Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE FILE L INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR A SECOND URBAN DEVELOPMENT PROJECT May 9, 1979 Report No. P-2538-TUN This document bus a restricted distrbuion and may be used by recipients only in the performnuce of their official dutles. Its contents may not otherwise be diswimed witbout World Bank authorization.
Currency Unit Tunisian Dinar (TD) The exchange rate of the Tunisian dinar (D) is floating. The rate used in the staff appraisal report, which approximates the current rate, is: US$ 1 TD 0.420 TD 1 - US$2.38 WEIGHTS AND MEASURES 1 meter (m). 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 sq. kilometer (km 2 ) = 0.386 sq. miles (mi 2 ) 1 hectare (ha) = 2.47 acres (ac) 1 liter (1) = 0.2642 US gallons 1 metric ton (m ton) = 2,205 pounds (lb) Fiscal Year January 1 to December 1 Abbreviations BDET CIMER CPSCL CPU MPU ONAS OTTEEFP SNIT SONEDE STB STEG Banque de Developpement Economique de Tunisie Constructions Individuelles de Maisons Evolutives Rationalisees (Site and Services Developments in Sfax) Caisse de Prgts et de Soutien des Collectivites Locales (Fund to Support Local Communities) Central Project Unit Municipal Project Unit Office National d'assainissement (National Sewerage Authority) Office des Travailleurs Tunisiens a l'etranger de l'emploi et de la Formation Professionnelle (National Employment Office) Societe Nationale Immobiliare de Tunisie (National Real Estate Company) Societe Nationale d'exploitation et de Distribution des Eaux (National Water Company) Societe Tunisienne de Banque Societe Tunisienne de l'electricite et du Gaz (National Electric and Gas Company)
REPUBLIC OF TUNISIA FOR OFFICIAL USE ONLY SECOND URBAN DEVELOPMENT PROJECT Loan and Project Summary Borrower: Beneficiaries: Amount: Terms:' Relending Terms: Project Description: Republic of Tunisia The Municipalities of Tunis and Sfax, Societe Tunisienne de Banque (STB) and the District of Tunis US$19.0 million equivalent Seventeen years including four years of grace with interest at 7.9 percent per annum The Government would make $7.1 million of the Bank loan available as budgetary allocations to the Ministries of Planning, Public Health, Education, Agriculture, Public Works, and Industry, Mines and Energy, and to the District of Tunis; $11.4 million would be on-lent to the Municipalities of Tunis and Sfax through the Caisse des Prets (CPSCL) and $0.6 million would be on-lent to STB, both on the terms of the Bank loan. Government would bear the foreign exchange risk. The major objective of the proposed project is to develop and implement low cost solutions to Tunisia's urban problems, particularly in the areas of shelter, social and infrastructure services and employment, within the context of an institutional framework designed to effectively carry out this project and to plan and implement future similar projects. The project would be implemented in Tunisia's two largest cities, Tunis and Sfax, and would consist of: (i) comprehensive upgrading in five low-income settlements; (ii) site and services; (iii) education facilities in low-income areas; (iv) a small business assistance program; (v) improvements in solid waste collection and disposal; (vi) improvements in traffic conditions; and (vii) technical assistance for project implementation, institution building and studies. About 40 percent of the population expected to benefit from the project have incomes below the Bank-defined urban poverty threshold. About 43 percent of total project cost would reach this group. Risks related to the technical aspects of the project are minimal. Other risks relate to the continuation of Government commitment to implement the project, coordination among the various agencies responsible for carrying out the project, and the full recovery of project costs. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
- ii - Estimated Cost: ----------US$ Million---------- Local Foreign Total Upgrading 13.0 9.0 22.0 Site and services 4.3 3.0 7.3 Small business assistance 0.6 0.6 1.2 Solid waste collection and disposal 1.3 2.2 3.5 Education services 0.5 0.2 0.7 Traffic improvement 0.4 0.4 0.8 Technical assistance 0.3 0.9 1.2 Administration 0.9 _0.9 - Total base cost 21.3 16.3 37.6 Physical Contingencies 1.1 1.0 2.1 Price Contingencies 2.6 2.7 5.3 TOTAL 25.0* 20.0 45.0 * Of which $5 million represents taxes. Financing Plan: ----------US$ Million---------- Local Foreign Total Bank - 19.0 19.0 Dutch Bilateral Aid 1.4 1.0 2.4 Government of Tunisia 16.1-16.1 Municipality of Tunis 4.9-4.9 Municipality of Sfax 2.0-2.0 STB 0.6 _0.6 - Total 25.0 20.0 45.0 Rate of Return: 28 percent for upgrading and site and services, calculated on $29.4 million, representing 65 percent of total project cost. Staff Appraisal Report: No. 2372-TUN of May 8, 1979.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR A SECOND URBAN DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Tunisia for the equivalent of US$19.0 million to help finance a Second Urban Development Project. The loan would have a term of 17 years, including 4 years of grace, with interest at 7.9 percent per annum. A portion of the proceeds of the loan would be relent to the Municipalities of Tunis and Sfax ($11.4 million) and the Societe Tunisienne de Banque ($0.6 million) on the terms of the proposed loan. A loan of about $2.4 million equivalent, made to the Tunisian Government in 1976 by the Kingdom of the Netherlands would be used to finance upgrading works in Tunis. PART I - THE ECONOMY 1/ 2. An updating economic mission visited Tunisia in June 1978; its report entitled "Economic Position and Prospects of Tunisia" (No. 2201-TUN) was issued on November 16, 1978. Country Data sheets are attached in Annex I. 3. Tunisia is rather poorly endowed with agricultural resources. Much of the country is arid or semi-arid. Agricultural activity is concentrated along the coast, in the Northwest, and in a few oases, but continues to play an important role in Tunisia's economic structure. During 1970-77 agriculture generated some 17 percent of GDP and accounted for some 40 percent of total employment. The main crops are wheat and olives. These crops are subject to sharp annual output fluctuations because of irregular rainfall in the case of wheat and a natural production cycle for olives. Tunisia's most important raw materials are phosphates, petroleum and natural gas; except for phosphates, known reserves are relatively small. Industrial development, although rapid, has been hampered by shortages of industrial entrepreneurs, the limited size of the domestic market and difficulties in marketing Tunisian products abroad. The most important sector is services, which, during 1970-77, generated about half of GDP, a quarter of that sector's contribution consisting of government services. Tourism has developed rapidly during the 1970s. Workers' remittances have become a significant item in the balance of payments, generating about 10 percent of current account receipts during 1970-77. 4. Tunisia's economy has performed remarkably well during the period 1970-77. Real GDP grew at an average annual rate of 8.6 percent, nearly twice as fast as during the 1960s. Per capita GNP in 1977 reached $860, which in real terms is some 72 percent above its level of 1969. According to the 1978 World Bank Atlas, Tunisia was one of the few countries in the world whose per capita GNP during 1970-76 increased by 6 percent and more. 1/ Substantially unchanged from the President's Report for the Second Urban Sewerage Project (No. P-2485-TUN), approved March 22, 1979.
5. This performance was partly attributable to improved economic management and partly to fortuitous factors. During the 1960s, Tunisia's policy orientation centered on an inward-looking investment strategy based on state predominance in all important economic activities. Economic management relied on a complex system of government regulations. In 1969, new policy orientations were announced, which, during the 1970s, resulted in change towards a more open and export-oriented economy in which private initiative could play an increasing role. A number of decontrol measures were introduced, albeit slowly. Overall, the new policy orientation proved highly beneficial for the country. In addition, the economy benefited from favorable weather conditions resulting in good agricultural crops while the change in world market prices during 1973/74 brought sizeable windfalls as the terms of trade improved sharply. This allowed domestic savings to increase to 22 percent of GDP during 1970-77, compared with 15 percent during the 1960s. Tunisia's dependence on external financing declined from about 32 percent of investment in 1969 to 25 percent in 1977; the share was as low as 15 percent during 1973-76, when gains from the terms of trade were at their peak. The balance of payments had been in continuous overall surplus since 1967, but after 1975 this was no longer the case as the terms of trade began to deteriorate while imports continued to increase rapidly. However, Tunisia's debt service ratio in 1977 was still a low 8.9 percent, compared with 20 percent in 1970. 6. Rapid economic growth allowed Tunisia to make substantial social gains during the 1970s. By 1976, primary school enrollment had reached 96 percent and secondary enrollment 20 percent of the relevant age groups. Education is free virtually through university. Public health services have been expanded, with many services provided free. A family planning program has been introduced and since 1973 has met with substantial success. The birth rate declined from 43.8 per thousand in 1966 to 36.4 per thousand in 1976 while the rate of natural growth declined from 3.0 to 2.6 percent in the same period. Attempts have been made to correct regional imbalances and to improve income distribution. The share of the population living in absolute poverty declined from 30 percent in 1966 to 18 percent in 1975. However, important disparities remain between income levels among individuals and regions. In coping with the social aspects of development, Tunisia faces strongly increased aspirations of its population in the face of limited natural and financial resources. 7. The most important problem facing the Tunisian economy is widespread open and hidden unemployment. In 1977, about 13 percent of the labor force-- some 220,000 people--were unemployed. In addition, there is considerable hidden unemployment in agriculture, which employed about 35 percent of the labor force in 1977. If one considers that about 40 percent of this labor force does not have full time jobs, the effective unemployment rate is more like 25 percent. An increasing number of young people born during the high birth rate years are reaching working age and a growing number of women are joining the labor force. About half of the registered unemployed are young people seeking their first employment. These are mostly relatively educated people whose job aspirations cannot be met.
