2.9 2.2 
      Cotton and other industrial agriculture 0.3 -0.4 0.3 0.1 -1.8 0.9 0.2 
   Livestock rearing 0.4 0.4 0.4 0.4 0.4 0.3 0.2 
   Forestry and fishing 0.1 0.1 0.2 0.1 0.2 0.0 0.2 
Manufacturing -1.6 0.3 -0.7 0.6 0.1 -0.6 0.8 
   Cotton lint -1.7 0.4 -0.7 0.4 0.0 -0.8 1.0 
Crafts 0.5 -0.5 0.2 0.4 0.0 0.4 0.2 
Oil 0.0 0.1 2.1 1.5 9.1 32.5 0.3 
Electricity and water 0.1 0.0 0.1 0.1 -0.1 0.0 0.1 
Services 2.0 0.9 4.7 4.0 4.0 4.2 3.7 
   Construction and public works 0.2 0.0 0.2 0.2 0.3 0.2 0.2 
   Transport and telecommunications -0.2 -0.2 0.4 0.3 0.2 0.4 0.4 
   Trade 0.3 0.4 2.3 2.5 1.4 1.2 1.0 
   Public sectors 1.9 0.4 0.9 0.8 1.5 1.9 1.0 
National accounts (percentage of GDP at current prices)        
Private consumption .. 89.0 77.9 75.2 63.5 43.5 36.3 
Government consumption .. 16.2 15.2 14.9 14.8 10.8 9.3 
Gross fixed capital formation .. 15.2 35.1 23.7 42.0 25.8 21.6 
Export of non-factor goods and services .. 20.0 19.2 17.5 25.4 50.5 54.4 
Import of non-factor goods and services .. 35.9 39.8 52.3 41.8 27.7 22.9 
         
Consumer Price Index (average change) -8.0 3.8 12.4 5.2 -1.8 -5.3 7.9 
        
External sector        
Current account (percentage of GDP) -11.2 -14.8 -33.4 -95.6 -56.0 -26.6 -20.7 
External reserves in months of imports, c.i.f.  3.6 4.3 2.3 1.2 2.2 2.2 2.0 
Nominal exchange rate (CFAF/US$) 615.7 712.0 733.0 697.0 581.2 528.3 527.5 
Real effective exchange rate (index 2000 = 100)b 96.6 100 111.1 112.2 111.5 105.0 107.9 
Price of Chadian oil (US$ per barrel, Komé, annual 
average)  n/a n/a n/a 22.7 27.5 28.3 41.5 
        
Consolidated government finance (CFAF b illion, current prices, end of period) 
Receipts 78.2 80.2 91. 7 110.0 133.1 217.5 .. 
Expenditure 158.6 200.4 218.2 285.6 329.2 378.4 .. 
   of which: subsidies and transfers 13.8 13.5 9.9 18.9 18.2 14.3 .. 
Total receipts as a percentage of GDP 8.3 8.1 7.3 8.0 8.4 9.3 8.9 
Total expenditure as a percentage of GDP 16.8 20.9 17.6 20.3 21.3 17.3 16.2 
Memorandum: GDP at current market price 942.8 986.6 1,253.5 1,385.3 1,581.9 2,331.3 3,088.0 
Fiscal balance (as a percentage of GDP)c -8.5 -12.8 -10.3 -12.3 -12.9 -8.0 -7.3 
Fiscal balance including grants (as a percentage of GDP) -5.5 -6.7 -4.9 -6.0 -4.4 -2.3 -1.0 
Total debt (US$ million)d .. 1,031.2 1,023.9 1,190.9 1,461.7 1,582.3 .. 
Total debt (as a percentage of GDP) .. 74.2 59.8 59.7 61.2 54.7 .. 
