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BOOSTING SHARED PROSPERITY IN CHAD
• Increasing competition in oil and mining exploration and production markets. The government should consider reforming its oil and mining licensing policy, which has so far relied on the first-come, first-served principle, without actively promoting prospective acreage. Current investors are either large corporations that control all the production in the country or very small companies that appear undercapitalized and are not aggressively pursuing activities on their blocks. Targeted licensing and promotional strategies—coupled with improved sector oversight capacity—are needed to foster further development of the sector and ensure acreage turnover and activity (World Bank 2019b).
ACHIEVING ADEQUATE MACROFISCAL MANAGEMENT AND A BUSINESS-FRIENDLY ENVIRONMENT The lack of fiscal space is a big challenge to achieve fiscal sustainability in the coming years. Chad is no longer benefiting from the substantial oil windfall revenue it did between 2008 and 2014, and the fiscal situation has been deteriorating under the COVID-19 pandemic. Oil revenues, by far the main source of public revenue, declined as a share of total revenues from 63.8 percent in 2005–14 to 36.9 percent in 2015–19, and are projected to fall further in the coming years. The country’s fiscal policy stance has largely been procyclical. Procyclicality, coupled with the absence of a fiscal anchor, has resulted in insufficient public savings for policies aimed at stabilizing the economy and achieving intergenerational equity. The country’s fiscal deficit (excluding grants) was significant and averaged 2.6 percent even during the oil price boom of 2005–14, before it widened to 3.4 percent in 2015–19. Chad’s fiscal framework needs to be addressed to ensure its sustainability.
Strengthening non-oil revenue mobilization and implementing relevant PFM measures To strengthen non-oil revenue mobilization and the implementation of relevant PFM measures, the authorities should consider the following: • Improving tools and policies for non-oil revenue mobilization. Revenue collection remains low by regional and global standards. Low tax collection can be attributed to multiple factors, with the most prominent being weak tax administration, the large size of the Chadian informal sector, the proliferation of tax exemptions, a nonexistent value-added tax (VAT) refund mechanism, and a narrow VAT base resulting from the abundance of goods and services exempt from taxes or taxed at a reduced rate. Providing the tax administration with adequate physical and information technology (IT) infrastructure (building, furniture, IT system, and so on) and investing in HRM could ensure its adequate performance. Simplifying business registration processes and tax legislation, as well as improving transparency and accountability in the relationship between tax authorities and taxpayers, could contribute to efforts aimed at reducing the informal sector. Ensuring information sharing between the different administrations (tax, customs, land, and so on) through computerized processes would help broaden the tax base by identifying businesses not registered for tax purposes. To collect more revenues, the
