Chad Plans Salary Cuts as It Battles to Service Glencore Loan

CHAD (Capital Markets in Africa~) – Chad plans to reduce the salaries of some civil servants by almost half as the country battles to meet debt commitments.

The proposed cuts of 5 percent to 45 percent for some public-sector workers will enable the landlocked nation to comply with a wage ceiling agreed under a bailout with the International Monetary Fund, Finance Minister Abdoulaye Sabre Fadoul told reporters Thursday in the capital, N’Djamena. The Washington-based lender approved a $312 million extended credit facility for Chad in June as the country is looking to restructure its obligations to creditors, including a loan from Glencore Plc that stands at more than $1 billion.

“If this effort isn’t made, Chad risks losing its partners,” Sabre said. “The situation that Chad is going through must be of concern to everyone.”

Chad, with few sources of foreign exchange other than oil, is one of the most underdeveloped countries in the world, ranking 186th out of 188 in the United Nations Human Development Index. Out of $271 million in oil-sales revenue in 2016, debt-service costs paid to Glencore was $231 million, which left only $40 million to the treasury, according to the IMF.

Workers “totally reject these cuts” and will embark on protest action if the reductions are implemented, Gounoug Faima Ganfare, secretary general of the main union, said in a statement on Thursday.

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director of Glencore.