World Bank, Chad Reach Interim Agreement On Funding, Oil
Revenue Management
Contacts:
In Washington :
Marco Mantovanelli 202-458-7571
Mmantovanelli@worldbank.org
Timothy Carrington 202-473-8133
Tcarrington@worldbank.org
WASHINGTON, April 26, 2006—The World Bank Group and the Government of Chad have completed a third round of discussions on issues
related to the suspension of World Bank Group funding in Chad and the escrow account used for oil proceeds.
While the Government and the Bank are yet to conclude a comprehensive and final agreement, they have reached an interim accord. Based on
this, the World Bank has agreed to resume some loan disbursements for education, health, community development, HIV/AIDs, agriculture,
electricity, water and infrastructure.
As agreed, the Government of Chad is to pass a 2006 budget law that will specify that 70 percent of the oil revenues will be used for priority
poverty programs. This allocation excludes security spending, which is to be funded from the Chadian Treasury’s general revenues.
If the bill does achieve this, as soon as the Consortium submits payments owed into the escrow account, the Bank will release one third of the total
amount on deposit over each of the next three months, with the understanding that we will work on a further, more permanent agreement during
that period.
The Chadian authorities also agreed to parallel actions to strengthen the monitoring, transparency and accountability of not only direct but also
indirect oil revenues and development aid.
"Even before recent developments, the people of Chad were among the poorest of Africa, with the bleakest prospects. Our aim has
always been to help the Government improve the basic services Chad’s people desperately require, from HIV/AIDS projects to schools
and roads. Suspending aid was a difficult decision but one the Bank had to take given developments that undermined the original
agreement to ensure that resources went to benefit the poor people of Chad," said World Bank President Paul Wolfowitz.
"The Government of Chad has agreed to take steps to restore the confidence of the international donor community, including specifying
in a new budget law that 70 percent of oil proceeds in the escrow account will be used for poverty reduction. A final agreement is still to
be reached but I welcome the Government’s efforts to address these issues. We believe the steps outlined in this accord provide a way
forward to ensure that the people of Chad see the benefits of the aid and oil revenue their country receives," Wolfowitz said.
In early April, technical experts from Chad and the Bank, IMF, EU, and other bilateral partners carried out an assessment of budget expenditures
and needs. They reported serious gaps both in meeting urgent needs as well as problems in the management of resources.
In particular, there are significant new pressures from refugees and internally displaced people from conflict in the region. At one village, Goz
Beida, which was visited by the delegation, between 200 and 300 people are arriving each day, increasing tensions with the local population over
water, food and shelter.
In addition to these poverty pressures, the multi-agency team identified significant weaknesses in the management of resources and agreed with
Chad officials on a number of initiatives to improve transparency and accountability in procurement, budget and financial management procedures.
These include strengthening and expanding the role of the College, the independent body with oversight of the allocation and use of Chad’s oil
revenues for poverty projects.
Implementing these monitoring plans will provide greater assurance that public resources can be tracked and spent well. The Bank’s proposed
partial resumption of loan disbursements under approved projects will take place in parallel with the new procedures.
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