CHAD

RISK RATING
High
Default High Risk Score 7.50
Normal Average 6.15
Weighted Average 5.88
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Chad’s attempts to delay debt repayments must be viewed in the context of its broader economy which has been hit hard by oil price volatility, recurrent droughts, growing insecurity across all its borders, and rising refugee numbers. This situation will almost certainly feed into anti-government unrest ahead of presidential and legislative elections in 2021. Chad is also fighting off cross-border threats emanating in the south, north and east. Coupled with rising anti-government sentiment and overstretched security forces, President Idriss Déby’s government faces serious instability risks. The lack of political change coupled with the implementation of austerity measures has resulted in numerous protests and strikes over the last years. Falling state revenues indicate not only higher risk of civil unrest and associated threats to political stability, but also acute contract risks as the cash-strapped government seeks to extract greater revenues from extractive sectors.

  • President Idriss D√©by and his PSM party have dominated Chadian politics since rising to power via rebellion in 1990. D√©by has gone to great lengths to consolidate his position ‚Äď including amending the constitution in 2018 to extend his tenure which means he can technically remain in power until 2033. Such measures and delays to elections have been coupled with a broad social-media ban to silence critics and suppress freedom of expression. Violent unrest and public sector strikes are likely ahead of elections in 2021. Meanwhile, attention will gradually shift to the eventual succession of President D√©by, whose departure would leave a destabilising vacuum in the highly centralised power structure.
  • Severe security risks emanate from frequent anti-government protests and an insurgency around Lake Chad. Ongoing insurgencies in the border areas to the south and north raise the risk of war and terrorism, including in the capital. While D√©by is expected to weather these challenges, particularly given extensive support from France, such developments have highlighted significant weaknesses in the political and military structures of Chad ‚Äď once perceived to be some of the strongest in the region. Anti-government sentiment has mounted in Chad not only because of the political changes but also the implementation of austerity measures. A key priority for Islamist insurgents is to retain control of long-time smuggling routes to boost revenue flows and ensure freedom of movement of militants travelling between Libya and the Lake Chad region.
  • The macroeconomic situation has deteriorated significantly, prompting Chad to rapidly seek debt service relief from the IMF, commodity traders, and other private creditors. Debt relief has come at a critical time for Chad, as its macroeconomic outlook has deteriorated significantly. In 2020, Chad approached Glencore to suspend payments on its oil-for-cash loan. Moreover, Chad has resorted to using cattle to repay debt to Angola in further signs of dwindling resources. Chad spends a 10th of its income paying external creditors. Chad‚Äôs risk of external and overall debt distress, according to the IMF, is therefore high and is partially compounded by a ‚Äúlarge, unexpected increase in public debt the last five years‚ÄĚ ‚Äď indicative of the economy‚Äôs fragility to external shocks.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
6.5
Expropriation, Nationalisation, Confiscation & Deprivation
4.0
Contract Frustration & Breach
5.0
Taxation
6.5
Bribery & Corruption
6.0
Regulatory Burden
6.0
Strikes, Riots & Civil Commotion
6.5
Security
6.5
Sovereign Default
7.5
Economic Volatiliy
7.0

Risk Rating Scale (small)

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