D_ocammt of

The World Bank

FOR OMFCIL USE ONLY

Report No. P-4353-TUN

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN THE AMOUNT EQUIVALENT TO US$30.2 MILLION

TO THE

REPUBLIC OF TUNISIA

FOR A

FOURTH URBAN DEVELOPMENT PROJECT

June 9, 1986

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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REPUBLIC OF TUNISIA

CURRENCY EQUIVALENTS

Calendar 1985 May 1986

Currency Unit = Tunisian Dinar (TD)

US$1.00 = TD 0.75 7D 0.72TD 1.00 = US$1.33 US$1.39

Exchange rate used in the Appraisal Report TD1 = US$1.43

Fiscal Year = Calendar Year

ABBREVIATIONS AND ACRONYMS

AFH - Agence Fonciere d'Habitation (Land Development Agency)ARRU - Agence pour la Rehabilitation et la RBnovation Urbaine

(Urban Upgrading and Renewal Agency)BCT - Banque Centrale de Tunisie (Central Bank of Tunisia)BDET - Banque de D6veloppement Economique de Tunisie

(Economic Development Bank)CNEL - Caisse Nationale d'Epargne-Logement (National Housing

and Savings Fund)CPSCL - Caisse de Prats et de Soutien des Collectivites Locales

(Municipalities Support Fund)FOPROLOS - Fonds pour la Promotion du Logement des Salaries

(Workers' Housing Fund)MOEH - Ministere de 1'Equipement et l'Habitat (Ministry of Equipment

and Housing)110 - Minist6re de l'Interieur (Ministry of Interior)MOP - Ministere du Plan (Ministry of Planning)ONAS - Office National d'Assainissement (National Sewerage

Authority)SNIT - Societe Nationale Immobiliere de Tunisie (National Real

Estate Company)SONEDE - Societe Nationale d'Exploitation et de Distribution

des Eaux (National Water Production and DistributionCompany)

STEG - Societe Tunisienne d'Electricite et de Gaz (PublicElectricity and Gas Company)

USAID - US Agency for International Development

FOR OMCIA4L USE ONLY

FOURTH URBAN DEVELOPMENT PROJECT

Loan and Proiect Suary

Borrower: Republic of Tunisia.

Beneficiaries: Agence pour la Rehabilitation et la RenovationUrbaine (ARRU), Agence Fonciere d'Habitation (APH),the municipalities, and low-income households inupgraded areas and serviced sites.

Amount: US$30.2 million equivalent.

Terms: Repayable in 20 years, including three years ofgrace, at the standard variable interest rate.

Onlending Terms: A total of $22.05 million would be onlent as follows:the Government would onlend $7.52 million to theCaisse de Prets et de Soutien des CollectivitesLocales (CPSCL) at the cost of Bank funds at thedate of the Loan Agreement, repayable in 20 yearsincluding three years of grace. CPSCL would onlendthese amounts to municiualities at cost, for 20years including two years of grace. The CaisseNationale d'Epargne-Logement (CNEL) would manage onbehalf of the Government $14.53 million, of which[i) $7.85 million would be onlent to AFE for siteservicing, at 11 percent per annum for three years;and (ii) $6.68 million would be onlent to individualbeneficiaries for house construction, at8.25 percent interest per annum for thosebeneficiaries earning more than 1 1/2 times theminimum wage (which is currently about $130 permonth) and at 7 percent interest per annum for thosebeneficiaries earning equal to or less than 1 1/2times the mi-nimum wage, in each case for 20 yearsincluding two years of grace. The Government wouldbear the foreign exchange risk, as well as theinterest rate risk.

Proiect Obiectivesand Description: The project would improve shelter and urban services

in under-served or squatter settlements, developserviced land affordable to low-income households,and strengthen urban sector institutions. It wouldprovide for the financing of upgrading and siteservicing of selected subproject sites, and of houseconstruction and improvement loans to beneficiariesin upgraded sites and house construction loans inserviced sites. The project consists of threeparts: (i) upgrading, to be coordinated by ARRU, ofinfrastructure and community facilities in

I This document has a mtnc distbution may be used by me nts only in the perform e|of their officisl duties. las contents may not otherwie be dislased wkhout Wodd Bhank authoriSdon.|

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under-served settlements; (ii) development ofserviced sites by AFE, aimed at low-income groups;and (iii) technical assistance to AYE and theDirection des Collectivites Locales in the Ministryof Finance and Economy.

