IMF managing director Christine Lagarde yesterday approved a Staff-Monitored Programme (SMP) for the central African country covering the period April-December 2013.

An SMP is an informal agreement between a country’s authorities and IMF staff to monitor the implementation of economic policies. It does not entail any financial assistance or endorsement from the IMF’s executive board.

The IMF said that improved public financial management was a ‘critical plank’ of the SMP. Among the reforms planned for Chad is the establishment of a public audit office, which should be in place shortly.

The SMP will also focus on reducing reliance on emergency spending procedures, strengthening treasury functions, increasing the use of competitive tendering for government contracts and improving public debt management. According to the IMF, debt sustainability in Chad ‘remains a concern’, pending the outcome of renegotiations on large non-concessional borrowing from China’s Eximbank.

The SMP will also focus on building up Chad’s Poverty Reduction Strategy. This aims to improve living standards, increase access to job, ensure food security and encourage private sector development.

Despite the recent relative political stability in Chad, the IMF said the SMP faces ‘significant’ political and economic risks. ‘The regional security situation remains volatile, the economy is highly dependent on volatile oil revenue and climactic conditions, and the [public financial management] framework remains weak,’ the IMF said.