S&P assigns 'B-/B' sovereign ratings to Chad with stable outlook

S&P Global Ratings has assigned the Republic of Chad a B-/B sovereign rating with a stable outlook, highlighting the country's progress in economic reform post-political transition and its unique challenges due to a heavy reliance on oil exports and regional security concerns. Sebastien Boreux, a Sovereign Analyst at S&P Global Ratings, recently provided insights into the rationale behind this rating and the outlook for Chad's economy. B- is considered a highly speculative credit rating, indicating significant risks and vulnerabilities. Chad faces hurdles such as a low level of development, security threats from neighboring countries, and a dependency on oil for economic activity, budget revenues, and exports. Despite these challenges, Chad's push for economic diversification and its membership in CIMAC contribute to macroeconomic stability. Furthermore, Chad's debt profile has improved after successfully restructuring its debt under the G20 framework, reducing external commercial debt and lowering costs. This limits risks and supports the country's credit position. Regarding fiscal space, the restructuring has provided Chad with more room to make investments in capital projects. However, enhancing non-oil revenues is crucial for sustainable economic growth. The country's development plan focuses on modernizing agriculture and boosting industry, particularly in mining, agribusiness, and textile sectors. Although Chad faces security concerns due to its position in the Sahel region, the effectiveness of its armed forces and support from international partners such as France mitigate some risks. S&P Global Ratings acknowledges both upside and downside scenarios for Chad's economy, with the current stable outlook balancing these factors. Monitoring the oil market's performance and security situation will be key factors in evaluating Chad's future performance. While risks exist, Chad's efforts towards economic diversification and debt restructuring demonstrate a commitment to building a more resilient economy. Despite the challenges ahead, Chad's stability and potential for growth remain at the forefront of the country's economic landscape.