Benefits and Risks: The project would benefit population groups withincomes below the urban household median monthlyincome. About 150,000 persons would benefitdirectly from the project, of which 90,000 fromimprovement of urban services in their current areasof residence, and 60,000 from acquisition ofserviced plots. Indirect benefits would accrue tothe population of settlements and owners of landadjacent to subproject sites through their proximityto improved services and environment. The risksthat institutional objectives related to the reformof AFH may not be fully attained, and that, in viewof the large number and geographical dispersion ofproject sites, implementation may be slower thanexpected, are alleviated by staff reinforcement,improved policies and management proceduresinitiated during project preparation, and technicalassistance.

Estimated Costs-': Local Foreign TotalUSWMillion

Land Acquisition and Rehousing 6.5 0.2 6.7Infrastructure and Utilities 11.9 16.4 28.3Co-mmity Facilities 0.8 0.9 1.7Construction Loans 4.7 5.9 10.6Studies, Operating Costs 5.5 0.0 5.5Technical Assistance 0.0 0.5 0.5

Base Cost 29.4 23.9 53.3

Physical Contingencies 1.9 1.5 3.4Price Contingencies 5.9 4.8 10.7

TOTAL COST 3z. 0.2 ALI

Financing Plan: Local Foreign TotalUS$ Million

IBRD - 30.2 30.2Government 24.2 - 24.2CNEL 6.0 - 6.0AFE 7.0 - 7.0

TOTAL 3Z I7A

I/ Does not include direct taxes and duties from which the project is exempt.

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Estimated Disbursements:

US$ MillionFY 87 88 89 90 91 92 93 94 95

Annual 0.3 1.7 4.1 4.8 5.4 5.2 3.9 2.8 2.0Cumulative 0.3 2.0 6.1 10.9 16.3 21.5 25.4 28.2 30.2

Rate of Return: 20 percent.

Staff Appraisal Report: No. 5444-TUN of June 9, 1986.

Map: No. IBRD 18756.

REPORT A3D RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND

DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSEDLOAN IN THE AMOUNT EQUIVALENT TO US$30.2 MILLION TO

THE REPUBLIC OF TUNISIA FOR A FOURTH URBAN DEVELOPMENT PROJECT

1. I submit the following report and recoumendation on a proposed loanfor the equivalent of $30.2 million to the Republic of Tunisia to help financea Fourth Urban Development Project. The loar would have a term of 20 years,including 3 years of grace, at the standard variable interest rate. TheGovernment would onlend $7.52 million of the proceeds of the loan to CPSCL atthe same interest rate as the Bank loan at the date of the Loan Agreement,repayable in 20 years including 3 years of grace. CPSCL would onlend thesefunds to municipalities at cost, for 20 years including 2 years of grace.CMEL would manage $14.53 million on behalf of the Government, of which $6.68million would be onlent to individual beneficiaries for house construction, at8.25 percent interest per annum for those beneficiaries earning more than 11/2 times the minioum wage and at 7 percent interest per annum for thosebeneficiaries earning equal to or less than 1 1/2 times the minimum wage, for20 years including 2 years of grace, and $7.85 million to AFH for siteservicing, at 11 percent interest per annum for three years. The Governmentwould bear the foreign exchange risk, as well as the interest rate risk.

PART I - THE ECONOMY i

2. An economic report entitled "Tunisia - Country Economic Memorandum:Midterm Review of the Sixth Development Plan (1982-86)", in two volumes(No. 5328-TUN), was distributed to the Executive Directors in October 1985.An economic mission to review the macro-economic framework of the Seventh Plan(1987-1991) visited Tunisia in January 1986; its findings are reflected inthis part and the country data sheets attached in Annex I.

3. Tunisia is a medium-size, middle-income country with a population of7.5 million and a per capita income of about $1100 2/. Much of Tunisia isarid or semi-arid. Only three percent of arable land is irrigated, and areaswhere rainfed agriculture is possible are subject to severe year-to-yearfluctuations in rainfall. Nevertheless, agriculture still occupies nearly oneout of every three Tunisians in the labor force. Tunisia's most important rawmaterials are phosphates, petroleum and natural gas. Kaown exploitablereserves of oil and gas are approaching depletion, and new hydrocarbon

1/ Part r is substantially the same as Part I of the President's Report No.P-4351-TUN of June 6, 1986 for an Energy Conservation DemonstrationProject.

2/ 1985 figure at current prices and actual exchange rates.

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reserves are limited afd require costly off-shore drilling; priority is nowgiven to slowing down the growth of domestic energy consumption throughconservation and pricing measures. The low qualEy- of phosphate depositsconstrains the expansion of the highly efficient Tunisian phosphate processingindustry. The country has also a considerable tourism potential; after aperiod of stagnation due to high prices and unsatisfactory quality s.andards,tourism resumed rapid growth in 1985.

