"We have been waiting for this day," IMF Managing Director Kristalina Georgieva said in a statement.
Sources familiar with the agreement said it would protect Chad if oil prices dropped again, while restoring confidence and opening the door to fresh resources. But they agreed that Chad's overall development needs were immense and eclipsed its external debt.
She said the debt treatment agreed by the creditors was consistent with the objectives of Chad's IMF-supported program, and should pave the way for completion of the first and second reviews that would enable disbursement of IMF funds.
Chad on Friday said it had reached a debt agreeement with Swiss commodities trader Glencore Plc. and other creditors. Sources said the deal called for some debt relief in 2024 in the form of a reprofiled debt service schedule, but added that it would not reduce Chad's overall debt level.
Creditors also agreed, contingent on oil prices and other factors, to stretch out debt-service payments beginning in 2024 to ensure that Chad's debt-service-to-revenue ratio fell below 14% in 2024 from the current level of 20%. After 2025, the ratio would be required to drop to 12.4%, said the sources.
The automatic mechanism would protect Chad if oil prices fell again, eroding revenues, they said. It was also needed to ensure continued IMF lending, which is possible only if a country is under the threshold for moderate risk for debt distress.
The agreement should pave the way for Chad to receive $145 million in funding from its IMF program, once the board approves the first and second reviews, probably around Dec. 22.
The announcement drew criticism from World Bank President David Malpass, who said he remained deeply concerned about Chad's longer-term ability to pay its $3 billion in external debts, given the absence of actual debt reduction.