Government denounces move to freeze oil account

The Chadian government has reacted angrily to Citibank’s freezing the escrow account for the country’s oil revenues - a move resulting from Chad’s recent changes to poverty reduction laws integral to a loan agreement with the World Bank. “It is inadmissible that a country be blocked from accessing revenues generated by the sale of its own natural resources,” Chad Finance Minister Abbas Mahamat Tolli said in a communique on Friday. The World Bank last week halted all new loans to Chad and suspended the disbursement of US $124 million already earmarked for the country, after the government scrapped key parts of a law designed to ensure that oil profits be used to help the poor. Citibank’s action is the automatic consequence as laid out in Chad’s agreement with the World Bank, Bank spokesperson Marco Mantovanelli said on Friday. The poverty reduction measures - including a trust fund for future generations - were required by the World Bank for support of the US $3.7-billion oil pipeline that snakes from southern Chad to a mooring buoy in the Atlantic Ocean off Cameroon. Finance minister Tolli in the press statement said freezing the escrow account was “totally unjustified,” adding that the government “will take appropriate action to reclaim the legitimate rights of the Chadian people.” The Chad-Cameroon oil project - run by an ExxonMobil-led consortium - was touted as a model for ensuring that a country’s oil wealth be used for improving the lives of the poor. In modifying its oil revenue management law, Chad did away with the “future generations fund” and opened the way for funds destined for poverty reduction to go to state security. The Chadian government had said it needed to tap more petrodollars now to tackle a fiscal crisis and increasing instability in the country. But the World Bank said the government’s move to change the ground-breaking legislation was a “material breach” of the loan agreement. Bank officials say the lender is still open to talking with the Chad government to seek a solution.