4. Tunisia has undertaken a massive effort to develop its humanresources, paying special attention to family welfare, education, andtechnical and vocational training. As a result, between the early 1960s andthe early 1980s, the infant mortality rate declined from almost 160 to 83,life expectancy at birth rose from 48 to 62 years, the adult literacy rateincreased from about 15 to about 62 percent, and average caloric intake percapita increased from 95 to 111 percent of minimum standard requirements. Anactive family planning policy pursued by the Government led to a decrease infertility and birth rates. Even though mortality rates also decreased, thegross reproduction rate decreased markedly from 3.5 to .2.4 percent over thesame period. However, since net emigration of Tunisians abroad was sharplyreduced by restrictive measures taken in the European Economic Communitycountries and Libya, the growth rate of the labor force accelerated, a mainreason for the rapidly growing, serious unemployment problem. Openunemployment reached 14 percent in 1983 and underemployment is extensive.These problems are particularly serious among the young.

5. Recent Economic Developments. During the 1970s, the Tunisian economydid well. Rapid growth in the range of 7-8 percent was accompanied bysubstantial structural transformation as manufacturing and tourism became morediversified and their share in total exports increased. Economic performancebenefitted from substantial terms of trade gains due to the rapid priceincrease of oil, allowing both consumption and domestic savings to increaseand investment to remain high (over 30 percent of GDP). It also benefittedfrom improved economic management with a cautious shift toward a more liberal,market-oriented economy. Price inflation was relatively modest, averaging6.4 percent during this period. The balance of payments current accountdeficit, averaging 5 to 6 percent of GDP over the period, was easily financed,much of it by direct foreign investment. The debt service ratio was10 percent at the end of the decade. The only major problem was apersistently high rate of unemployment/underemployment.

6. The Sixth Plan (1982-86) proposed a number of policy reforms to facethe consequences of rising unemployment and the progressive decline in netenergy exports. Its main objectives were employment generation, exportpromotion, regional development and public sector efficiency. Investmentpriority was given to agriculture, engineering industries and tourism. Theoverall rate of investment was projected to decline during the Plan period.To minimize the effects on e-onomic growth and employment, measures wereproposed to increase the efficiency of existing investments, and encourage ashift to labor-intensive activities. These measures were to be accompanied bya substantially tightened income policy, particularly in cautious wage andsalary policies, and a considerable slowdown in the growth of recurrent budgetexpenditures.

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7. However, economic performance deteriorated during the Plan period.In 1982, a prolonged drought depressed agricultural output and agro-industrialproduction, technical problems plagued the phosphate and cement industries,and tourism and exports of manufactured goods were adversely affected by therecession in Europe and high domestic prices. Also, oil production stagnatedduring the Plan period. The economy recovered in 1983 and 1984 due to buoyantgrowth in manufacturing output, stimulated by rapidly expanding local demand.Growth was further stimulated in 1985 by an exceptionally good agriculturalcrop and resumed growth in tourism, bringing the average annual GDP growth inthe first four years of the Plan to 3.7 percent, compared to 6.3 percenttargeted. This performance was nonetheless favorable in view of the worldrecession, and as compared with other countries.

8. The Government was slow in adjusting domestic demand to thedecelerated economic growth. In contrast to the Plan's macro-economicobjectives, the investment rate remained high rather than declined, mainly dueto high public enterprise investments in energy and transportation, whiledomestic consumption expanded rapidly, fuelled by sharp increases in wages andsalaries in 1982 and early 1983. This strong demand pressure, facilitated byrather liberal credit policies, was reflected in rising inflation whichaveraged nearly 10.5 percent in 1982-84, compared to 7.5 percent over1977-81. It also contributed substantially towards the marked worsening ofthe current account deficit of the balance of payments, which reached11 percent of GDP in 1984. The Government's overall budget deficit alsoincreased from 5.3 to over 7 percent of GDP between 1982 and 1984. Thisreflected increases in recurrent expenditures due to wage and salaryincreases, higher subsidy payments to households and public enterprises,higher public investments and growing dollar-denominated debt service payments(caused by a 57 percent dollar appreciation vis-a-vis the Tunisian dinarbetween 1981 and 1984).