- 3-8. During 1970-77, agriculture provided about 40 percent of total employment, 25 percent of merchandise exports and 17 percent of GDP. Food processing accounted for another 4 percent of GDP and comprised 35 percent of value added in manufacturing. During this period agricultural production rose substantially, largely as a result of favorable weather. Large infrastructure investments were made during the last decade. Current policy, which emphasizes projects that make a rapid and direct contribution to production, recognizes various constraints on agricultural development: insecurity of tenure; inadequate access to agricultural credit; inadequate extension services; insufficient agricultural education; and underutilization of irrigation investments. Under the Fourth Plan (1973-76) about $140 million was allocated to a rural development fund executed by the provincial administrations. 9. During the 1960s, manufacturing production in Tunisia increased by 8 percent annually. This growth rate accelerated in the 1970s to 11 percent annually, due in part to record years for the olive oil processing industry and to favorable developments in the textile and chemical industries. The early thrust of industrialization was supplied by large import substitution projects. These suffered, however, from the limited domestic market and from shortages of experienced staff and management. Since 1970, more emphasis has been put on export-oriented private industries, particularly in food processing, textiles, fertilizers and mechanical and electrical industries. Foreign and domestic private investment is now stimulated by a comprehensive incentive framework and facilitated by streamlined approval procedures of the investment promotion agency. Foreign investors are expected to contribute know-how and overseas marketing capability. Although an agreement between Tunisia and the European Community signed in April 1976 provided for duty free entry into the Community of nearly all Tunisian industrial products, new restrictions have recently been imposed. The Government has established a special fund to encourage growth of small industries and industrial decentralization, and it has started a program to establish industrial estates. 10. The development of tourism in Tunisia is relatively recent. Foreignvisitor arrivals reached 1 million in 1977, with an average annual rate of growth during 1970-1977 of 12 percent -- sharply higher than that of the Mediterranean tourism market as a whole. Since 1970, tourism has become a major source of foreign exchange earnings, reaching $315 million in 1977; this was slightly more than earnings from all manufacturing exports and was exceeded only by petroleum exports. The rapid development of tourism in Tunisia has unfortunately not been accompanied by adequate development of infrastructure (particularly recreational facilities), trained manpower, or related services. The Government is endeavoring to alleviate these constraints through a variety of measures including revised investment incentives, increased marketing and training efforts, codes to enforce quality standards, and more stringent zoning laws. 11. The main objectives of the current Five-Year Plan (1977-81) are: (i) full employment of the additional labor force; (ii) self-sufficiency in major foodstuffs (defined as a balanced trade account for agricultural goods); (iii) increases in the standard of living; and (iv) social stability through incomes policies and wage and price harmonization. The Plan foresees an
- 4 - average annual rate of real GDP growth of 7.3 percent. This is somewhat below the 9.2 percent achieved during 1970-76, mainly because the fortuitous factors prevalent during the early 1970s were not expected to continue. Investment is projected at D 4.2 billion ($9.8 billion) in current prices during the Plan. In real terms, average annual investment would be 54 percent greater during 1977-81 than during the preceding Plan period. Nonetheless, the targeted average annual rate of growth of real investment during the Fifth Plan is only 4.1 percent, as this rate is influenced by the very high investment level achieved in 1976 in an effort to meet targets of the preceding Plan. 12. The Fifth Plan's strategy emphasizes in particular export-oriented industrial development and agricultural growth. Special attention is given to employment creation and to balance of payments considerations. Substantial investments are to be made in hydrocarbons, manufacturing, water development, transport and housing. The Plan prescribes increased domestic production and processing of Tunisia's mineral resources (phosphates, petroleum) to export as much value-added as possible. Extraction and distribution of newly discovered offshore gas deposits in the Gulf of Gabes rank prominently in the list of major projects. This gas will substitute for petroleum-based fuels, freeing the latter for export. Eventually, gas will also be used as an input for the chemical industry. Private sector initiative is expected to dominate investment in textiles, mechanical and electrical industries, and tourism. It is in these activities that the authorities expect most employment creation to take place. Employability of the labor force is to be increased through education and training programs. Efforts towards regional development are to be pursued through establishing regional planning structures, strengthening regional administration and developing incentives for the decentralization of productive activities. The strategy proposed for the Fifth Plan does not represent any major departure from the strategy pursued successfully during the preceding Plan. 13. Tunisia's existing resource base, its institutional and infrastructural framework, its good performance in the earlier part of this decade, and the desire of the authorities to support further development with appropriate policy measures and institutions are fundamental factors pointing towards continuing rapid economic growth during the Fifth Plan. The 7.3 percent growth target is in line with the possibilities of the economy. The investment priorities formulated in the Plan are considered necessary to support the sectoral strategies. There are, however, some less favorable signs. Tunisia's development recently benefited from the structural changes in world market prices and from excellent weather conditions. As noted above, it cannot be expected that these fortuitous factors will continue in Tunisia's favor to the same extent as in the past. Hence, Tunisia will have to rely increasingly on its own resources. As the resource base is relatively narrow, available resources should be efficiently deployed. Achieving the Plan targets presupposes the timely introduction and successful execution of measures to (i) strengthen the absorptive capacity for investment, especially for labor intensive projects; (ii) promote exports; (iii) base economic management on an efficient price and incentive system and improve productivity; and (iv) mobilize the resources needed to realize the comprehensive social development
- 5 - targets while maintaining domestic and external financial stability. The Tunisian authorities have begun to introduce measures in these respects. 14. Substantial efforts in domestic and external resource mobilization in particular will be of crucial importance to finance the planned level of investment. On the domestic side, there is a great need for increased savings and improved financial intermediation. The Government sector, in particular, will again be called upon to contribute substantially to the savings effort. The Plan suggests that this should be done by prudent expenditure policies and increased revenue collections (selective tax increases and better tax collection). In addition, the public enterprise sector will have to increase substantially its contribution to public savings through better management and especially through cost-related increases in the sale prices of selected enterprises. Externally, Tunisia would have total financing requirements (disbursement basis) of some $2.8 billion during 1977-81. Given the country's creditworthiness, Tunisia should be able to mobilize such financing without putting undue strain on the country's debt servicing capacity (see below, para. 16). 15. Since the early 1960s Tunisia has obtained large amounts of official aid. A Consultative Group chaired by the Bank provided a forum for aid-coordination among major donors in the past. During 1970-77, annual loan commitments from public sources averaged $235 million, or about $43 per capita. About 73 percent of these commitments came from bilateral public sources, chiefly from France, Canada, and the Federal Republic of Germany. About 17 percent came from oil-producing countries whose share increased rapidly from 8 percent in 1970 to 29 percent in 1977. Commitments from the Bank Group during 1970-77 accounted for 20 percent of total public commitments. Most aid has been obtained on concessionary terms; in 1977 the average terms of borrowing were 5.8 percent interest and 20 years maturity, including 6 years of grace. During 1970-77 Tunisia also received annually some $43 million in grants. Loan commitments from private sources averaged $34 million a year. While direct foreign private investment has been comparatively small, it has recently picked up momentum following increased activity in the petroleum sector and new incentives offered to foreign investors in manufacturing. Net direct foreign investment increased from $19 million in 1970 to $75 million in 1977. 16. At the end of 1977, total foreign debt (disbursed and outstanding) was estimated at about $1.6 billion, or 32 percent of GDP compared with some 40 percent in 1970. According to preliminary estimates, it has reached about $2 billion at the end of 1978. The debt service ratio in 1977 was 8.9 percent, compared with 20 percent in 1970. This significant decline in the debt service ratio was mainly due to the sharp increase in export earnings following the changes in world market prices in 1973/74. External borrowing at the rate projected in the 1977-81 Plan (para. 13) would increase debt service obligations in relation to exports to around 13 percent by 1981 and 17 percent by 1986, according to current Bank projections. At these levels, the debt service burden would be manageable, particularly when seen in the light of Tunisia's long record of prudent and skillful balance of payments and external debt management. Tunisia is therefore considered creditworthy for further Bank lending.
- 6 - PART II - BANK GROUP OPERATIONS IN TUNISIA 17. Since 1962, Tunisia has received a total of thirty-two loans and eleven credits amounting respectively to $497.0 million and $70.1 million, net of cancellations. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of March 31, 1979, and notes on the execution of ongoing projects. While disbursements of some loans and credits have been slower than foreseen at appraisal, on the whole, project execution has been satisfactory. As of December 31, 1978, total disbursements amounted to 54 percent of initial appraisal forecasts, and to 67 percent of revised forecasts. In a number of sectors, important institutional improvements have been achieved and independent agencies have been created or strengthened. 18. The Bank's lending strategy in Tunisia aims at supporting Government efforts to (a) increase employment, (b) encourage more balanced growth and distribution of income among regions and income groups, (c) promote exportoriented policies and investments, and (d) provide selective support for the development of infrastructure and for institution building in key public services. The main supporting feature of this lending strategy is to encourage the Tunisian authorities in timely and well-coordinated preparation of projects, with emphasis on technical assistance. The Bank is also cooperating with the Government in its efforts to increase the mobilization of domestic and foreign resources, in part through encouraging project cofinancing; the latter is particularly important in view of the extent of Tunisia's external resource needs, the large size of many priority projects, and the limited availability of Bank resources relative to the country's needs. 19. Within this broad framework, past Bank Group lending has emphasized support for long-term investments in infrastructure and social development. Lending for urban and social development, including water supply, sewerage, education, family planning and the Tunis District urban planning and public transport project has accounted for 31 percent of Bank/IDA commitments in Tunisia since 1971. Lending for transport, power and tourism infrastructure has accounted for an additional 31 percent. Agriculture and fisheries have received 16 percent of total commitments. Industrial and hotel financing through the Banque de Developpement Economique de Tunisie (BDET) has accounted for 17 percent, and the Gafsa phosphate development project received 5 percent of total commitments. 20. In 1973 a loan of $11 million and a credit of $7 million were made for the Tunis District urban planning and public transport project to support the first regional planning authority in Tunisia, the Tunis District, and to assist the Societe Nationale de Transport (SNT) in improving its organization, upgrading its maintenance and traffic operations and renewing its bus fleet and railway rolling stock. The major part of the project has been completed and most objectives have been met. Studies carried out under this project have provild the basis for most of the improvements included under the second urban development project proposed in this report.
21. In addition to the proposed loan for a second urban development project, a loan for a second fisheries project is expected to be presented to the Executive Directors in the current fiscal year. The second urban sewerage project was approved in March 1979, and the fifth water supply project was negotiated in April 1979. In the next and subsequent fiscal years, Bank lending intends to support the two objectives set by the Government to balance its economy, namely promotion of agriculture and of export-oriented and employment-generating industries. Emphasis will be placed on agricultural production projects in less developed regions, such as an irrigation project in Southern Tunisia, an agricultural development project in the Northwest, and continued assistance for agricultural credit. Bank assistance to industry will focus on small-scale industrial enterprises, mechanical and electrical industries and possibly rehabilitation of the textile subsector; this assistance may also include financing for the Miskar project for the development and distribution of Tunisia's offshore gas resources. The program would also continue financing selected priority social development projects, such as a second population project, a vocational training project and further assistance to education. 22. The Bank Group accounted for about 20 percent of total public commitments to Tunisia during 1970-77. The Bank Group's shares in total debt outstanding and disbursed at the end of 1977 (including loans from private sources) and in debt service during 1977 were 14 percent in both cases. The Bank Group's share in Tunisia's disbursed external debt by 1986 is expected to remain unchanged from about 14 percent in 1977, but its share in debt service would decline to about 12 percent of total. 23. IFC has invested in NPK Engrais (a fertilizer plant), in BDET, in Compagnie Financiere et Touristique (COFIT, a company to promote and invest in tourism projects), in Societe Touristique et Hoteliere RYM (a large hotel development) and in Industries Chimiques du Fluor, which will produce aluminium fluoride from local fluorspar for export, and in the Sousse-Nord integrated tourism development project. IFC's net commitments in Tunisia total $15.7 million. IFC's Board has approved the sale of IFC shares in NPK Engrais to the Tunisian Government. PART III - THE SECTOR 24. Of Tunisia's total population of about 6 million, 47 percent, or about 2.7 million people, live in urban areas, most of which are found along the eastern coast of the country. The urban growth rate has averaged about 4.2 percent annually over the past 15 years while the total population growth rate has averaged about 2.3 percent annually. Nearly two-thirds of the urban population is concentrated in the three major cities of Tunis, Sfax and Sousse. By far the largest and probably fastest growing urban agglomeration is that of Greater Tunis where the population exceeds one million. 25. In contrast to the average annual population growth rate of 2.3 percent, the rate of natural increase between 1964 and 1977 was 2.6 percent,
the difference representing net emigration, mostly of skilled labor to Europe and the Middle East. Not only has emigration to Europe now virtually ceased, but significant numbers of Tunisian workers and their families are now returning home. Many of them are resettling in the major urban areas where the skills they acquired abroad are in greatest demand. The other major direction of population movement has been from rural to urban areas, composed mostly of jobless rural workers seeking employment. Although the Government has endeavored to ease this trend through special rural programs, rural-urban migration continues to be significant. A third migratory movement that can be identified is a pattern of movement from rural to small urban and subsequently to large urban areas. This has resulted in a particular strain on the traditionally largest urban areas such as Tunis and Sfax. 26. The major problem in Tunisia's urban areas today is inadequate housing, services and employment. In 1977, there was an estimated shortage in urban areas of 32,000 housing units. About 17 percent of all urban housing is provided through heavily subsidized public housing programs, but fully half the urban population cannot afford the least expensive unit. The continuing housing shortage has led to a steady increase in the density of illegal squatter settlements in and around the country's major urban areas. It is estimated that some 800,000 people now inhabit such settlements, some of which have existed since the early 1930s. One-third of the nation's total housing units is located in these uncontrolled settlements, which are growing at an average rate of 10,000 units a year. Up to 40 percent of these units may be makeshift. Most squatter settlements, particularly the more recent ones, are virtually without roads, water, sewerage and electricity and lack sufficient health and education facilities. The oldest settlements have benefitted from some services but these are far from adequate. 27. Each of Tunisia's 18 governorates, or provinces, is headed by a governor appointed by the President supported by a council composed of representatives of professional and social organizations. Budgets of the provinces are approved by and entirely funded through the Ministry of Interior. Urban areas or municipalitias (also known as communes) are administrative subdivisions of the province, and are defined by the Municipal Law. There are 155 municipalities in Tunisia, each with an elected municipal council and an elected mayor. Municipalities levy local taxes to generate financial resources although the proceeds of these are very limited; the bulk of their revenues comes from Government budget contributions and allocations of a share in certain taxes. The technical capacity of the municipalities is also restricted by insufficient qualified staff. The management of urban growth is entrusted to a number of central government agencies and is largely uncoordinated. Major responsibility rests with the Ministries of Public Works, Agriculture, Interior, and Industry, Mines and Energy. The Ministry of Public Works carries out urban and regional planning nationwide and is responsible through two public agencies, the Societe Nationale Immobiliere de Tunisie (SNIT) and the Office National d'assainissement (ONAS), for municipal housing development and sewerage and drainage respectively. The Ministry of Agriculture, through the Societe Nationale d'exploitation et de Distribution
- 9 - des Eaux (SONEDE), is responsible for water supply. Local public services such as solid waste collection and disposal are provided by the Ministry of the Interior. The Ministry of Industry, Mines and Energy is responsible for providing electricity through the Societe Tunisienne d'electricite et de Gaz (STEG). 28. Because of the difficulties inherent in the rational design and implementation of urban development within this administrative system, the Government over the past several years has begun to introduce measures to decentralize some of the responsibility for urban development. On a national scale, five economic regions, each comprising three or four provinces of similar socio-economic characteristics, have been identified which could be expected eventually to assume responsibility for regional development. The details of this responsibility would be worked out in the context of the preparation of integrated regional development programs. At the local level, and in an attempt to respond to the increasingly complex problems of developing the metropolitan Tunis area, the District of Tunis was created in 1972 as a regional planning authority to coordinate and supervise public investment and to direct private investment for the 15 municipalities which comprise the Greater Tunis area (see para 32). The Tunis District is under the authority of the Governor of Tunis and is supervised by a Higher Council chaired by the Prime Minister. The District has carried out a series of analyses and studies on the administrative, financial and technical aspects of creating a regional development plan, and has supervised the housing feasibility studies for Tunis and Sfax which provide the basis for the proposed project. 29. Tunisia's rapid economic growth during the seventies permitted a substantial expansion of social services, including education, health and family planning facilities. Government measures to improve income distribution also resulted in a decrease in the population living in absolute poverty (see para. 6). During the same period, however, the stagnation of employment in agriculture and the growth of industry and of tertiary sector activities resulted in a very rapid growth in the urban population. Government efforts to keep up with this growth in terms of urban services and housing were inadequate to meet the demand. Although by 1976 sufficient data was available pointing to the need for reviewing Tunisia's urban housing policy to meet this demand, the authorities were reluctant to introduce changes. Thus, although the Government's Fifth Development Plan (1977-81) allocates about 16 percent of urban housing investment (representing about 30 percent of total planned urban units) for the lowest-cost public housing units as compared with 7 percent (or about 20 percent of total urban units) allocated under the previous Plan, there remains an important gap between the proposed supply of affordable units and the present demand of the low income population. Many municipalities have thus begun to plan upgrading and site and services projects to cope with the problem at the local level. The proposed project, which would be managed largely at the local level but coordinated and monitored at the central Government level, could be expected to provide a model for urban development that could become part of the central Government urban planning effort.
