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Contributions from
the Column
Monitor
Tsunami relief: Too much of a good thing
Merits and limts of contract farming
EU sugar regime: Double-edged pledge
Afghanistan’s drug cultivation at a record high
US government agency assesses Millenium Challenge Account
More votes for emerging nations at IMF
Oil: World Bank and Chad reach agreement
Slow progress in fight against desertification
Private sector: Making money in peace
10/2006
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[ Oil ]
World Bank and Chad reach agreement
For the time being, the World Bank and the government of Chad have settled their dispute over the use of oil revenues. In mid-July, they signed a memorandum of understanding, according to which 70% of the Chadian 2007 budget will be spent on poverty-reduction programmes. Furthermore, the government wants to draw up a Medium-Term Expenditure Framework and a new strategy for reducing poverty by 2008. On that base, a new law on the use of oil revenues is to be adopted. Revenues exceeding the framework’s outline are to be invested in a stabilisation fund for future use.
At the end of 2005, Chad had amended its law on the use of oil revenues. That step led the World Bank to suspend cooperation with the country. In April, both sides agreed on a negotiation process, which resulted in the memorandum now signed.
World Bank President Paul Wolfowitz said the agreement respects both the government’s wish for more flexibility in public expenditure, as well as its obligation to do more to reduce poverty. Critics, however, regard the paper as worthless, they consider the definition of “poverty reduction” too vague. According to the Bank’s website, this sector had been “extended to include spending to improve governance.” The critics also bemoan that the memorandum is not binding, and does not provide for any sanctions should Chad not stick to the commitments. Wolfowitz stressed there were “very important additional steps that need to be taken to implement this agreement”.
Thanks to the oil revenues streaming in and his disputed re-election in spring, Chad’s president Idriss Déby feels strengthened. He makes no secret of striving for even more leeway for using oil revenue in future. In late August, he threatened to expel two oil companies, Exxon from the USA and Petronas from Malaysia, from Chad unless they paid more taxes. At the same time, he announced that, instead of those two companies, a yet-to-be founded state-run company would control the country’s oil production in future. (ell)
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