Chad

Oxford Economic Country Briefings, Sep 9, 2008

* As a condition for its assistance, the World Bank insisted on a law (the Petroleum Revenue Management Law) that required 80% of the oil revenues to be spent on education, health, infrastructure and other social welfare projects. It was hoped that this would avoid the waste and corruption prevalent in other African oil producers (in 2005, Transparency International rated Chad as the most corrupt country in the world, along with Bangladesh).

The deal was seen as a new approach to ensure that authoritarian governments spend income from commodities on alleviating poverty rather than enriching the elite. However, in 2006 the government amended this law and the World Bank responded by freezing the offshore escrow account. This aggravated the country's financial problems, but under a July 2006 agreement between the government and the World Bank 70% of the budget was supposed to be spent on poverty reduction programmes and a stabilisation fund was set up to provide for long-term growth. The government pledged to enhance transparency and accountability and to support the independent oil revenue oversight authority. But little progress is being made and Cad's relations with the World Bank have soured.