- 10 - Bank Sector Strategy and Lending 30. Bank lending in Tunisia in the urban sector is aimed at supporting Government efforts to improve public sector management, project preparation and public services, to strengthen financial policy and to introduce measures to promote decentralization and alleviate income inequalities. This strategy has translated into projects or components of projects designed to meet the needs of the cities in the areas of education, family planning, job-creation, water supply, sewerage and public transport, and to strengthen the institutions responsible for providing these services. Education loans have helped finance the construction of middle level and teacher training schools as well as workshops in many urban areas. A proposed fourth education project would focus on strengthening vocational training. Under the industrial finance project approved in FY78, a $5 million loan to Government and a $2 million loan included under the seventh line of credit to the Banque de Developpement Economique de Tunisie (BDET) were earmarked to provide technical and financial assistance to small enterprises. A population project included construction of a network of maternity clinics as well as hospitals in Tunis, Sfax, Sousse and Bizerte. 31. Four water supply projects focussed on increasing the supply and treatment capacity of potable water for Greater Tunis, Sfax and its surrounding areas, and several medium-sized towns in northern Tunisia. A fifth project focuses on the expansion and improvement of water distribution systems in intermediate and small towns, in rural areas and in the low-income areas of cities. A first urban sewerage project assisted in establishing the national sewerage authority, ONAS, and aimed at renewing and expanding the sewer network and at providing additional treatment facilities in Greater Tunis. One of the major objectives of this project was to strengthen the District of Tunis by creating a formal relationship between the District and ONAS in the implementation of all sewerage works in the District's jurisdiction. The second urban sewerage project provides a second stage of sewerage works for Greater Tunis and extension and improvement of the sewer system in Sfax. 32. The first Bank assisted urban development project was the Tunis District Urban Planning and Public Transport project, designed to support the newly created Tunis District in carrying out its planning, programming and supervision functions, to train its personnel, and to help improve traffic in Tunis. The main components of the proposed Second Urban Development project were prepared in a series of housing feasibility studies carried out under the supervision of the Tunis District and with the assistance of a $250,000 advance from the Project Preparation Facility made available in 1976. Under the proposed project, the District would supervise the implementation of the solid waste collection and disposal component. Background on Project Cities 33. Tunis. More than one-third of the population of Greater Tunis lives in the overcrowded Medina in the center of the city and in squatter settlements of varying age and quality that have formed in the center and on the
- l] - outskirts of the city. Only about half of the population in these settlements is served with electricity and water, and the sewerage and solid waste collection and disposal services are inadequate, causing a serious health hazard. The distribution of schools and clinics is uneven and these services are inadequate or non-existent in many of the poorer areas. In addition, since most of the residents in these settlements have no title to their land, they have been unwilling to invest to improve or extend their dwellings. Although the overall unemployment rate in Tunis is about 13 percent, the rate is substantially higher among the young and unskilled living in these settlements. The areas most affected are old settlements like Saida Manoubia and Jebel Lahmar, newer smaller settlements on the outskirts of the city and very densely populated areas like the Medina. 34. Sfax. With a population of 350,000, Sfax ranks as the second largest city in Tunisia and is growing at about 3.5 percent per year. Sfax has a strong tertiary sector employing some 55 percent of the active population and the unemployment problem there is less severe than in Tunis. The pattern of urbanization in Sfax is unique in Tunisia and has led to the formation of densely populated "rbats" following the traditional medina-type urban fabric around the center of the city. Water, sewerage and electricity services are inadequate in Sfax, particularly in the rbats. Sfax also has a traffic problem due to poor traffic management and competition for limited road space among bicycles, mopeds, buses, trucks and private cars. PART IV - THE PROJECT 35. The proposed project has been designed to develop a new approach to the resolution of some of Tunisia's most urgent urban problems, and to establish an institutional framework capable of developing and implementing other similar projects in Tunisia. It is conceived as an integrated urban project with all necessary infrastructure and services in specific locations. Project components were selected on the basis of Government priority needs and complement the components of Bank-financed projects in other related sectors (see paras. 30-32). The project was identified in mid-1974, and prepared by the Government with the assistance of consultants and of several Bank missions through 1977. The project was appraised in October/November 1978. Negotiations were held in Washington in April 1979. The Tunisian delegation was headed by Mr. Masmoudi, Deputy Director in the Planning Ministry. A Staff Appraisal Report entitled "Republic of Tunisia, Second Urban Development Project" (No. 2372-TUN) dated May 8, 1979 is being circulated separately to the Executive Directors. A Loan and Project Summary is provided at the beginning of this report; a Supplementary Project Data Sheet, Annex III, and maps showing the location of project works are also attached. Objectives and Description 36. The proposed project has two major objectives. First, it would develop and implement a coherent series of low-cost solutions designed to
- 12 - respond to Tunisia's urban problems in housing, social and infrastructure services and employment. A particular concern of the project is to meet the needs of the lowest income groups at a cost they can afford with little public subsidy. Second, the project would provide for the establishment of an institutional framework to carry out this project effectively as well as to design and implement future projects in other urban areas. The project would be implemented in Tunis and Sfax and would consist of: (i) comprehensive upgrading in five low-income settlements; (ii) site and services; (iii) education facilities in low-income areas; (iv) a small business assistance and vocational training program; (v) improvements in solid waste collection and disposal; (vi) improvements in traffic conditions; and (vii) technical assistance for project implementation, institution building and studies. 37. Upgrading. Five low-income settlements would be improved under the project, including Saida Manoubia and Jebel Lahmar in Tunis and the rbats of Chichma, Oued R'Mel/Bir Karouba and Merkez Chaker Sud in Sfax. The improvements planned in all five settlements are considered a priority because of the low income levels of the inhabitants and the low level of existing infrastructure and social services. The settlements in Tunis have a population of 76,000 and cover 170 ha. The population of the rbats is estimated at about 17,000 covering an area of about 60 ha. Median household incomes range from TD 50 to about TD 57 per month. Besides inadequate access to public services, the main problem in the Tunis settlements is lack of security of tenure. About half the land in the Tunis settlements is privately owned but almost no residents are owners. In contrast, land in the Sfax rbats is owned by the residents. 38. The works to be carried out include surfacing of about 12,700 m of primary and secondary roads and 7,200 m of tertiary roads, extension of the water supply and sewer systems to allow about 80 and 100 percent respectively of the plots to be connected, extension of street lighting to one light every 50 m, improvement of two existing transfer stations for domestic waste collection, and construction of primary schools, health centers and markets. Some 1,960 new plots would also be developed within built-up areas (infill plots), all provided with water, sewerage and electricity connections. About 88 percent of these plots would have an ablution unit, a perimeter wall and a core house. Building material loans up to about $600 would be provided to some 4,000 households for home improvements or expansion of core units on infill plots. Beneficiaries of serviced infill plots without core unit could obtain construction loans of up to about $1,200 each. The unit cost per household for upgrading under the project is $1,278. Any families displaced as a result of upgrading would be compensated by the Municipalities and relocated in the same project area (draft Loan Agreement, Section 3.10). 39. Site and Services. In Sfax, about 1,800 low income families and some 100 small scale enterprises are expected to benefit from the development of about 1,900 serviced plots in two areas known as Cimer_Nord and Cimer-Sud. The sites were selected to ensure that employment opportunities were close, off-site infrastructure was available and land prices were affordable. Both
- 13 - sites are on flat land and are served by water mains and trunk sewers. The two sites, which cover about 26 ha, would be developed to include residential plots as well as land for workshops and community facilities. Developed land would be priced according to location, accessibility and commercial potential. Plot sizes would range from 72 m2 to 144 m2 and each would have individual water, sewerage and electricity connections. Forty percent of the plots would be provided with an ablution unit, a brick perimeter wall and a core house ranging from 10 to 16 m2. Building material loans would be made available to permit construction or expansion of housing. Plot prices would range from about $1,200 to about $3,500; a downpayment of at least 15 percent would be required at the time of purchase. The unit cost per household for site and services development is $4,360. The minimum plot option with a $600 building loan would be affordable to 90 percent of Sfax's urban population. A primary school with a capacity of 640 students would also be provided on each site. 40. The beneficiaries of new housing development in upgrading and site and services areas would be selected on the basis of specific criteria including level of income, need, and willingness to accept the downpayment and monthly payment requirements (draft Loan Agreement, Schedule 2, Annex B). Plot allottees in the Tunis upgrading and Sfax site and services areas would be given transferable freehold titles to their land. For the first five years, the title would be transferable only in certain cases and with the authorization of the municipality. In case of default, the municipality would foreclose the plotholder's mortgage. Evidence of availability of land or rights to land necessary to carry out the project in Jebel Lahmar, Saida Manoubia and Cimer-Sud is likely to be provided shortly and would be a condition of effectiveness; evidence of this availability for the Cimer-Nord site would be a condition of disbursement for that sub-component (draft Loan Agreement, Section 6.01(a) and Schedule 1, para. 4). 41. Education Facilities. Although urban primary school enrollment had reached a national average of 95 percent in Tunisia in 1976, the average in low-income areas is substantially lower. In the context of a Government program to achieve more balanced primary school enrollment throughout the Greater Tunis area, four primary schools with a total of 30 classrooms would be provided under the project as part of low-income public housing programs in the Tunis District to bring their service level to that currently prevailing in the District. Each classroom would accommodate 40 students and would operate on double shift. 42. Small Business Assistance and Training. The population movements mentioned in para. 25 combined with increasing numbers of women and school leavers joining the work force every year have led to a severe unemployment problem in Tunisia's larger urban areas. The small business assistance component of the project aims at creating nearly 1,000 job opportunities in the project areas by providing a line of credit totalling $1.2 million for small business loans and related extension services and manpower training. The unit cost per job created is estimated at $4,150. Loans for equipment purchase and working capital, expected to represent about 72 percent of all loans contracted, would average about $1,200; loans for workshop improvement and
- 14 - construction would not exceed $7,200. Minimum loan terms would be 8.25 percent, for a period of 8 years including one year grace for workshop construction loans, and a maximum of 3 years for working capital and equipment loans. All loans would be secured by a mortgage on plots or a lien on goods. These terms are comparable with those applied by commercial banks on medium-term industrial loans, which currently carry interest at 6.75 to 8.25 percent, repayable over up to 11 years, including two to three years grace. 43. The small business component would be carried out by the municipalities with the assistance of the Societe Tunisienne de Banque (STB) and the National Employment Office (OTTEEFP) (see para. 54). OTTEEFP, which is responsible nationwide for training programs, would provide the extension services and vocational training required for the project through its Employment Promotion Unit. Courses would be offered in such fields as electrical work, household appliance repair, carpentry, metal work and mechanics. The Office would also provide extension services in technical fields and in elementary business management. The curricula and capacity of OTTEEFP's training centers in Tunis and Sfax are adequate for project purposes. 44. Solid Waste Collection and Disposal. Until now there has been no regional authority to supervise, coordinate and control solid waste collection and disposal in Greater Tunis. ONAS, the national sewerage authority, deals only with water-borne sewerage disposal and not with solid wastes. Waste collection and street cleaning are inadequate due to insufficient and badly maintained equipment, public landfills are not controlled, and nearly two-thirds of the 180,000 tons of household waste produced annually in the District is disposed of in illegal dumps. The District of Tunis has been instrumental in the recent adoption of plans to create a regional authority, establish landfills, close illegal dumps and examine the possibility of using waste to produce compost. Measures to improve the collection of the existing housing tax are expected to yield sufficient funds to cover the operating costs (estimated at about $1.3 million annually) of all sanitary landfills needed in Greater Tunis. 45. The proposed loan would finance the first phase of a comprehensive solid waste management program for the Greater Tunis area. Elements would include improvement of maintenance facilities and of six transfer stations, including one in each of the two project upgrading areas, purchase of vehicles for solid waste collection and of truck compactors, closure and reclamation of 50 ha of open dumps, provision of services and equipment needed to open and start operating a new sanitary landfill of a capacity of 55,000 tons per year, and technical assistance related to the development of alternative designs and recommendations for the technical, institutional and financial arrangements needed to ensure efficient management of solid waste in Greater Tunis. 46. Traffic Improvements. The proposed project would include several low-cost improvements to relieve congestion and reduce accidents in Sfax, particularly among low-income groups such as pedestrians, bicyclists and bus passengers. Special traffic lanes would be provided for bicycles and mopeds and for buses, ten major intersections would benefit from improved signaling equipment, and traffic in the central areas of the city would be eased with the introduction of a one-way street system. These improvements are expected to benefit about 150,000 people at a total per capita cost of about $6.