9. While the situation had not reached crisis proportions, the trendobserved during 1981-84 clearly could not be sustained. Faced with thisdeterioration, the Government started to implement a package of policymPasures aimed at stabilizing the economy. The minimum wage has not increasedsince January 1983. As a result, average nominal salaries increased by lessthan 3 percent per annum over the last three years, resulting in a cumulativedecline of real salaries by over 15 percent by mid-1986. In April 1985,general interest rates were raised by 1-2 points and, later during the year,low special interest *ates were raised by 3-4 points; with inflation decliningto about 7 percent in 1985, most rates are now positive in real terms. Inmid-1985 the authorities adopted a more flexible exchange rate policyresulting in a gradual downward adjustment of the dinar vis-a-vis Europeancurrencies. Finally, credit expansion was kept in line with GDP growth in1985.

10. As a result of these measures, and of the imposition of drasticforeign exchange and import restrictions, the balance of payments currentaccount deficit was brought back to 7 percent of GDP in 1985, despite reducedexports of oil and phosphates. While this improved the immediate situation,the underlying disequilibrium has not been resolved, and problems usuallyassociated with controls, such as growing shortages of raw materials,semi-finished products and spare parts, have appeared. Meanwhile, the budgetdeficit rose to about 9 percent of GDP in 1985 because of a slowdown in

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revenues, despite a slight decline of capital expenditures in real terms. Theauthorities prepared a restrictive budget for 1986, designed to reduce thisdeficit to about 7 percent of GDP through a number of measures including a 15percent reduction in real terms of subsidies to households and publicenterprises. The decline in overall public expenditures of over 2 percent inreal terms will make it possible to increase urgently needed imports of rawmaterials and spare parts for the country's productive sectors withoutexceeding last year's balance of payments deficit.

11. Medium-term prospects depend on two main factors: futuredevelopments in the hydrocarbon sector, and the speed with which theGovernment implements the far-reaching macro-economic policy changes discussedbelow. Oil and gas exploration programs since the mid-1970s have not beenencouraging. Barring large new oil or gas discoveries, and given the rise indomestic energy demand, Tunisia is generally expected to turn into a net oilimporter in the early 1990s.

12. Preparation of the Seventh Plan (1987-1991) is currently underway.Preliminary indications are that the Government will give high priority to arapid improvement of the balance of payments and to more employment creation.To attain these objectives, it intends to pursue a strategy based onstimulation of non-oil exports, more efficient utilization of domesticeconomic resources, especially of human capital, and better savingsmobilization through more restrictive demand management. Preliminaryprojections indicate that a GDP growth of 3.5-4 percent per annum, and areduction in the current account deficit, can be achieved without a systematicrecourse to quantitative restrictions and other protection measures, andwithout excessive external borrowing. This growth scenario would only bepossible, however, if additional substantive adjustment measures are takenover and above the ones already implemented.

13. The Tunisian authorities, in consultation with the Bank, haveprepared a program of structural reforms emphasizing policy action in eightdifferent fields: wages and salaries, exchange rate, budgetary policies,interest rates, monetary and credit policies, price and investmentliberalization, and import protection. In the first five of these fields, theGovernment has, over the last few years, made considerable and successfulefforts, and all indications are that it will continue to do so. Restrictivewage and salary policies are likely to continue; an austere budget is in placefor 1986, and guidelines for the coming years include a nearly 10 percentannual reduction in subsidies in real terms. Most interest rates are nowpositive. On the exchange rate, the Government recognizes that a flexiblepolicy has to be followed to improve Tunisia's competitiveness inagricultural and manufactured products, as well as in tourism, in order toachieve its ambitious export targets.

14. While substantial progress has been made since the early 1980s onthese important issues, progress has been more limited in the remaining areas,i.e., on price and investment liberalization and import protection. Over thelast years, the Government has focused with some success on administrativetype measures. Concerned with immediate economic and social problems, itresorted to short-term measures and direct, quantitative controls such asmandatory price reductions and import restrictions. The price liberalizationprocess has moved slowly, with some reductions in price subsidies

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(particularly for transportation and energy), increasing liberalization ofagricultural producer prices and some liberalization in the price regimes formanufactured goods. While investment incentives were modified to stimulateexports and promote regional development, strict investment licensing wasstill maintained. The program of structural reforms, to be implemented overthe coming 2-3 years, includes a number of concrete policy changes aimed atdealing with these issues, so as to achieve a gradual but systematic decontrolof. the economy.