Table 1.2 (cont'd) WT/TPR/S/174 Trade Policy Review 
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 1999 2000 2001 2002 2003 2004a 2005a 
Financial indicators (per cent)        
Tender interest rate (end of period)  7.60 7.0 6.50 6.30 6.00 6.00 5.50 
Maximum bank lending rate 22.0 22.0 18.0 18.0 18.0 18.0 18.0 
Maximum bank deposit rate 5 5  5 5 5 5 5 
Money plus quasi-money (M2), annual varia tion  -4.0 18.3 23.2 23.8 -3.1 3.5 31.3 
.. Not available. 
n/a Not applicable. a Preliminary estimates. 
b An increase indicates appreciation.  
c A minus sign (-) indicates a deficit. 
d Total long-term debt, World Bank estimates. 
Source : BEAC;  and IMF, Staff Report , various editions.  
9. Pursuant to its Charter, one of BEAC's priority  objectives is monetary stability, in particular 
maintenance of a low inflation rate and a sufficient le vel of liquidity in its Member States' economies.  
Monetary and credit targets are set on an annual basis for each Member State as part of "monetary 
programming", which takes expected changes in th e macroeconomic framework into consideration.11  
The main instruments of monetary policy are the tender interest rate, money market operations and 
compulsory reserves (currently 5 per cent for demand  deposits and 3 per cent for term deposits in the 
case of Chad).  The issue of Treasury bonds by the governments of BEAC Member States, initially 
scheduled for 2004, has been postponed. 
10. Driven by petroleum investment, the money supply (M2) saw strong growth in 2000-2002, 
and again in 2005 and 2006 (+31.3 and +35.4 per cent, respectively) as a result, inter alia , of oil 
revenues and, in part, domestic credit , in particular credit to the economy.12  Net claims on 
Government between March and May 2006 also helped to increase the money supply;  the level of the 
statutory advance granted by the BEAC to Chad has risen following the recent increase in public 
revenue.13  This evolution of the money supply, coupled  with climatic variations affecting cereal 
harvests, explains the significant fluctuati ons in the inflation rate (Table I.2). 
(3) TRADE AND INVESTMENT PERFORMANCE  
(i) Trade in goods and services 
11. The exploitation of and surge in the prices of petroleum products have boosted Chad’s 
international trade and contributed to a sharp in crease in its average ratio of trade in goods and 
services to GDP from 58 per cent in 200 0-2001 to 102 per cent in 2005-2006.14  The sharp rise in the 
ratio was the result of a tenfold increase in annual exports from around €270 million in 2000-2001 
(prior to oil exploitation) to €2.7 billion in 2005-200 6, while GDP has multiplied by 3.2.  The level of 
this ratio downplays the real importance of foreign trade to the Chadian economy, given the significant share of informal trade, which, by defini tion, is not recorded in the statistics.  Trading 
operations traditionally constitute the livelihood of a large part of the population and alone represent 
over 10 per cent of GDP (Table I.1). 
                                                     
 
11 BEAC (2006a). 
12 BEAC (2006b). 
13 The Monetary Cooperation Convention of 1972 provides for the capping of direct advances from the 
BEAC to each Member State at 20 per cent of ordinary national budget revenues from the previous financial 
year.  This system of direct advances to governments is to be eliminated in the period 2004-2014. 
14 Trade statistics have been compiled on the basis of data from partner countries, given that the last 
edition of Chad's Yearbook of Foreign Trade dates back to 1997. Chad WT/TPR/S/174 
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12. The trade balance deficit (Table I.3) peaked in 2002 as a result of strong imports of capital 
goods related to oil exploitation, including the pipeli ne construction, before turning into a surplus of 
almost CFAF 704 billion (more than €1 billion) in 2004 thanks to pe troleum exports.  However, the 
worsening of the services balance deficit, attri butable to increased expenditure on transport and 
insurance and reimbursements relating to factor income in the oil industry ( inter alia ), meant that the 
2005 current-account deficit (20.7 per cent of GDP) was greater than its average level during the period 1995-2000 (prior to the exploitation of Chadian oil).  The overall trend is, however, towards an 
improvement in the current account, with deficits  of 22 per cent, 11 per cent and 10 per cent being 
forecast for 2006, 2007 and 2008. 