- 15-47. Technical Assistance. About 150 man-months of technical assistance would be provided under the project to supplement the various agencies and units responsible for project implementation. Their focus would be on assisting: (i) the OTTEEFP in implementing the small business program; (ii) the District of Tunis in implementing the solid waste collection and disposal component; (iii) the Municipality of Sfax in implementing the Sfax traffic scheme; (iv) the Directorate of Local Public Authorities in the Ministry of Interior for municipal staff training; (v) the Caisse de Prets et de Soutien des Collectivites Locales (CPSCL) for financial and management assistance (paras. 56, 57); and (vi) the Central Project Unit in executing and monitoring this project and in preparing future similar projects (para. 58). Experts for (i), (iv) and (v) above would be provided through CPU. Cost Estimates 48. The total cost of the project is estimated at $45 million, of which $20 million or 44 percent represents foreign exchange cost. The local cost of $25 million equivalent includes $5 million representing taxes. Physical contingencies are calculated at 10 percent for infrastructure and community facilities and 5 percent for service connections and core units. Physical contingencies have not been included for self-help building material and small business loans, manpower training or technical assistance. Price contingencies are based on current and projected price escalation rates over the period of implementation, estimated at 9 percent and 6 percent, respectively, of baseline cost for equipment and civil works in 1979, and at 8 percent and 6 percent, respectively, thereafter. The average cost of consultant and advisory services is estimated at $7,000 per man month (including local cost) for services provided from abroad and $1,000 per man-month for services provided locally. Financing Plan 49. The proposed Bank loan of $19 million, which represents 47 percent of total project cost (net of taxes), would finance 95 percent of the project's foreign exchange cost. The balance of the foreign exchange cost of $1 million as well as $1.4 million equivalent of local costs would be financed by a loan from the Kingdom of the Netherlands made in 1976 for upgrading two specific sections in Jebel Lahmar (Tunis). Of the remaining local cost of $23.6 million equivalent, $16.1 million would be met by the Government, $4.9 million by the Municipality of Tunis, $2.0 million by the Municipality of Sfax and $0.6 million by STB. The Government would be the borrower and would carry the foreign exchange risk. 50. About $7.1 million of Bank funds and $6.9 million equivalent of Government funds, including those obtained from the Dutch loan, would be made available as budgetary allocations to the relevant Ministries and the District of Tunis for primary infrastructure works, community facilities, waste collection and disposal, education facilities and technical assistance. The budgetary allocations earmarked for primary infrastructure and community facilities (about $6.7 million) would be passed on to the Municipalities of Tunis and Sfax by the Ministries; the remainder would be retained by the Ministries concerned for the execution of the components under their direct
- 16 - responsibility. Another $11.4 million of Bank funds and $11.7 million equivalent of Government funds would be made available to the Municipalities for building material loans and upgrading and site and services schemes. The remaining $0.6 million of Bank funds would be onlent to STB for the small business assistance component. STB would provide $0.6 million equivalent ot local funds to match the Bank's contributions for each loan made. 51. Funds for building material loans and for upgrading and site and services schemes ($11.4 million Bank and $11.7 million equivalent counterpart) would be onlent to the Municipalities through the CPSCL. Bank funds would be onlent at Bank terms; Government funds would be made available to CPSCL half as equity and half as interest-free loan, and would be onlent to the Municipalities at CPSCL's current terms of 2 percent over 20 years. The Municipalities would onlend to beneficiaries at 6.5 percent over 20 years. The Municipalities would also make available a combined amount of $6.9 million equivalent for the project from their budgets, which contain provisions to that effect. The difference between the lending and borrowing rates of the Municipalities, estimated at about 1.3 percent, would cover their administrative costs. With all funds in excess of the amount needed to amortize the Bank loan and repay the loan portion of the Government's contribution, CPSCL would finance similar projects in the future (draft Loan Agreement, Section 3.02(e)). The signature of the subsidiary loan agreement between the Government and CPSCL, and of the convention between CPSCL and the Municipalities of Tunis and Sfax, respectively, would be conditions of effectiveness (draft Loan Agreement, Section 6.01(b) and (c)). Project Implementation 52. The major responsibility for the implementation of the project would rest with the Municipalities of Tunis and Sfax, mainly through a Municipal Project Unit (MPU) in each city which would manage and execute the project at the local level. They would have sole responsibility for all aspects of the upgrading and site and services components and for the traffic improvement scheme in Sfax, and would assure the coordinated implementation of the small business program with STB and OTTEEFP. The waste collection and disposal component would be implemented by both the District of Tunis and the regional authority(ies) to be created. Responsibility for the construction of primary schools in low income areas would rest with the Ministry of Education. A technical reinforcement would be provided at a central level by a Central Project Unit (CPU) in the Ministry of the Interior which would assist the executing agencies in the implementation of the proposed project and in the planning and development of other low-cost integrated upgrading and site and services schemes. The physical and financial coordination of the project as a whole would be assured by a Coordination Committee composed of representatives of the Ministries of Public Works, Planning, Finance and Interior, and the Director of the CPU. 53. The Director of the technical department in each municipality would coordinate the project and would have direct responsibility for all technical preparatory work and for construction. He would also chair a Municipal Steering Committee, composed of all municipal department directors involved in
- 17 - project implementation. The MPUs would monitor project execution at the municipal level and would prepare progress reports for submission to the CPU. The MPUs have been created and their directors appointed. 54. The municipal director responsible for administration and finance would coordinate the implementation of the small business program with STB and OTTEEFP. Applications for loans would be considered by a committee composed of members of these three organizations, based on criteria including low capital-labor ratio, creditworthiness and the economic and financial feasibility of proposed investments. The OTTEEFP would screen potential loan candidates, assist them in filling their applications and present these to the Municipalities and STB. The STB would determine loan terms and conditions. The STB is the largest Bank in the country. Established in 1957, STB acts as a deposit bank, a merchant bank and a development bank. STB has assets of $750 million; operations in 1977 included $280 million of short-, medium- and long-term loans. STB has about 1,400 employees and operates a network of 52 branch offices. The OTTEEFP's Employment Promotion Unit, reactivated for purposes of the project, would be staffed with three economists, an engineer and several technicians of varying specialities; a small business expert, to be hired by CPU, would be made available to assist the Office. The small business component would be implemented in accordance with selection criteria agreed with the Bank, and a protocol between the the Municipalities and STB and OTTEEFP, respectively, concerning coordination in implementation and including details of these criteria, would be signed by September 30, 1979 (draft Project Agreements with the Municipalities, Section 2.01(c)). The signature of the convention between the Government and STB concerning implementation would be a condition of effectiveness. STB will use the funds from reimbursement of small business loan repayments to finance similar small business assistance programs. 55. The solid waste collection and disposal component would be implemented by the District of Tunis, which would be responsible for all elements involving collection and for studies concerning disposal, and by a regional authority(ies), expected to be created by June 30, 1980, which would be responsible for the opening and initial operation of the sanitary landfill and the closure and restoration of 50 ha of open dumps. Disbursements against these latter two elements would be contingent on the creation of the regional authority(ies). The District would hire a waste collection expert and two assistants by September 30, 1979, and a waste treatment expert within three months after the creation of the regional authority(ies) (draft Project Agreement with the District of Tunis, Section 2.02). The Bank would be consulted no later than December 31, 1979 on the results of the study on arrangements for solid waste management in Greater Tunis (draft Loan Agreement, Section 4.03). 56. The CPSCL, which is under the supervision of the Ministries of the Interior and Finance, was established in 1975 to supersede the Caisse de Prets aux Communes created in 1902. The CPSCL was chosen as a major channel for project financing because its main purpose is to lend to public entities such as municipalities and governorates for financing public facilities, infrastructure works and municipal housing development. About 90 percent of CPSCL's resources derive from Government budgetary allocations. The terms of loans it
- 18 - makes are 2 percent over 20 years for non-income earning projects and 4 percent over 10 years for income earning projects. CPSCL had assets in 1978 of about $24 million equivalent. It holds its account with BDET which has major responsibility for the financial management of CPSCL funds. 57. The CPSCL would be strengthened under the project to keep full accounts of its operations and with a view to permitting its development in the long term into a viable municipal lending agency which could advise municipalities nationwide on financial and technical matters and ensure adequate project monitoring. A municipal banking and finance expert would be made available by BDET to aid CPSCL as needed, and an expert would be made available by the CPU to CPSCL on a part-time basis to set up appropriate commercial accounting procedures. Separate consolidated accounts for the project will be maintained, audited and submitted regularly to the Bank. A specific agreement satisfactory to the Bank would be concluded governing the respective responsibilities of the CPSCL and BDET in the management of loan funds (draft Loan Agreement, Section 3.02 (d)). 58. The project executing agencies would be assisted in planning and developing low cost upgrading and site and services schemes by the newly created CPU. This unit will be established and fully staffed before November 30, 1979, with a director, three advisors and three permanent staff specialized respectively in engineering, financial analysis and small business development and urban planning. After project completion the director and the permanent staff would constitute a permanent unit to plan and develop similar upgrading and site and services schemes throughout urban areas in Tunisia. The director of the unit has been appointed and the qualifications of the candidates for the other six positions have been agreed. The CPU would prepare and submit to the Bank quarterly progress reports on the project, including monitoring and evaluation results, and would make available to the Bank the audited accounts and financial statements on the project prepared by each implementing agency. Cost Recovery and Interest Rates 59. Project costs, including land acquisition, site preparation, on-site infrastructure and buildings, design and supervision costs and interest during construction, would be fully recovered in the Tunis upgrading and Sfax site and services areas through plot charges. These charges in the site and services areas would vary to reflect location, plot access and commercial potential. Plot charges would be recovered in monthly installments at a nominal interest rate of 6.5 percent over 20 years. Costs for infrastructure improvement in the rbats in Sfax, where project beneficiaries already own the land on which they live, would be recovered through an existing frontage tax (contribution des riverains). The base on which this tax is calculated would be modified for purposes of the project to reflect repayment of the present value of the improvement works and to include administration costs and interest during construction. These modifications would ensure recovery of allocable costs at a nominal rate of 6.5 percent over 20 years. This tax would be made effective by January 1, 1981 (draft Loan Agreement, Section 3.11 and Annex B to Schedule 2). Plot charges and the frontage tax would be collected by the Treasury department of each municipality and would be used to reimburse the CPSCL.
- 19-60. Interest rates currently charged for housing in Tunisia range from 3 percent for public sector housing finance to 8 percent for private housing finance. The current and projected inflation rate in the country is about 6 percent. A 6.5 percent interest rate for the low-cost housing to be provided under the project represents a substantial improvement in present policy in Tunisia and is considered an important step in ensuring future replicability of similar projects, the servicing of municipal debts and the growth of CPSCL's special fund. 61. Building materials loans for home improvements and construction would be recovered by the municipalities at 6.5 percent over 10 years. Credit to small businesses for workshop construction, equipment and working capital would be recovered by STB at 8.25 percent over 3 to 8 years. Costs for the solid waste collection and disposal component would be recovered through increased receipts from the existing housing tax. The costs of community facilities and of the traffic scheme in Sfax would not be recovered but charged to the budgets of the Ministries concerned. The cost of off-site infrastructure would be recovered through utility charges. Affordability 62. A substantial portion of Tunisia's urban poor could afford to participate in the proposed project. Beneficiaries of squatter settlement upgrading in Tunis and Sfax would be required to make monthly payments of between 5 and 8 percent of their income for existing plots and between 15 and 22 percent for new infill plots. About one third of the population affected by the project's upgrading program in Tunis, and about 42 percent of that in the Sfax rbats, would fall below Tunisia's urban absolute poverty level (estimated in 1978 at TD 45 or $107 equivalent per household per month). The majority of beneficiaries of the site and services program in Sfax would need to allocate only about 18 percent of their income for housing. The minimum site and services plot option would be affordable to about 90 percent of Sfax's urban population. Procurement and Disbursements 63. Contracts for civil works totalling $28.9 million and for equipment and vehicles totalling $0.9 million would be awarded on the basis of international competitive bidding in accordance with Bank procurement guidelines. The civil works contracts for water, sewerage and electricity works, amounting to $13.7 million, would be awarded by SONEDE, ONAS and STEG, respectively, the national companies responsible for these utilities, in accordance with technical specifications to be outlined in separate protocols with the two Municipalities, to be signed by September 30, 1979. In the evaluation of bids, local manufacturers would be allowed a margin of preference of 15 percent or the applicable customs duty, whichever is lower. Contracts for civil works of $350,000 or less and for equipment and vehicles of $75,000 or less, for an aggregate of $3.3 million, would be awarded through competitive bidding procedures advertised locally and which are satisfactory to the Bank. Consultants services amounting to $1.2 million would be procured individually by the agencies responsible and awarded on terms and conditions acceptable to the Bank.
