The World Bank and IMF have offered to work with Chad and give it extra budget support in a last-ditch effort to stop the government tapping the profits from a big oil pipeline meant to benefit the poor.
The proposal, outlined in a letter obtained by Reuters, will be discussed in meetings this week in Washington between Chad's finance minister Abbas Mahamat Tolli and officials from the World Bank and International Monetary Fund.
The talks are aimed at trying to resolve tensions over the cash-strapped Chad government's plan to change a World Bank-backed oil revenue management law so it could take a larger share of oil profits from the 620-mile Chad-Cameroon pipeline, developed by a Exxon-Mobil-led consortium.
The talks took on greater urgency on Wednesday as Chad's President Idriss Deby, his leadership under threat from army deserters and elections next year, told supporters in the capital N'Djamena Chad should be allowed to change its laws.
"The government is right to bring some changes to law 001 (on oil revenue management). It is a Chadian law, initiated by Chadians, voted by our national representatives," Deby said in a speech in N'Djamena.
"I am jealous of our sovereignty. I will not allow anyone, even if they are a partner, to violate our national sovereignty. Do we need to be guided to the point where we are told how to manage our own affairs? We need aid, but we do not need guidance, particularly on this precise point (law 001)."
Deby said he had promised Chad's people that oil revenues would be managed openly and he pledged to keep his word.
In exchange for funding the $3.7 billion pipeline, the World Bank told Chad to pass a law ensuring that 10 percent of its proceeds would go into an overseas bank account, earmarked for poverty reduction programs.
If Chad were to change the law, it would deal a major blow to the credibility of the bank as well as to its biggest investment in Africa - one it billed a test case for its strategy for using oil investments to help the poor.
In the November 15 letter to Chad's Prime Minister Pascal Yoadimnadji, the No 2 officials at the World Bank and IMF - Shengman Zhang and Anne Krueger - said they were mindful of the difficulties Chad faced and of the need for flexibility.