External Debts and Real Exchange Rates in Developing Countries: Evidence from Chad

The objective of this work is to analyze the effect of external debt on the real exchange rate in Chad from 1975 to 2014. The generalized method of moments is used. Findings show that external debt positively and significantly affect the real exchange rates at 5% significant level. Moreover, debt servicing affects negatively and significantly real exchange rate. The main recommendation goes to Chadian government; it should adopt a budgetary policy, in such a way to reorient its debt towards economic sectors that are able to boost economic growth; and reinforce strategies that contribute to re-equilibrate industrial activities.