- 20-64. The project would be implemented over three and one-half years, with disbursements expected through December 1983. The proposed loan would be disbursed against: (i) 100 percent of foreign cost and of ex-factory cost for equipment and vehicles; (ii) 45 percent of total cost for civil works and building materials; (iii) 50 percent of disbursements for loans for workshop construction and improvement, equipment and working capital; and (iv) 100 percent of foreign cost for consultant and advisory services. In addition, the $250,000 advance from the Project Preparation Facility (para 32) would be reimbursed to the Bank under this loan. Justification and Risks 65. The proposed project would be the Government's first comprehensive attempt to meet the needs of urban low-income groups with limited public subsidy. It would help develop an institutional framework capable of carrying on the planning and execution of similar future projects and would initiate the decentralization of responsibility for the design and execution of urban programs nationwide. Particularly important in this respect are: (i) the low unit cost for site and services housing (20 to 25 percent of the cost of conventional public housing in Tunisia); (ii) the introduction of an upgrading program for low income areas averaging only $1,278 per household; (iii) the inclusion of job creation in upgrading and site and services programs; (iv) the initiation of a solid waste collection and disposal program for Greater Tunis; (v) the inclusion of low cost traffic improvements benefitting and encouraging low cost transport modes; (vi) the establishment and strengthening of sector institutions to improve project implementation, monitoring and evaluation and provide for the preparation of future similar projects in Tunisia. Of the total population to benefit from the project, about 40 percent have incomes below the Bank defined urban absolute poverty threshold. About 43 percent of project cost would reach this group. 66. The economic rate of return of the upgrading and site and services components together, which represent 65 percent of project cost, is about 28 percent: 34 and 18 percent respectively. Quantifiable benefits are based on estimates of increases in imputed rental values for housing and market sale prices for workshops plots. Rates of return were not calculated for the other components because of difficulties in the measurement and quantification of benefits. Some 940 jobs would be provided under the small business assistance program in Tunis and Sfax. Average cost would be $4,150 per job, compared to the 1977 Bank defined poverty capital/labor threshold for Tunisia of $10,890. Annual savings of 16 percent are expected to be attained in the operating costs of solid waste collection in the Tunis District, primarily through better organization and management and improvements in equipment maintenance. The project would improve environmental and health conditions. 67. Technical risks associated with the project have been minimized by careful selection of project areas and thorough preparation of project components. The risks that can be identified are policy related. Since the progress in implementation of this project will depend directly on the Government's commitment to carry it out, a lessening of this commitment would adversely affect the project. Risks that could then be envisioned include inadequate budgetary allocations, non-enforcement of cost recovery procedures in the project upgrading areas and the allocation to higher income groups of site and services plots. These risks at present appear limited because of
- 21 - the commitment of the central and municipal authorities to provide adequate and affordable shelter to low-income populations and in view of the sociopolitical will that exists at present for meeting the needs of the urban poor. In addition, it is likely that beneficiaries will continue to be willing to pay improvement costs as this will yield them security of tenure. Other risks could relate to the relative complexity of the implementation organization and the number of agencies involved. However, the Government and the Bank perceive the implementation apparatus proposed as the most likely to succeed. PART V - LEGAL INSTRUMENTS AND AUTHORITY 68. The draft Loan Agreement between the Republic of Tunisia and the Bank, the draft Project Agreements between the Bank and the Municipalities of Tunis and of Sfax, and the District of Tunis respectively, and the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 69. The draft Loan Agreement and the draft Project Agreements conform to the normal pattern for urban development projects. Features of special interest are referred to in the appropriate paragraphs of this Report and in Section III of Annex III. Special conditions of effectiveness are: (i) that all action necessary to acquire land and rights to land in Jebel Lahmar, Saida Manoubia and Cimer-Sud has been taken and such land and rights in respect of land are available; (ii) signature of the subsidiary loan agreement and the STB convention between the Government and CPSCL and STB, respectively; and (iii) signature of the conventions and the CPSCL-BDET agreement between CPSCL and the Municipality of Tunis, the Municipality of Sfax, and BDET, respectively (draft Loan Agreement, Section 6.01). Special conditions of disbursement against related expenditures are: (i) submission of evidence that all action necessary to acquire land and rights to land in Cimer-Nord has been taken and such land and rights in respect of land are available; and (ii) creation of the regional authority(ies) to carry out part of the solid waste disposal component, including any necessary amendments to the Project Agreement with the District of Tunis (draft Loan Agreement, Schedule 1, para. 4). 70. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 71. I recommend that the Executive Directors approve the proposed loan. Attachments May 9, 1979 Washington, D.C. Robert S. McNamara President by I. P. M. Cargill
-22- AN X Page 1 of 5 TUNISIA - SOCIAL INDICATORS DATA SHZZT REIERENCE GROUPS (ADJUSTED AVERGES TUNISIA A LAND AREA (THOUSAND SQ. kh.) - MOST RECENT ESTYHATE) TOTAL 164.2 SAHM SAHE NEXT HIGHER AGRICULTURAL 76.1 MOST RECENT GEOGRAPHIC INCOKE INCOME 1960 Lb 1970 Lb ESTIMATE Lb REGION e GROUP /d GROUP Le GNP PER CAPITA (US$) 220.0 360.0 860.0 1438.5 867.2 1796.4 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 190.0 261.0 447.0 816.7 578.3 1525.0 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 4.0 5.0 5.9 URBAN POPULATION (PERCENT OF TOTAL) 32.3 42.6 47.0 45.8 46.2 52.2 POPULATION DENSITY PER SQ. KM. 25.0 30.0 36.0 23.2 50.8 27.6 PER SQ. KM. AGRICULTURAL LAND 54.0 67.0 78.0 112.4 93.3 116.4 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 42.4 45.5 43.1 46.0 42.9 34.8 15-64 YRS. 52.6 50.5 52.7 50.6 53.5 56.0 65 YRS. AND ABOVE 5.0 4.0 4.2 3.3 3.5 5.7 POPULATION GROWTH RATE (PERCENT) TOTAL 1.8 f 2.3 Lf 2.3 Lf 2.9 2.5 1.6 URBAN 3.0 I 4.7 5.0 4.7 3.3 CRUDE BIRTH RATE (PER THOUSAND) 46.6 44.7 40.0 45.0 37.8 27.0 CRUDE DEATH RATE (PER THOUSAND) 21.5 16.9 13.8 13.7 10.8 9.9 GROSS REPRODUCTION BATE 3.1 3.4 3.0 3.4 2.5 1.9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS).. 29.2 58.1 USERS (PERCENT OF MARRIED WOMEN).. 12.0 13.7 14.7 20.0 19.3 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 124.8 100.0 128.2 107.1 107.3 103.8 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 86.0 93.0 102.0 99.2 105.3 110.4 PROTEINS (GRAMS PER DAY) 54.0 63.0 /h 67.4 63.4 63.0 77.7 OF WHICH ANIMAL AND PULSE 13.0 14.0 /h 20.0 16.4 21.7 22.2 CHILD (AGES 1-4) MORTALITY RATE.. 1.5 /i.. *- 8.0 1.9 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 46.1 51.6 54.1 53.7 57.2 63.0 INFANT MORTALITY RATE (PER THOUSAND).. 125.0 62.6. 77.7 53.9 38.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL.. 49.0.. 59.1 56.8 67.7 URBAN.. 92.0 93.0 85.9 79.0 83.5 RURAL.. 17.0.. 38.0 31.8 41.5 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL.. 62.0.. 64.3 30.9 70.3 '"RBAN 100.0 94.5 45.4 90.7 RURAL.. 34.0.. 27.7 16.1 38.3 POPULATION PER PHYSICIAN 10000.0 5950.0 4620.0 4271.6 2706.8 1310.8 POPULATION PER NURSING PERSON.. 730.0 670.0 /k 2077.4 1462.0 849.2 POPULATION PER HOSPITAL BED TOTAL 360.0 /I 410.0 410.0 1k.. 580.2 493.9 275.4 URBAN *- 280.0 230.0 1k.. 310.0 229.6 129.9 RURAL.. 930.0 1040.0 k.. 2947.9 965.9 ADMISSIONS PER HOSPITAL BED.. 24.1. 22.0 22.1 18.9 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL.. 5.1 Li 6.0 5.4 5.2 3.9 URBAN.. 5.1 Li 5.8.. 5.0 RURAL.. 5.1 L 6.1.. 5.4 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL.. 3.2 /i.... 2.0 0.9 URBAN.. 2.7 /i.. 1.8 1.5 0.8 RURAL.. 3.6 7i.... 2.7 1.0 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL.. 24.0 /i.. 40.3 64.1 59.2 URBAN....... 67.8 78.0 RURAL...... 12.2 34.1 12.5
-23- ANNEX I Page 2 of 5 TUNISIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES TUNISIA - HOST RECENT ESTDIATE) SAME SAME NEXT HIGHER *MOST RECENT GEOGAPHIC INCOME INCOPM 1960 b 1970 lb ESTIMATE /b REGION C GROUP Ld GROUP Le EDUCAT ION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 66.0 100.0 95.0 80.8 99.8 97.6 FEMALE 43.0 79.0 75.0 61.8 93.3 87.4 SECONDARY: TOTAL 12.0 23.0 20.0 23.6 33.8 47.8 FEMALE 6.0 13.0 13.0 18.2 29.8 42.6 VOCATIONAL (PERCENT OF SECONDARY) 24.0 12.0 17.0 6.7 12.8 22.7 PUPIL-TEACHER RATIO PRIMARY 61.0 48.0 40.0 31.5 34.9 25.4 SECONDARY 16.0 28.0 23.0 22.3 22.2 24.9 ADULT LITERACY RATE (PERCENT) 15.5 24.0 L i. 50.1 71.8 96.3 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 11.0 13.0 18.0 14.5 12.4 32.3 RADIO RECEIVERS PER THOUSAND POPULATION 41.0 77.0 49.0 125.8 104.5 201.9 TV RECEIVERS PER THOUSAND POPULATION 0.1 10.0 27.0 34.5 28.1 97.7 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 19.0 16.0 28.0 17.4 45.2 70.9 CINEMA ANNUAL ATTENDANCE PER CAPITA 2.0.. 2.3 1.6 4.6 4.4 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 1400.0 1300.0 /i 1880.0 FEMALE (PERCENT) 6.1 7.7 8.5 9.3 25.7 17.6 AGRICULTURE (PERCENT) 69.0 57.0 Li 37.4 42.0 46.2 38.4 INDUSTRY (PERCENT) 17.6 21.0.. PARTICIPATION RATE (PERCENT) TOTAL 27.0 23.7 23.7 26.9 33.8 33.7 MALE 50.2 44.2 44.0 46.6 48.1 50.8 FEMALE 3.3 3.6 4.0 5.3 17.3 12.6 ECONOMIC DEPENDENCY RATIO 1.3 1.8 /i 1.4 1.9 1.4 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OP HOUSEHOLDS.... 17.0.. 23.6 20.2 RIGHEST 20 PERCENT OF HOUSEHOLDS.... 42.0 *- 52.3 47.9 LOWEST 20 PERCENT OF OOUSEHOLDS.... 6.0.. 4.3 3.2 LOWEST 40 PERCENT OF HOUSEHOLDS.... 15.0.. 13.1 13.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN.... 198.0.. 191.9 RURAL.... 94.0 142.0 193.1 157.9 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN.... 500.0 236.1 319.8 448.8 RURAL...... 144.7 197.7 313.1 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN.... 20.0 21.5 19.8 23.2 RURAL.... 15.0 37.4 35.1 54.5 Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme valve. of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Moot Recent Estimate, between 1973 and 1977. /c North Africa & Middle East; /d Intermediate Middle Income ($551-1135 per capita, 1976); Le Upper Middle Income (S1136-2500 per capita, 1976); /f Due to emigration, population growth rate is lower than rate of natural increase; /& 1956-66; /h Av. 1964-66; /i 1966; /i Registered only; /k 1972; L 1962; /m Government hospital establishments only. September, 1978
