Chad’s state oil company loaned nearly $1.45 billion (1.18 billion euros) from Glencore in 2014, with the backing of four banks. By FABRICE COFFRINI (AFP/File)
Chad announced Wednesday it had struck a deal with Swiss mining giant Glencore to restructure debt of more than $1 billion from a cash-for-crude-oil loan.
The poverty-stricken west African nation’s state oil company loaned nearly $1.45 billion (1.18 billion euros) from Glencore in 2014, with the backing of four banks.
The loan was to be repaid with crude oil assets, but Chad’s economy has since been badly hit by a downturn in the price of oil exports.
The two sides finally signed a renegotiated agreement on Wednesday, Chad’s finance ministry said in a statement.
The deal includes a “two-year grace period” for the country to repay its debt, a 12-year extension of debt maturity and a reduction of the interest rate from 7.5 percent to two percent.
It will also involve the total supply from the country’s refinery near the capital N’Djamena.
A source close to the matter said Chad negotiated for seven months to restructure the debt, which N’Djamena says now stands at $1.36 billion.
The same source said the agreement was a “necessity” for Chad to continue receiving funds from a stabilisation programme by the International Monetary Fund (IMF), which opened up a $312 million credit line last June.
“This restructuring agreement makes it possible to guarantee the sustainability of our external debt and to ensure the financing of our three-year program with the IMF,” said the finance ministry statement.
Chad has cut public spending to try and meet the terms of the IMF programme, prompting strikes and protests when it halved civil servants’ bonus pay in January.
The austerity programme has increased social tension in a country where nearly 40 percent of the population lives below the poverty line, as well as anger towards President Idriss Deby, in power since 1990.