2.6.2Budget allocation to
manufacturing, agriculture and education sector of Chad
Literature studies (Baninla et al., 2020; Chang et al., 2014;
Jerven, 2014; R. Mahmood & Jia, 2019) show that the oil discovery and
exploration improved the economic situation of the country and this also
positively impacted the non-oil sectors(Abosedra et al., 2019; Cash, 2012;
Malay, 2019;
Wegenast et al., 2019; Williams et al., 2017). The non-oil
reserves of Chad increased form the year 2015 to 2018, but a slight decline was
observed in the late 2018's. The improvements made in the economic sector
resulted in improving the budget allocation in different sectors including the
manufacturing, agricultural and education sectors. The spending on the
education sector in the year 2019 was 2.9 percent of the total spending and of
health sector, the total spending was 11 percent of the total budget. The
budget that was allocated to the manufacturing sector of the country had its 80
percent use in the wages of the workers and for the poverty reduction of the
country (IMF country report No. 19/259)
2.7 Oil Export revenue and
Economic Growth
The resource curse is a term used for countries that have rich
natural reserves but the overall economic growth is not good. And as a result
the country faces social and political struggles. Countries having a national
income which is highly dependent on the oil and mineral resources have a higher
chance of facing the resource curse. The list of such countries include Angola,
Sudan, Gabon, Libya, Nigeria and Chad. These countries are full of various
resources which have led to enormous revenues but have faced political and
economic problems along with that. As a result of this the economic growth is
slow overall. The main source of economic activities in Chad was livestock and
agriculture before the advent of oil production. In 2003 the oil industry of
Chad reached the international platforms. At that time the government received
a huge amount of revenues from it. Regardless of the huge sum of the amount it
was not spent on the educational or the health system nor it was employed to
eradicate poverty (Keenan, 2005; Kojucharov, 2007; Pegg, 2006). Thus the
country had to face various economic problems in the following years. In 2015
the United Nation Development program recorded that Chad was 185 out of the
total 188 on the Human Development Index.
There was a 39.8 percent increase expected in the poverty
rate of Chad in 2019. These statistics are taken from the World Bank. Studies
have shown that in the early years the oil production had a positive effect on
the economy of Chad; this is not true for the recent years. Due to the drop in
the oil prices the country had to go through a very low macroeconomic
performance. It has been studied that the GDP grew 1.6 % from the year 1990 to
the year 2000 (Behrends, 2008; Cash, 2012). This was the period when Idriss
Deby became the president and the oil projects for oil extraction were just
approved. In 2003 the production of oil started on a large scale. This helped
to increase the GDP by 33.6%. Chad had the highest growth rate globally in late
2004. In the start of 2016 the overall oil revenues dropped according to the
IMF. This was lower by 80% than the previous year. This caused many problems
for the government due to the cut in the annual budget. The country was clearly
running out of money and as a result the government had to reduce the budget in
2016. According to the studies the oil production and export revenues have
proven to be a disaster for the nation as far as the social and economic growth
is concerned (Abakar, 2018; Lopez-Calix &Pitigala, 2019; Nourou, 2020).
Regardless of this some experts have argued that the oil production contributed
to the economic growth in some ways during the time period from 2010 to 2012.
During these years the government had spent a part of the oil revenue on the
foundation of various educational institutes. The economy of Chad recovered a
little after the drop in oil prices in the year 2018. The growth was recorded
as 2.6 % of the GDP in 2018 as there was a little increase in the agricultural
production and in the prices of oil (Kablan &Loening, 2017; Omeje, 2017).
From then till 2019 a decrease was seen in the national income to 4.7 % from
6.6 %. The government is still working on mobilizing the revenue generated. Oil
industry is the main driving factor of the economy. In 2019 moderate growth is
expected as the oil prices are again increasing. The economy of the nation is
volatile and fragile. Unless the country is able to work on the development of
non-oil sectors like education and health there will be risks and threats for
the economy of Chad.
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