-24- AMIX I Page 3 of 5 S6PINITfIOS Of SOCIAL INDICATORS U"A:x The adjusted group averages for each indicator ara population-weighted geometric mciken, excluding the extrome values of the indicator and the most pop.l.t.d -.untr/ In each group. Coverage of countries amon% the indicstors depends on availablity of data and is not uniform. Due to lack of date, ornul everoc,,..- apitol S.rph.. (PitI Eor'a nd indicator. of acc.sa to water and excrete disposal, housing, income diatribution end poverty aer ImpI. p.p.lulicr-' II,td gootl I,, It., l tiul the -ucl.i,ncn of ektremae values.. Mlal AREA thi.--od.,q. kos) PgeInPer hospital bed - total. urban, cod rural - Population (total, Total - T'tota aurface ar.. reprialng land ur.a nd Inland wrat.r.. urban, and rural) divided by thair respective number of hospital beds 4aiutrl- most recant eatujate of agriculturel area used temporarily available in public and private general and aperialdxed hoapital end raor per,manently for crops, Pacturea, earket and kitchen gardens or to habilitation centers. Hospitals are aetablishmota perumanetly saftefd by lie fallow, at least one physician. Establishments providing principally custodial cart are not included. Rural hospitala, however, include hatith and medl- C.RP PfR CApI'i'l (ill) - lon' 1,r cupltn estimaces at current market Prices, cal center. not Permanently ataffed by a physician (but by a medico) Ce- -.,I,-uiut,:d by,u-a,.oro,n -- --rtl,d -n W-rld lonk Acl.. (l975-77 baain); aistaoc, nurse, midwife, etc.) which offer in-patciatl accomeodation and 191,0, 1970J,.o] I'9l7 d,lt,, provide a limited range of medical facilitias. Admissions per hospital bed - Totel number of admissions to or discharges tlieri,y COgfSiNFTIO1 PtER CAlITA - Annual conoseption of commercial energy from hoepitals divided by the number of beda. (coal and lignite. petroleun. natural ges and hydro-, nuclear And geothermal electricity) in kilograms of coal equivalent per capita. HOUSING Average size of household (preracs per bousehold) - total, urban, and rural - POPULATION ANDt VITAL STATISTICS A household conistsc of a group of individuals who shore living quarters 'lotal population, mid-yer (millions) - As of July 1; if not available, end their main meals. A boarder or lodger may or may not be included in average of two end-yea..r eatimtca 1960. 1970. and 1977 date, the household for statiatical purpoata. Statistical definitions of houaa- Ujrban population (percent nf total) - Ratio of urban to total popule- hold vary. tion; different definitions of arban areasa may affect comparability AveroSe numbr :fofpracss tar room - total, urban. and rural - Average Ouuof data awnon countries, her of peen pr room In all, urban, ed rural occupied conventioaml Population density dwellings, reapectively. Dwellings exclude non-permnaent structure ancd Faer asq. kh. - Hid-year population Per squat. kilometer (100 hectare.) unoccupied parte. of total area. Accesa to electricity (percent of dwellio&m) - total, urban. and rural - Par sq. km. agriculture lard - Conpoted ae above for agricultural land Conventional dwellings with electricity in living; quartera as perceantage only. of total, urban, and rural dwellinss respectively. population cue structuro_(pe_rcen_-t)_ - Children (0-14 yearn), working-age (15-64 years), and retired (65 year. and over) as pe,rc..nragea of mid- EDUCATION year population. Adlusted enrollment ratios Popul.ti.. growth rate (percent) - total, and urban - Compound annual Primary school - total, and female, - Total and femala enrollment of all ages growth rates of total end urban mid-year populationo for 1950-60. at the Primary level as percentages of respectively primary school-age 1960-70, and 1970-75. populationa; normally tincludes children aged 6-11 years but adjusted for Crud, birth rato (Par thoue...d) - Annual live hirthu per thouoand of different lengtha of primary education; for coun,trina with unvra domid-yeer population; ten-year oritheetic average. ending in 1960 end cation enrollment may exceed 100 percent aince aoma pupils are below or 1970 and five-year average ending in 1975 for moat recent estimate, above the official school age. Crude death rate (per tboueand) - Annual deatha per thouaand of nid- Secondary school - total, and fmemle - Computed an above; secondary sducayear population; ton-yaar arithmetic ave.agea ending in 1960 and 1970 tion requires at leaset four years of approved primary instruction; proand five-year average ending in 1975 for most recent estimate. videe general vocational, or teacher training Instructions for pupils Grosa reproduction rate - Average number of daughters a woman will hear venally of 12 to 17 yeara of age; correspondence courase are generally in her normal reproductive period if she experiences proeenl age- excluded. specific fertility rates; usually five-year averages ending in 1960. Vocational enrollment (percent of seconldary) - Vocational institutione in- 1970, and 1975. clude technical,.industrial, or other programas which operate independantly Family planning - acceptors, annal (thousands) - Annual number of or as departmenta of sacondery institutions. acceptors of birth-control devic.. under aua pics of rational family Puoil-teacher ratio - primary, and secondary - Total etudenta enrolled in planning program Primary and secondary levela divided by numbera of teachera in the corr.- Family planning - usera (percent of married women) - Percentage of epondiog levels. married woaen of child-hearing age (15-i4 year.) who uae birth-control Adult literacy rate (percent)- Literate adulta (able to read nd write) a. devices. o al married onnin name age group, ae percentage of total adult population aged 15 years an oer P0OD AND NUtRITIONh CONISUMPTION Index of fond production per capita (1970'.100) - laden number of per Passenger care (per thomaand population) - Passenger care comprise motor cars capita annual production of all food cosmoditiea. seating loes then eight persons; excludes mabulances, hoarsee and military Per capita supply of calories (Percent of requirements) - Computed from vehicles. energy equivalent of net food supplies available in country per capita Radio receivers (per thougand population) - All types ef r"eivers for radio per day. Available aupplics comprise domeatic production, Importe leas broadcasts to general public per thousand of population, excludes unlicensed exports, and changee in stock. Net supplies exclude anima feed, seeds, recei~vers In countries and In years when registration of radio sets.. e in quantitiee used in food procesaing, and losses in distribution. Re- affect; data for recent years may not he comparable aince moat countries quire..nenc ware estimated by FAO basad on physiological needs for nor- abolished licensing. ma1 acti~vity and health coneidering environmental temperature, body TV receivers (par thousand population) - TV rceaivera for broadcast to gard,c weights, age and sex distributions of population, and allowing 10 par- public per thousand population; excludes unlicnened TV receiver, in councent for waste at household level. tri..aend in years when registration of TV aets was in effect. Per capita supply of protei,na(grans,per day) - Protein content of Per hiwpprcruaion (per thousand populpation) - Shows the average cicculacapita noar supply ffo pydy Her supply of food is defined as on, of "dily genraorl interest n eapr,defined aa a periodical publiabove. Requirements for all countries established by USDA provide for cation devoted primarily to recording general news. It is conaidered to a minimum, allowance of 60 gram of total protein per day and 20 graxo be "daily" If it appears at lteast four tieca a week. of animal and pulse protein, of which 10 gram.snhuuld be animal protein. Cinema annual attendance Par capita por yeer - Based on the number of tickets Th... standards are lower than thoae of 75 gram. of total protein and sold during the year, including adalasions to drive-in cinemas and mobile 23 gram. of animal protein as an average for the world, proposed by units. TAO in the Third World Food S.rvey. Per capita Protein supply from animal and pulse - Protein supply of food EMPLOYT4ENT derived from animal. and pulses In grans per day. Total labor force (thousands) - Economically active persons. including armed Child (aese 1-4) mortalitv rate (Per thousand) - Annual deatha per thoua- forces and unemployed but excluding housewives, studenta, etc. Definiand In age group 1-4 years. to children in this age group. tion. in various countries are not comparable. Female (percent)- Female labor force as Percentage of total labor force. HEALTH Agriculture (percent)- Labor force in farming, forestry, hunting end fiahing Life expectancy at birth (yearo) - Average number of yearo rf life as percentage of total labor force. remining at birth; usually five-year averages ending in 1960, 1970, Industry (percent) - Labor force. in mining, construction, manufacturing and and 1975. e1acteicity, warer cad geas as percen.tage of total labor force. infant mortality rate (per thousand) - Annual deaths of intfant. under Participation rate (percent) - total, male, and fmale - Total, male, and one year of age par thousand live birhto. female labor force as percentage. of their r*apective populations.. Access to safe water (percent of population) - total, urban, sod rural - Thoea are 01.0. adjuatred participation rat.esreflectingal-x Number of people (total, urban, and rural) with reasonable access to structure of the Population, snd long time trend. safe water supply (includes treated surface waters or untreated but Eic.nomic dependency ratio - Ratio of population under 15 and 6) and over to uncontaminated water such aa thst from protected boreholes, springa, the labor force in age group of 15-64 years. and sanitatry wells) a. percentage, of their respective population.. In an urban area a public fountain or stendposc located not more INCOME DISTRIBUTION than 200 mater. from a houee may be considered as being within res- Percent.ag of private inkcome (both in cash and kind) received by richest 5 sonable a.ccess of that house. In rural area, reasonable access would percent, richest 20 percent, poorest 20 percent, and poorest 40 Percent imply that the housewife or members of the household do not have to of ho.aaholds. spend a disproportionate part of the day ir fetching tho family's water needs. POVERTY TARGET GROUPS Accesa to excreta disposal (percent of popultion) -total. urban, and Estimated absolute poverty inccome level (USS per capita) - urban and rucal - rural - Number of people (total, urban, and rural) served by excrete Abanlute poverty income level is that inooae level belo- which a minimal dispoa I. as percentages of their reapentivo populations. Excreta nutritionally adequate diet plua essential non-food requiremeants is not disposal may include the collection and dinposal, with or without affordable. treatment, of human encreta and waste-water by water-borne syst... Estimated relative poverty income level (US$ per capita) - urban and rural - or the use of pit privies and imitac installations. Relative poverty income level is that income level lose than -one-thi-rd Population per physician - Population divided by number of practicing per capita p.erona1 inc.om of the country. physicians qualified from a medical school at university level. Eatieated population below poverty income level (Percent)- urban and rural - Population per nureini person - Populatior divided by number of Percent of population (urban and rural) who are either "absolute poor" or practicina main and fema.e grusduate en.pratical -orne, aod r,elative poor" whichever is greeter. assistant nurn...