Table I.3 
Balance of payments, 2000-2005 
(CFAF billion) 
  2000 2001 2002 2003 2004 2005a   
A. Current account, net 151.7 - 422.0 -1,306.3 -744. 0 -334.8 -412.3 
   Balance of trade -40.2   -239.5   -904.7   -103.5   703.8   1,010.1 
      Exports, f.o.b. 130.2   138.3   128.7   349.3   1,157.7   1,599.3 
         Cotton 50.6   56.9   38.9   45.0   44.7   42.2  
         Live cattle 48.8   49.5   59.4   134.7   151.4   118.1  
         Petroleum    135.7   916.8   1,389.5  
         Gum Arabic 5.6   5.8   6.3   6.5   7.5   18.1  
         Other 25.1   26.1   24.1   27.5   37.4   40.8  
      Importations, f.o.b. -170.4   -377.8   -1 033.4   -451.6 -453.9   -589.3 
         Petroleum sector -59.8   -234.0   -832.0   -217.7   -108.2   -263.9 
         Non-petroleum sector -49.2   -49.3 107.3 113.4 215.2 -204.5 
         Public sector -18.9   -23.3   -23.8   -54.3   -59.2   -39.5 
         BEAC notes -19.2   -17.1   -25.8   -30.0   -20.5   -26.6  
         Other -23.3   -56.6 -4.0 -6.2   -0.6   -54.8 
   Trade in services, net 135.3   198.7   -420.3   -439.3   -813.6   -910.0 
      Freight and insurance -53.6   -118.6   -322.5   -145.6   -149.8   -193.3 
      Travel and tourism -29.7   -24.6   -38.1   -62.1   -67.6   96.6 
      Official services  13.2   14.5   15.5   1.3   -0.9   -1.3 
      Other private services  -52.6   -60.1   -61.9   -219.2   -339.6   -335.4 
      Other transport and insurance -11.1   -9.8   -13.3   -58.9 -255.7 -283.4 
   Revenue, net -12.3   -16.4   -41.5   -260.7 -341.0   -635.5 
      Employee remuneration -1.5   -3.9   -28.9   -99.8   -88.4   -83.3 
      Investment income -10.8   -12.5   -12.6   160.8 -252.6   -552.3 
         Interest on public external debt -8.8   -8.5   -10.0   -5.5 -8.7  -7.2  
         Interest on private external debt  -3.2   -4.2 -3.3 -156.0 -326.5  -628.8  
   Current transfers, net 36.0   32.8 60.4   57.3   115.9   123.2 
      Private 4.6   14.3   22.8   14.2   42.1   39.7 
     Public 31.4   18.4 37.4   43.0 73.7   83.5 
B. Capital transfers, net 33.9   34.8   59.0 81.1 89.4   63.7 
     Public 33.9   33.8   57.3 81.1 89.4   ..  
     Private 0.0   1.0   1.8   0.0 0.0   ..  
C. Financial account, net 124.8   406.8   1,299.5 579.2 196.8 430.5 
     Direct investment 81.7   337.1   644.1   414.2   246.6 323.3 
     Portfolio, net 0.1   0.0   0.4   0.3  -2.9   ..  
     Other investment, net 42.7   69.7   655.0   164.7 -47.9   107.2 
D. Errors and omissions -3.9   6.4   23.4   -9.7   -72.1   -58.5 
E. Overall balance 1.6   -6.2   38.1   -27.3   12.6   23.5 
.. Not available. 
a Estimates. 
Source : Information provided by the BEAC. 
13. In 2004, goods exports were mainly composed of four products (Table AI.1):  petroleum, 
which represented 80 per cent of the total (a round US$1,250 million), livestock (around 
US$250 million);  cotton (around US$75 million) and gum Arabic (around US$15 million).  The WT/TPR/S/174 Trade Policy Review 
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import basket is diversified and includes mainly transport machinery and equipment and chemicals 
(Table AI.2).  The import share of transport eq uipment has decreased sharply since 1995, whilst that 
of fuel has increased in spite of the exploitation of domestic petroleum resources, given the absence of 
local refineries.  Food imports fluctuate strongly, subject to the dictates of the climatic conditions. 
