Chad is experiencing a rather mixed socio-political situation that impacts its economy and hinders its growth in several ways. However, forecasts from international and regional institutions predicted a growth of 5.2% in 2024, which would rise to 5.3% in 2025. The economic situation in Chad is marked by dependence on the oil sector, which accounts for over 80% of public revenues and 40% of GDP. After a recession in 2020 and 2021, linked to the COVID-19 pandemic and falling oil prices, the country was expected to see a recovery between 2022 and 2023, thanks to rising crude prices and the implementation of structural reforms. The budget deficit is expected to remain controlled at less than 3% of GDP.

**Recent Macroeconomic and Financial Developments**
The economic growth rate was 4.3% in 2023, compared to 3.4% in 2022, driven on the supply side by the oil sector (+13.3% in 2023) and on the demand side mainly by net exports (+7.4% in 2023). Inflation decreased from 5.8% in 2022 to 4.8% in 2023, above the 3% target of the Economic Community of Central African States (ECCAS), fuelled by high food prices (18.8% at the end of December 2023). However, it is noted that Chad continues to face significant challenges, including combating corruption, regional insecurity, and oil price volatility. All these factors make it even more difficult for the government to meet development challenges.

The budget balance, which has been in surplus since 2022, stands at 4.8% of GDP in 2023, due to an exceptional increase in oil revenues. The debt-to-GDP ratio was 20.5% in 2022. The country benefited from the G20 Debt Service Suspension Initiative and, in November 2022, reached a preliminary agreement through the G20 Common Framework on nearly $3 billion in debt. In 2022, public debt service fell to 5.7% of GDP, and the risk of over-indebtedness is expected to be moderate in the medium term. The current account surplus improved, rising from 5.9% of GDP in 2022 to 1.8% in 2023, thanks to strong growth in oil exports. The banking system remains fragile. Non-performing loans accounted for 39.7% of total bank loans in 2023, up from 36.1% in 2022, and the risk coverage ratio was 5.8% in 2022, down from 9% in 2021. The national poverty rate is 42.3%. The unemployment rate was 18.5% in 2018, according to the National Institute of Statistics, Economic Studies, and Demographics of the country. Due to the COVID-19 pandemic, the extreme poverty rate rose from 31.2% in 2018 to 34.9% in 2021 and 35.4% in 2023, according to the World Bank. Despite mixed results, economic growth in Chad has shown positive signs in recent years.

**Outlook and Risks**
Economic prospects remain favourable, with growth for 2024 projected at 5.2% and expected to rise to 5.3% in 2025, thanks to the dynamism of the oil sector. On the demand side, the drivers of growth are investment and exports. Inflation could drop from 3.4% in 2024 to 3.2% in 2025, remaining above the ECCAS target of 3%. The budget balance is expected to be in surplus, at 2.2% in 2025. During the same period, the current account balance is also expected to remain in surplus, at 0.8% this year, due to increased oil exports. The main risks to medium-term macroeconomic prospects include potential tensions following the presidential election on May 6, 2024, insecurity in sub-regions, volatility in global oil prices, global geopolitical crises, and the effects of climate change. However, with the political agreement reached between the government and the opposition to chair the government, political stand-by is expected in Chad, even if there are still some possibilities of violence. The review by the International Monetary Fund’s Board of Directors in 2021, supported by an extended credit facility, will further strengthen the macroeconomic framework, increase the mobilization of non-oil budget resources, and improve debt sustainability.

**Reform of the Global Financial Architecture**
From 2005 to 2023, agriculture accounted for nearly 50% of GDP, followed by services and industry. Economic diversification is now at the heart of the country’s development strategy, particularly in the agricultural sector, which has immense potential for creating value chains. In 2022, the agricultural sector (agriculture and livestock) accounted for an average of 25% of GDP and employed 69% of the workforce. Services represented 21% of employment, and industry 9.6%. However, marked deficits in agricultural production, energy, transport, and infrastructure development pose major obstacles to inclusive and sustainable growth. Additionally, there are constraints related to climate change, which affects the ecological balance of certain regions of the country, particularly arid areas. To finance and accelerate structural transformations, the country could leverage its enormous natural capital, estimated at $75.4 billion, to mobilize more international financing. Better access to public and private climate financing (green bonds), substantial concessional resources, and innovative financing, such as partial risk guarantees, would help the country meet the enormous financing needs of the National Development Plan 2024–2028, estimated at $22.25 billion, of which $4.33 billion needs to be raised from the international financial community.

**Employability in Chad**
The unemployment rate in Chad decreased to 1% in 2023, compared to 1.10% in 2022. The unemployment rate in Chad averaged 0.87% from 1991 to 2023, reaching a historical high of 1.70% in 2020 and a historical low of 0.60% in 1992, according to the International Labour Organization.

**Outlook**
Chad continues to face challenges, but economic prospects remain generally favorable. Economic growth is projected to be 5.3% this year, supported by the dynamism of the oil sector. Additionally, it should be noted that Chad is among the countries with full access to the U.S. market through AGOA, covering more than 6,200 products. If the new Trump administration’s policy on AGOA does not change, the country could continue to benefit from this facility. In the textiles and garments sector, Chad could even import fabrics, manufacture clothing locally, and export them to the United States duty-free while fully benefiting from AGOA mechanisms. However, some entrepreneurs claim that Chad seems to do everything to prevent them from taking advantage of this U.S. mechanism. Nevertheless, this can change if there is a will. The question is: What should Chad do in 2025 to utilize AGOA, if it is maintained, to derive significant benefits from this agreement?

Indeed, it is estimated that if the government invested only 40 billion FCFA over two years in key sectors identified for AGOA (textiles, garments, sesame, gum arabic, natron, organic meat, smoked and dried organic fish, leather value chains, etc.), it could create 15,000 industrial jobs and generate between $300 – $350 million annually in non-oil export revenues…