~~~~~~~1965 TUNIISIA - E41913*U04IC 79VEWP.0899, 8.IA ShiftT 0..UoOI 8.,. P,09o..U.d ~~~~~~~~~~~~~~~~~~~~ 99667070191-7 997173 9977-31 177-1 99797 91 970 1 5997 7-1 978 999 99 1 _ MUn,,, 9111,o. U, Ca..06-0 1977 fti... A..Ir. A-oI C.ovth 5.'. Cr-.. Uo i..7 P-d-9O 65 61'. 1,796 1.465 t.b00 1,772 1.976 4.7 9.3 7.0 900.0 Ca.,. ro Ta.,- *1 90-.9-6 72 53 '.9 5U 48 66 3.3 4,0.. lfl~~~~~~.,..., ~650 U000.9(U 922 1.339 9,595 1.650 1,7808 2^0 496 983 7.3 103.5 100or90 (C 000 995) 179 771 ~~~~~~~~~~~~ ~ ~ ~~~301. Eopor6*: IC :.Id SU~ IS)lPo.cop.c- 1 6) 90.15 999 1 373 495 52I 52 5 569 4.3 91.7 5.5 53. 377 391 418) 497 I9.7 12.7 8~. 235.4 R--- --- U GoP 74 39 59 123 9361 II, 60. - C0n...OrOloo ~~~~ ~~~~ 696 ~~~~~549 1.961 L.764 1,389 14608 1,70 4.9 88885. lno.u.,162 964 330 378 406 415 4802 9. 5..92. 80296 I'78 255 277 300 338 7.4. 17.1 4.3 17.0 0.Ita... I071 104 274 2681 269 :86 316 9.2 29.4 6.9 90.9 488.6680 f9..9.~ 160$ U160ta 104 1.444 4,324 3.035 5.809 6.668 9.570 7.5 25.0 13.5 B. SECTOR OUT 9I7 Sh.08. I90D 9718 C00...' 92 P.1m o. 9*. i,b& A-r A A0~0.,~I 06,016 886 BE681f.8 22.1 20.4 29. IR.5 la.) 13.4 17.7 - to., 3.3 EI,:, I'll 27 0 24. 25.4 257 26.0 26.0 27. 6. I819. 34. 53.6 S5.8 5.55.6 54. 5.S2.. SeroUco. ~~~~~ ~~~~~ ~~~ ~~55.9 C. 9E8C9968IS0 TRADE6 9999I9o- * t90 D.11... ft--no.8100...98..0n8 081.88 OUlv Oil 26 CrdI.r9o. - 77 4 3973 60 77 636 77 8 85 5600.301.7-9.0 36. R.!9.82 P,.6.0.. - 5 95 93 14 95 96.3.0 6. Ph..p6~ _R86 22 24 995 49 55 63 L03 1.? 37.0 96.6 Sopo 99.o.ph-. is I? 42 46 68 S2 79-9.2 26.0 21.9 76.M oi L. U9d - - 38, 49 92 53 7I... 0.7 A8rUoI d.0116,08. 39 40 92 87 97 909 876 6. 18.1 7.4. T. fill. 2 2 Ss 166 930 207 299-93.0 26.3 To,.1 Good. 121 U8 859 939 9,z3 I,20 6, "93. 33.5 19.9 F--8, S.8-6-.. 68 533 497,,j 64... 0! 978-014 1 ILA 209-9 KoPO.. la9 390 9.33, 9,322 9.799 9,901 2,571 6.2 40.0 14.0 80043t0ff. 36 a0 2z5 296 265 269 274 98.7 23.0 I.. 066.8 COO-o Cond. 62 49 29E 397 355 385 507-0.3 40.0 92.9 8,o_;TC 19 97 940 190 323 217 918 3.4 60.0-63.9 loo.t.di.i. 40*4* ILL 41t 552 639 631 I6.9 29. 13.7 00,89 d...... 73) 430... j, j7j Z6 838 I. IAl To9. Gd. 292 320 1.424 1.814 2.070 2,208 2.607 4.8 5s.$ 35.3 09608NF 95.LL 66 169 211 217 22? 297 :.LI 31Ilu T- I89Good..68 N8S 320 381,56S 2.020 2.287 2.639 2,906 3.6 3119.7 U.!R9CCO _9 12 72 t 0 0 88. A o 1 89 8 6 8 3 E.po,t p,0c. i.d.. 795 39.7 194.9 202.3 209.8 298.7 248.5 3 963 I.5.9 9008pl. d.8. 90.7 96. 67S.7 933.9 99. 29..1 2.6.3 7.8.. 09 UrOd. 9,9.. 08.0 98.9 990.8 993.1 994.6 14.11 993.2 115.2-2.4 3.7 9.21151. COPd.99f 70. 92.I15. 64. 5. 65.2 185.0 5.4.06.1 A089.0600 06 D1 08 )8525 0.323 0.4*02 0.429 6.29042 29 9-7.- I. 'PUBLIC H999S I.o..n... 9 40D 0 Co-rront ic.. F. DETAIL6 UN 68997 9, P.r-. f9 T.Wo 19965 1970l 9975 9976 1277 SECT9OR 9999"T"'819 1972-74 99L_-7_77 Coo 88-1 R... (G.nO. I. Co-.) 99.6 29.8 28. 2. 9. Cn,,ooft E.p..d06o9 (C....1 G-nU.3 95. I 97. 29. 21. 23300. 4 97.77... 0. S-8plo, 4.6 3.9 7.5 7.4' 6.8. 89098.. 7 fl08,9.oou ~~~ ~~7 rolr*ic...06..5 3.9 4.1 4 7 1.7 Co9.U0 3.2 7.4 T0U960-I l~o1.n 21 9117 8.L99 9. 97.9 9nfEr.trofI 6.2 5.9 Of6.- 2/ 5f 62.2 C. OET1991 00-.19986 U60976 9. 8,.009.. Lh3L. 70.9. 900.0 900.0 fdo~~~~~~.u,o,, ~~~~~~~25.7 32,6 227. 7C.3 29.3 jj999199 066.8 S. -vi 0r1.. 93 16.? 9. 39 9. S08c,l8r8. 3:, 4 n 7. 5. E6 1- S1-n 5-o9n. 59.2 50I3 46h. SOl Ic.o1 7.7 93.7 16.2 94.5 97.2 09.6.t.l 16.o982.m4 26.5 A0,1,899..d 0 UrU... 36.1 30.9 3.0 38. 40.9O..I 0808 o, 637. 900.0 900.0 900.0 900991 79067 F...96,'.00--73 99.89) 77.9 2916 T0.I9 89n...r.. 900.8 9901.0 Fr,,.~~~~~~~~~~~9.7 I., 4,997 boa Stall ~ M. 9.A6,9 8198SE 994o..09.. 1977 9977 6Or900IUSo. 31 ~~~~577 531 9.ldo.6,o 31.~ ~~~4 462 Sorvic.. 6~~ ~ ~~~06 67 Un.~~~~9,,,o9 ~ ~ ~ 7) 249 9,459 9.727 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 17
ANNEX I TUNISIA - BALANCE OF PAYMENTS AND EXTERNAL ASSISTANCE Page 5 of 5 pages (Aosunts in milltons of US dollar.) I/ Actual Est. Projected 2/ 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1986 A. SUNMARY BALANCE OF PAYMENTS E.ports (in,m. NFS) 316 408 567 714 1,254 1.356 1,309 1,522 1,719 1,901 2,206 2,571 4,821 Ilports (in,]. NFS) 381 _42 593 782 1242 1,565 1,669 2.026 2.287 2.435 2,659 2 904 4.967 Resource Balance -65-34 -26-68 12-209 -360-504 -568-534 -453-333 -146 Net Interest Payments -50-18 -18-13 2-5 -42-57 -75 -IOnD -125-147 -240 of.i,ch: Intere-t on Public Loans (-17) (-20) (-22) (-27) (-31) (-37) (-39) (-53) (-68) (-95) (-122) (-147) (-275) Direct lveut-ecw Income -9-10 -25-35 -36-37 -26-21 -40-60 -82-93 -188 WorkerS' Re.ittran.e. 29 44 62 98 119 146 143 168 210 236 264 295 521 Other Net Factor Services -8-39 -41-82 -103-116 -127-117 -129-142 -156-172 -276 Current Transfers (net) 10 16 6 4 1-3 -1-1 2 4 7 7 7 Balancr. on orrent Account -93-41 -42-96 -5-224 -412 533-600 -597-545 -443-323 Private Direct Investment 19 24 31 5/ 49 48 63 75 86 110 121 133 267 official Capital Grants 43 35 37 45 43 50 45 45 40 40 40 38 30 Poblic M a LT loans: Disbur.e.eo t. 82 107 140 153 174 211 327 440 632 612 610 550 695 - As.ortization -45-49 -70-59 -59-66 -65 _t33-109 -123 w -- 3 _530 Net Disboreements 37 58 70 94 115 145 262 357 523 489 444 357 165 Crpital Tra.sections n.e.i. 3/ 13 24-19 -8-99 -62-3 -- -- -- -- -- -- Change in Net Resees (increases - -) -19-100 -77-92 -103 43 43 57-50 -43-60 -85-140 Net Foreign Reserveo 15 115 192 284 387 344 J05 248 297 340 400 485 1242 (months of imports equva-lent) 0.5 3.1 3.9 4.4 3.7 2.6 2.2 1.5 1.6 1.7 1.8 2.0 3.0 B. PUBI.C LOAN COMMITllrlTtS Act.al Debt OutstandinL on l)ec. 31/7 IBR0 -- 37 36 25 64 37 60 80 Disb. Only In Percent of Total IDA 10 10 10 7 -- -- 5 -- EXTERNAL DEBT other Multilateral -- -- I -- 12 11 96 6f World Bank 127.9 IO.I Governments 100 84 106 138 79 289 446 125 IDA 64.1 5.0 Suppliers 8 5 7 12 2 27 8 54 Other Multilateral 22.8 1.8 Financial Instlitutions 21 28 28 17-12 20 19-11 Governments 796.1 62.5 Total Pobli, M + LT L.oans 139 164 188 199 169 384 634 256 Suppliers 89.3 7.0 Financial institutions 99.3 7.8 Bonds 50.4 4.01 Public eftbt nei.23.0 1.8 Total Puiblic 9 + LT Debt 1,272.9 1110. 0 D. DEBT AND DEBT ERV1CE PUblic Debt Outst. f [lslurued 524 604 680 807 954 1,071 1,273 1,630 Interest on Plubli, De.I 17 20 22 27 31 37 39 53 Amorticatios 45 49 70 59 59 66 65 83 Total Public Debt Service 62 69 92 86 90!03 104 136 Burden on Esport Ear-ing, 4/ (%) PoSbl,. Debt Serv-ce 19.6 16.7 16.2 12.0 7.2 7.6 8.0 8.9 TlS + Ili-eor Invert. Inc. 22.5 19.1 20.6 16.9 10.0 10.3 10.0 10.3 Avcrage Terms ot Public Debt Int. ds 7. uf Priur Year D0 + D 3.3 3.8 3.6 4.(1 3.8 3.9 3.6 4.2 Ac.-rt. ou /. P-or Year Dl) c U 9.5 9.1 11.6 8.7 7,3 6.9 6.1 b.6 1BRD DebL Oct. F Disbur-ed 26 39 S2 70 89 110 128 159 IBRD as 7i.f Poblc Debt 5.0 6.5 7.6 8.7 9.3 10.3 1i.2 9.7 IBRD1 0. V/. 2f Public D.bc Srvi-e 4.2 5.3 6.5 9.4 12.0 13.3 15.8 13.3 IDA Deft (lcr. and 1)islo,red lb 21 28 57 43 55 64 69 IDA os X ui PublI, Debt 3.1 3.5 4.1 4.6 4 5 5.1 5.1 4.2 IDA as If P.l Ilc Debt Se-v,-, 0.1 0.2 1.3 0.4 0,4 0.4 0.S 0.5 11 tcul-oo e fairs used or the various 6 slucks and IlIws cor-c-pond to tli-5 pu in mls,ed IFS. 2! Peojctcd by World bh.. Staff. 197 19t7l,er 3! leudlnl. efroca jud umssioss. 4/ Inchel cog cu,r- factor scrolces.
ANNEU II Page 1 of 7 A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of March 31, 1979) Loan or US $ Million Credit Amount (Less Cancellation) Number Year Borrower Purpose Bank IDA Undis, Twenty-two Loans and Credits Fully Disbursed 126.0 58.5 238 1971 Republic of Tunisia Population 4.8 2.1 270 1971 Republic of Tunisia Fisheries 2.0 0.2 858 1972 Republic of Tunisia Tourism Infrastructure 14.0 7.0 881 1973 SocietE Nationale d'investissement Development Finance Co. 14.0 0.6 937 1973 Republic of Tunisia Urban Planning & Public Transportation 11.0 1.8 989 1974 SONEDE Water Supply 23.0 2.5 1029 1974 Republic of Tunisia Hotel Training 5.6 3.3 1042 1974 Compagnie des Phosphates et Chemin de Fer de GAFSA Phosphate Development 23.3 6.8 1068 1974 Republic of Tunisia Irrigation Rehabilitation 12.2 6.6 1088 1975 Republic of Tunisia Urban Sewerage 28.0 22.7 1155 1975 Republic of Tunisia Education 8.9 8.9 1188 1976 Republic of Tunisia Highways 28.0 27.5 1189 1976 Banque de Developpement Economique de Tunisie (BDET) Development Finance Co. 20.0 2.7 238-1 1976 Republic of Tunisia Population 4.8 1.1 1340 1976 Banque Nationale de Tunisie Agricultural Credit 12.0 9.1 1355 1976 SociEtE Tunisienne de 1'Electricite et du Gaz Power 14.5 1.4 1431 1977 Republic of Tunisia Irrigation Development 42.0 33.6 1445 1977 SONEDE Water Supply 21.0 20.4 1504 1977 BDET Development Finance Co. 30.0 25.0 1505 1977 Republic of Tunisia Small-scale Industrial Project 5.0 5.0 1601 1978 Republic of Tunisia Rural Roads 32.0 32.0 1675 1979 Republic of Tunisia Second Urban Sewerage 26.5 26.5 TOTAL 497.0 70.1 246.8 Of which has been repaid.. 48.3 4.5 Total now outstanding 448.7 65.6 Amount Sold 14.3 Of which has been repaid 4.2 10.1 Total now held by Bank and IDA.. 438.6 65.6 Total Undisbursed 263.4 3.4 246.8 a/ Not yet effective. b/ Prior to exchange adjustment. B. STATEMENT OF IFC INVESTMENTS IN TUNISIA (as of March 31, 1979) Amount in US $ Million Year Obligor Type of Business Loan Equity Total 1962 NPK Engrais Fertilizers 2.0 1.5 3.5 1966 $ecift& Nationale d'investissement Development Finance Co. 0.6 0.6 1969 COFIT (Tourism) Development Finance Co. 8.0 2.2 10.2 1970 SociEte Nationale d'investissement (SNI) now (BDET) Development Finance Co. 0.6 0.6 1973 SociEte Touristique & H8teliere RYM SA. Tourism 1.6 0.3 1.9 1973 SocietE d'etudes & de Developpement de Sousse-Nord Tourism -- 0.0 0.0 1975 SociEt6 d'etude & de Developpement de Sousse-Nord Tourism 2.5 0.6 3.1 1974 Industries Chimiques du Fluor Chemicals 0.7 0.7 1978 bdet Development Finance Co. 1.3 1.3 Total Gross commitments 14.1 7.8 21.9 Less cancellations, terminations, repayments and sales 4.6 1.6 6.2 Total commitments now held by IFC 3. 15.7 Total undisbursed.. -- 0.7 0.7
-28- ANNEX II Page 2 of 7 C. PROJECTS IN EXECUTION 1/ Cr. 238: Population Project; US$4.8 million credit of April 5, 1971; Date of Effectiveness: December 29, 1971; Closing Date: (Original) June 30, 1976; (Current) December 31, 1979. Cr. 238-1: Population Project: US$4.8 million Supplemental Credit of October 13, 1976; Date of Effectiveness: March 21, 1977; Closing Date: December 31, 1979. Under the Government's new decentralized and integrated health policy, the national family planning program continues to show good progress. The last of the 29 MCH clinics are expected to be completed by mid-1979. Three of the four maternity hospitals are close to completion, and the fourth, at Bizerte, is scheduled for completion late this calendar year. Bids have been invited for the procurement of furniture and equipment. The Avicenne training school is completed, equipped, and functioning. Because of delays encountered in construction, the closing date of the project has been extended to December 31, 1979. Cr. 270: Fisheries Project; US$2 million credit of September 24, 1971; Date of Effectiveness: May 24, 1972; Closing Date: (Original) December 31, 1976; (Current) September 30, 1979. All the 190 boats ordered have been constructed. About 96 percent of the Credit funds is disbursed, the balance is committed. The remainder of the credit will be used to finance fishing gear, and it is estimated that project completion can be achieved by June 30, 1979. However, the recovery of loans provided under the project to the fisher-men remains a matter of concern as the recovery rate has been low and measures to improve the situation were taken only recently. BNT has recruited seven recovery agents in its branches along the coast whose main task is the collection of installments in the places where fishermen land and sell their catch. Ln. 858: Tourism Infrastructure Project; US$14 million loan of September 28, 1972; Date of Effectiveness: June 29, 1973; Closing Date: (Original) December 31, 1977; (Current) June 30, 1980. The project has entered its final implementation stage. Project works are about three-quarters completed; the remainder is expected to be completed by end 1979/early 1980. Total project cost, including price escalation allowances, is still estimated at TD 31.5 million. Of the total Bank financing of $24 million (including the fully disbursed Credit 329), 70 percent, or $17 million, has been disbursed. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.