14. The United States absorbs around 60 per cent of Chad 's total exports, including most of its oil;  
Europe and Asia share the balance equally between them (Table AI.3).  Two thirds of total import 
values are from Europe, France being the foremost supplie r (Table AI.4).  Strong growth in trade with 
China has been recorded since 2002, Chad exporting ma inly oil, in addition to its rising exports of 
cotton lint, and importing miscellaneous manufactured articles.  Regional trade is at a very low ebb, 
although, according to some sources, informal tr ade with neighbouring countries (Libya, Niger, 
Nigeria, the Central African Repub lic and Sudan) is considerable. 
15. Services exports are mainly composed of travel  receipts and services supplied to foreign or 
international entities established in the country.  Im ports relate mainly to transport and insurance 
costs. 
(ii) Direct investment 
16. Net inflows of foreign direct investment (FDI),  which represented less than 0.5 per cent of 
GDP in the 1990s, climbed to 47 per cent of GDP in 2002 (€1 billion) as a result of petroleum 
investments (Table I.3).  FDI in 2003, 2004 and 2005 has been estimated by the BEAC at 
€631 million, €376 million and €493 million, respectively.  Recent direct investment has involved in 
particular the construction of a new brewery, the establishment of  a new mobile telephone operator 
(Chapter IV(5)) and the opening of the largest hotel (5-star) in Chad in N'Djamena.  
17. The measures envisaged to facilitate direct i nvestment and company creation in Chad (for 
example, the Single Window) have yet to be implem ented.  Overall, the economic environment is not 
particularly business-friendly. According to th e Integrated Framework mission report, current 
administrative requirements for setting up a co mpany – ranging from cumbersome procedures 
resulting in lengthy delays to formal and informal  payments – act as a deterrent and can reach such 
proportions as to constitute a drain on company profits for several years.15  Corporate tax, at 40 per 
cent of taxable profits, and personal income  tax, at 20-60 per cent, remain high.16  M o r e o v e r ,  t h e  
existence of frequent hotbeds of tension explains to a large extent the lack of interest in the country on 
the part of private investors.17 
(4) OUTLOOK  
18. Working on the assumption that the GDP contribu tion of petroleum resources is set to decline 
gradually, Government forecasts for real GDP grow th rates are 1 per cent for 2007, 1.1 per cent for 
2008 and -1.6 per cent for 2009.18  In the event of an improvement in the budgetary position and 
favourable weather conditions, th e prudent monetary policy of the BEAC could mean that 
Government forecasts of a fall in the rate of infla tion from close to 8 per cent in 2005 to 3 per cent in 
the period 2006-2009 are feasible.  An improvement in  the external current account and a reduction in 
public debt through debt remission under the HIPC Initiative are also envisaged. 
                                                      
15 World Bank (2004). 
16 Ministry of Finance, Directorate-General of Taxes (2006). 
17 Ministry of Commerce (2006). 
18 Ministry of the Economy, Planning and Cooperation (2006). Chad WT/TPR/S/174 
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19. The effective implementation of measures redistributing oil revenue to productive sectors, as 
planned by the Government, should foster grow th which is equitably distributed amongst the 
population.  In particular, the promised investment in transport infrastructure should help to improve 
lines of communication.  The planned investment  in irrigation and input supply should enable 
agriculture potential to be better harnessed, thereby raising the living st andards of the majority of the 
population.  New growth centres could appear, notab ly in energy and water supply, transport and 
telecommunications services, following the rehabil itation of these subsectors and an increase in 
consumer purchasing power.  All of the above is, ho wever, conditional upon the creation of a climate 
of sustainable socio-political stability essential to th e foreign investment inflows so sorely needed by 
the country to achieve growth coupled with poverty reduction.