Chad agrees debt plan with creditors, including Glencore

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Chad becomes first country to agree deal under Common Framework

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Agreement expected to open way for more IMF funding

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Details of debt treatment have not been released

(Adds comment from Chad government adviser)

By Mahamat Ramadane

N'DJAMENA, Nov 11 (Reuters) -

Chad has reached a debt agreement with its creditors, including Swiss commodities trader Glencore, potentially paving the way for more funding from the International Monetary Fund (IMF).

The deal, outlined by Chad's finance minister Tahir Hamid Nguilin on Friday, is the first to be agreed under the Common Framework - a mechanism created by the Group of 20 major economies in late 2020 to help poor countries weather the fallout from the COVID pandemic. However, the framework was widely criticised for delays in granting debt relief.

The minister's statement confirms a Reuters report that creditors had reached an agreement in principle. It is also China's first participation in a finalised joint debt treatment deal with other creditors, a source close to the negotiations told Reuters.

"Chad is the first country to reach an agreement with its official and private creditors under the G20 Common Framework," Eric Lalo, head of sovereign advisory at Rothschild & Co and advisor to Chad's government told Reuters.

The "favourable outcome for Chad" of these negotiations will help the country access deeply needed funding from international financial institutions as well as address in advance potential debt sustainability issues, Lalo added.

Nguilin said in his statement the parameters of the debt treatment were in line with commitments made by Chad under its Extended Credit Facility (ECF) programme with the IMF as well as Common Framework principles, making it "possible to restore the sustainability of the public debt."

However, he did not specify terms of the debt relief deal.

A third of the central African country's external debt, which stood at $3 billion by end-2020 according to IMF data, is commercial and concentrated in an oil-backed loan from Glencore.

"We are pleased that all stakeholders have agreed on how Chad's external debt should be treated," a Glencore spokesperson said in an emailed statement.

Chad said the agreement with both bilateral and commercial creditors will allow for another disbursement from its $572 million, four-year ECF programme by end-2022, pending approval from the IMF.

FIRST COMMON FRAMEWORK DEAL

Apart from Chad, Ethiopia and Zambia also sought a debt restructuring under the G20 Common Framework.

World Bank and IMF officials, as well as Western finance officials, have grown increasingly frustrated about what they see as foot-dragging by China in addressing debt issues, despite its role as the world's largest bilateral creditor.

China has tended to offer debt relief by extending maturities rather than accepting writedowns on loans. Beijing has

rejected claims

that it was to blame for delays in cases such as Zambia's debt restructuring.

Chinese loans make up a small portion of Chad's external debt at $291 million, according to IMF data.

Chad was widely expected to be first to reach a framework deal due to the mix of its external creditors. It agreed to a debt relief deal in principle with official creditors last year, though an agreement with the Glencore-led private creditors proved elusive until now.

In October, the country's bilateral creditors - China, France, India and Saudi Arabia - said in October the country did not currently require debt relief given higher oil prices, but pledged to reconvene and offer Chad help if needed.

The IMF said earlier this month that it could not make more disbursements to Chad from the ECF program that began in 2021 until a "contingent" debt relief deal was agreed by creditors.

Neither the IMF nor the Paris Club were immediately available for comment on Friday. (Reporting by Mahamat Ramadane in N'Djamena and Karin Strohecker in London, Writing by Nellie Peyton and Rachel Savage, Editing by David Goodman, Jane Merriman and Toby Chopra)