-29- ANNEX II Page 3 of 7 Ln. 881: Fifth Development Finance Company Project; US$14 million loan of February 20, 1973; Date of Effectiveness: May 24, 1973; Closing Date: (original) March 31, 1978 ; (Current) June 30, 1979. Ln. 1189: Sixth Development Finance Company Project; US$20 million loan of January 26, 1976; Date of Effectiveness: June 7, 1976; Closing Date: June 30, 1980. The closing date of Loan 881 has been postponed to June 1979 to permit BDET to disburse the last $0.6 million in the Loan account toward a few subprojects which encountered implementation delays. The utilization of the loan has been generally in line with the appraisal report's projections, which foresaw the loan to be fully disbursed by March 1977. Disbursement on Loan 1189, which is also fully committed, reached $17.3 million in April 1979, about 6 months ahead of the schedule projected in the appraisal report. BDET has shown consistent improvements over the past three years in the key areas of management effectiveness, arrears recovery, financial practices and resource mobilization. The institution plays an increasingly important role in financing industrial development, extending about one-third of all term credit available to the industrial sector in Tunisia. Ln. 937: Tunis District Urban Planning and Public Transport Project; US$11 Cr. 432: million loan and US$7 million credit, both of October 5, 1973; Date of Effectiveness: September 24, 1974; Closing Date: (Original) December 31, 1976; (Current) December 31, 1979. The major part of the project has been implemented and most of the objectives have been met. The project helped establish and strengthen the Tunis District, the first regional planning authority in Tunisia. Work carried out by the District in the housing and transport sectors has been instrumental in bringing about substantial changes in public programs and policies, such as the adoption of measures to encourage the use of buses and restrain the use of private cars. The project also assisted the public transport company Societe Nationale de Transport (SNT) in renewing its bus fleet and railway rolling stock, improving its organization and finance, and upgrading the maintenance of its vehicles with the construction of a new bus depot. In parallel, the city of Tunis adopted a new traffic plan with a one-way street system, reserved bus lanes and restricted parking zones, which contributed substantially to the improvement of bus services in Greater Tunis. This, combined with an increase in the SNT bus fleet and improved bus maintenance has led to an increase in the use of SNT transport facilities by about 27 percent above the level which would have been achieved in the absence of the project. The construction of the last project component, a bus depot, is now scheduled to start in May-June 1979.
-30- ANNEX II Page 4 of 7 Ln 989: Third Water Supply Project; US$23 million loan of May 29, 1974; Date of Effectiveness: September 24, 1974; Closing Date: (Original) June 30, 1979. Ln. 1445: Fourth Water Supply Project; US$21 million loan of July 5, 1977; Date of Effectiveness: January 30, 1978; Closing Date: Devember 31, 1982. Most of the civil works programmed under the third project are now completed. The project is expected to be fully completed by December 1979, about one year behind the appraisal schedule. Preliminary financial results as of December 31, 1978 indicate that SONEDE has met the rate of return covenants and debt service requirements for 1978. The proportion of cash in SONEDE's current assets of 2.4 percent in 1978 is considered low. However, it is expected that from 1979 onwards, due to tariff increases and other contributions, cash will gradually increase to an adequate level. As far as current assets are concerned, SONEDE agreed that attention would continue to be given to inventory management in order to reduce stocks to a more appropriate level. Good progress has been accomplished in the execution of the works included in the Fourth Water Supply Project. Final engineering design of the project components, with the exception of the water treatment plant, is completed, and laying out of the project facilities and soil tests are under way. It is now expected that, except for the treatment plant, procurement under the project should be completed by mid-1979. Ln. 1029: Hotel Training Project; US$5.6 million loan of July 17, 1974; Date of Effectiveness: November 4, 1975; Closing Date: (Original) October 31, 1978; (Current) October 31, 1979. Civil works for the first two centers started in July 1977 and are now expected to be completed by July 1979. Revised cost estimates indicate a project cost of about $17.8 million, 45 percent higher than the appraisal estimate. ONTT has proposed that the third center be deleted from the project and that residual funds (US$1 million) be applied to the first two centers. This proposal is being evaluated in the Bank. Ln. 1042: Gafsa Phosphate Project; US$23.3 million loan of October 1, 1974; Date of Effectiveness: March 14, 1975; Closing Date: June 30, 1979. Underground mining operations using the longwall method were intended to supply phosphate rock to the Sehib beneficiation plant to be commissioned by the end of 1979. Following the failure of the related tests to reach satisfactory production levels a partial reformulation of the project will be carried out with the assistance of experienced consultants whose services will be financed by the unused portion of the Bank loan. The services will include (i) a 9 months assistance in further testing the longwall method, (ii) a feasibility study for open pit mining of an adjacent deposit, and (iii) a review of the Gafsa company's five-year investment program with a view to designing and implementing an improved cost control system. In the next 5 to 6 years the beneficiation plant will be supplied with ore mined at a small deposit nearby until a new and bigger deposit is ready for operations.
-31- ANNEX II Page 5 of 7 Ln. 1068: Irrigation Rehabilitation Project: US$12.2 million loan of December 31, 1974; Date of Effectiveness: September 18, 1975; Closing Date: June 30, 1982. Progress in construction and rehabilitation work in the Medjerda sub-project area continues to be satisfactory, except for water supply to farmers on which a common decision is expected by SONEDE and OMVVM, regarding the latter's contribution to the investment costs. Some progress has been made since May 1978 in enforcing the Agrarian Reform Legislation. OMVVM continues to encourage large owners to improve cultivation of land and marked progress has been reported in the distribution of medium- and short-term credit. In Nebhana, the land consolidation program is developing well and farmers have been settled on nearly 60 percent of the total area. Progress in construction and rehabilitation of irrigation, drainage and road networks continues to be satisfactory. Ln. 1088: First Urban Sewerage Project; US$28 million loan of February 18, 1975; Date of Effectiveness: August 15, 1975; Closing Date December 15, 1979. The project suffered considerable delay as a result of a number of factors, some beyond the control of the project entity, ONAS. As a result, considerable cost escalation has occurred, chiefly in local cost components. However, bids for most of the works have now been received and construction is under way on all major components. The project is expected to be completed in mid-1982. One of its major benefits will be release of land for development around the Lake of Tunis, which until now has been impossible because of the pollution of the lake waters by untreated sewage. Consultants financed under the project have produced a land-use plan for the area, and Government has begun to acquire land. Ln. 1155: Third Education Project; US$8.9 million loan of August 13, 1975; Date of Effectiveness: March 1, 1976; Closing Date (Original Project: June 30, 1980 (Amended Project) March 31, 1983. Following a change in the educational priorities in Tunisia, the Government and the Bank have recently agreed to reformulate the project. The proposed amendment to the project was approved by the Executive Directors in March 1979 on a no-objection basis. The objectives of the original project have been maintained and the modifications relate mainly to a decrease in the number of ITM centers to be built under the project, an increase in facilities to train teachers for ITM and an increase in the amount of the loan allocated for technical assistance. The total cost of the amended project is estimated at $11.3 million and the Bank loan is decreased by $0.3 million to $8.6 million, representing the full foreign exchange cost of the amended project.
-32- ANNEX II Page 6 of 7 Ln. 1188: Second Highways Project; US$28 million loan of January 26, 1976; Date of Effectiveness: June 16, 1976; Closing Date: December 31, 1979. Civil works of Lots 9 and 10 of the Tunis-Bizerte highway are behind schedule although quality of works is generally satisfactory. Construction is in progress on Lot 6; alternative bypasses of Nabeul, Hammamet and Korba are under study by the Sous-Direction des Etudes. Construction works of Lots 5, 7 and 11 have not started yet due to lack of local financing and, in the case of Sfax bypass, problems with expropriation. The local financing issue has been discussed with the Ministries of Public Works and Planning and a satisfactory solution is expected shortly. The draft final report of the transport coordination study is behind schedule, since the Government is still discussing some of the initial recommendations with the consultants. Ln 1340: Second Agricultural Credit Project; US$12 million loan of November 23, 1976; Date of Effectiveness: July 19, 1977; Closing Date: December 31, 1980. About 28 percent of the amount envisaged at loan signature was disbursed by the end of March 1979. The appraisal of subloans for small farmers is now progressing and BNT has made the first disbursements. The funds earmarked for SONAM are fully disbursed and prospects are good for the commitment of funds for service cooperatives to small and medium size farms. Commitments of funds made by BNT under categories 2 and 4 are progressing satisfactorily but due to cumbersome administrative procedures and other technical problems, subloan applications of SCMVS under category 3 have been delayed. To overcome these difficulties, BNT and the Ministry of Agriculture have proposed new procedures, and BNT is expected soon to notify the Bank officially of the new standard loan conditions. Ln. 1355: Second Power Project; US$14.5 million loan of January 12, 1977; Date of Effectiveness: May 4, 1977; Closing Date: June 30, 1981. The Project has been almost completed, and is largely on schedule in spite of some mechanical problems with three of the seven gas-turbine units. The consultants for the price study are being selected and the study is expected to commence shortly, after some delay. Ln. 1431: Sidi Salem Multi-purpose Project; US$42 million loan of July 5, 1977; Date of Effectiveness: July 31, 1978; Closing Date: June 30, 1984. For the project as a whole, progress in implementation continues to be satisfactory. However, construction of the two diversion tunnels is about three months behind original schedule. Accelerated efforts are needed to complete construction of both tunnels and cofferdam by the end of September 1979. Progress in implementation of the railroad substructure is also slightly behind schedule. The land reform and consolidation program has been developing on schedule.
-33- ANNEX II Page 7 of 7 Ln. 1504/1505: Industrial Finance Project consisting of Seventh Loan to Banque de Developpement Economique de Tunisie (BDET) and a Pilot project for assistance to SSI; Loans of $30.0 million to BDET and of $5.0 million to the Government, of January 25, 1978; Date of Effectiveness: October 13, 1978; Closing Date: December 31, 1981. The start up of the project suffered from difficulties in finalizing legal arrangements concerning the SSI Pilot Project component, which delayed effectiveness by about six months. Nevertheless, commitments under the loan to BDET have built up rapidly after effectiveness, and $5.0 million have been disbursed as of April, 1979, in line with appraisal estimates. Under the project, BDET is giving priority in its financing to projects which are located in the least developed regions, sponsored by new entrepreneurs, characterized by high labor intensity or export-orientation. No commitments have been made yet under the SSI pilot project, although a number of suitable projects are in the pipeline. Commitments and disbursements should soon build up as well under the loan to the Government. The commercial banks' initial reluctance to utilize Bank funds for SSI financing is being overcome. Considerable progress has been made by the Tunisian authorities toward setting up a network of Tunisian and foreign technical assistance experts, specifically catering to the needs of SSI, as agreed under the project. Ln. 1601: Rural Roads Projects; US$32.0 million loan of July 24, 1978; Date of Effectiveness: April 30, 1978; Closing Date: June 30, 1984. The loan has only recently become effective mainly because of delays in finalizing the subsidiary loan agreement between Government and BNT. This has, however, not held up project implementation. Preparation of project works in the first two of the provinces to be covered under the project is progressing satisfactorily.
-34- ANNEX III Page 1 of 2 Republic of Tunisia SECOND URBAN DEVELOPMENT PROJECT Supplementary Project Data Sheet Section I: Timetable of Key Events (a) Time taken by the country to Four years prepare the project: (November 1974 - October 1978) (b) Agency which prepared the project: Government, District of Tunis, Consultants (c) Project first identified by Bank: May-June 1974 (d) Date of Bank appraisal mission: October/November 1978 (e) Date of completion of negotiations: April 20, 1979 (f) Planned date of effectiveness: October 15, 1979 Section II: Special Bank Implementation Actions None Section III: Special Conditions 1. During negotiations, assurances were obtained that: (i) families displaced as a result of upgrading schemes would be compensated and relocated in the same area by the municipalities (para. 38); (ii) beneficiaries under the project would be selected on the basis of agreed criteria including level of income, need and willingness to accept the downpayment and monthly payment requirements (para. 40); (iii) the surplus generated by the Caisse de Prets et de Soutien des Collectivites Locales (CPSCL) under the project would be used to finance similar projects in future (para. 51); (iv) the small business assistance component would be implemented in accordance with agreed administrative procedures and selection criteria, and the National Employment Office (OTTEEFP) would be staffed with sufficient and qualified personnel to carry out the project (para. 54);
-35- ANNEX III Page 2 of 2 (v) the Tunis District will hire a waste collection expert and two assistants by September 30, 1979, and a waste treatment expert within three months after the creation of the regional authority(ies). This regional authority(ies) would be established no later than June 30, 1980 to complete the implementation of the solid waste collection and disposal component (para 55); and (vi) the terms and conditions of cost recovery through plot charges for upgrading in Tunis and the site and services areas in Sfax, and through collection of the frontage tax (contribution des riverains) in the rbats in Sfax would be those agreed (para. 59). 2. Special conditions of effectiveness include: (i) that all action necessary to acquire land and rights to land in Jebel Lahmar, Saida Manoubia and Cimer-Sud has been taken and such land and rights in respect of land are available (para. 40); (ii) signature of the subsidiary loan agreement and the STB convention between the Government and, respectively, CPSCL and Societe Tunisienne de Banque (STB) (paras. 51 and 54); and (iii) signature of the conventions and the CPSCL-BDET agreement between CPSCL and the Municipality of Tunis, the Municipalitiy of Sfax, and BDET, respectively (paras. 51 and 57). 3. Special conditions of disbursement include: (i) submission of evidence that all action necessary to acquire land and rights to land in Cimer-Nord has been taken and such land and rights in respect of land are available (para 40); and (ii) creation of the regional authority(ies) to carry out part of the solid waste disposal component in Greater Tunis, and introduction of any necessary amendment(s) to the District of Tunis Project Agreement (para. 55).
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TUN ISIA SECOND URBAN DEVELOPMENT IBRD 14145R MAY 1979 PROJECT CIMER NORD SITEAND SERVICES Project Boundary Asphalted Road (First Phase) of t fgraded and Compacted Road Green Area EZZ ~Plot, Type A Plot, Type B ZZ~~ Plot, Type C Workshop L) 20 40 60 80 100 METERS Th,o -tp h-e b-., p,.p-,d by th. W.I SB-' VW -1,yf. h of th. rd-&e of th-po ropld to.,ht onot the 0-4.hd. d, - d affiftas, any judgment ont the lee'al act tptaneo d t fs suh boutndaries \4 LIBYA \\0/'Eri1==.5 i> z,