15. Social Issues. Since independence, the country has gone a long waytowards meeting the basic needs of its population. Over 16 percent of GDP isnow devoted to social programs, and the number of absolute poor declined from17 percent of total population in 1975 to 10 percent in 1984. Thisimprovement was largely concentrated, however, in urban areas. Since 1981,social issues have faced a different context than in the 1970s, when an easyfinancial situation seemed to allow a relatively unconstrained expansion ofsocial services. Oa one hand, the Tunisian population has become increasinglyaware of, and sensitive to income distribution issues, and to the Government'sresponsibility for redistribution. Furthermore, the beneficial effects ofpast rapid expansion in social services, reflected in the improvement of thecountry social data (see Annex I), have created a demand for improvedstandards in social services delivery. On the other hand, the provision ofadequate social services - education, health, urban infrastructure, housing -is being increasingly hampered by budgetary constraints. To reduce thefinancial burden of social services, the administration is reviewing the coststructure of the various types of social services, including free orbelow-cost delivery, and the possible introduction of some user fees. Specialefforts are needed to improve social infrastructure management, in particularas regards hospitals. Also, decentralization of social facilities to.deprivedzones will have to be assessed carefully because costs for servicing andmaintaining them could become prohibitive.

16. To reduce socio-economic differences, in particular between rural andurban areas, and between workers in the modern sector and those precariouslyemployed in informal activities, the Government is channelling more resourcesinto regional development and youth employment. Integrated rural programs arebeing developed to stimulate productive job creation and grassrootsparticipation. Subsidies and credit facilities are granted for youngtechnicians to create their own enterprises, and for entrepreneurs to createnew projects in underdeveloped regions. More efforts are needed, however, tostrengthen the coordination of vocational and on-the-job training with marketdemand.

17. External Assistance and Foreign Debt. During the second half of t*C1970s, foreign borrowing was modest and a large share of foreign funds wasprovided by public sources at relatively soft terms. At the end of 1979, debtoutstanding and disbursed was estimated at $3 billion, or 42 percent of GDP;debt service was 10 percent of export revenues. For reasons mentioned earlier(para. 8), the balance of payments deficit has increased substantially sincethen, as has foreign indebtedness. According to preliminary estimates, totalpublic foreign debt outstanding and disbursed reached nearly $4.1 billion (50percent of GDP) at the end of 1985. The debt service ratio rose to about 22percent in 1985. However, the Tunisian authorities have followed cautiousdebt management policies; whilz the share of short-term borrowings has

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increased slightly since 1980, Tunisia's overall foreign debt remainspredominantly long and medium-term, and debt service requirements areprojected to increase only slowly. During 1980-84, 60 percent of foreign loancommitments were from official sources, and nearly 35 percent on concessionalterms. Over 70 percent of official commitments came from bilateral sources(mainly Arab oil-producing countries, France, Japan and the Federal Republicof Germany), about 20 percent from the Bank Group and 10 percent from othermultilateral sources. Overall borrowing terms were favorable, averaging8 percent interest and 15.2 years maturity.

18. In the medium-term, external capital requirements should remaineasily manageable. In the longer-term, much will depend on the policy changesto be initiated during the next few years. The Government's medium-termobjective is to maintain the present level of indebtedness; this prospectstrongly depends on a timely implementation of policy measures to accelerateexports, reduce public investments, slow down growth of domestic demand, andliberalize the economy by easing regulations and controls. On this basis, thecurrent account deficit is projected to average about $540 million in 1988 and1989, but decline thereafter. During 1986-91 new loan comfitments from abroadcould be kept at a little over $1 billion per year on average (in currentprices), while net foreign borrowing might increase from about $360 to $400million during the same period; this could result in a debt service ratiopeaking at about 25 percent in 1990.

19. To conclude, Tunisia, after a decade of good performance, is facing amajor challenge in having to adapt its economic structure to the post-hydrocarbon era at a time of external and internal financial constraints. Astrategy of demand restraint and export promotion combined with more liberaleconomic policies is called for to improve efficiency and preserve thecountry's financial stability and creditworthiness. The Government hasalready taken several measures to implement such a strategy. Considering itslong record of prudent external debt management, there are good grounds toassume that Tunisia will implement the necessary policy changes, and remaincreditworthy for a continued high volume of Bank lending.

PART II - BANK GROUP OPERATIONS IN TUNISIA1 '

20. Since 1962, the Bank has committed to Tunisia sixty-nine loans andten IDA credits amounting respectively to $1,481.0 million and $75.2 million(net of cancellations) of wnich forty-four loans and credits have been fullydisbursed. Annex II contains a summary statement of Bank loans, IDA creditsand IFC investments as of March 31, 1986. Project implementation is generallysatisfactory. As of March 31, 1986, overall disbursements amounted to52.5 percent of appraisal estimates, whi-h is in line with experience in othercountries in the region. Disbursement performance for irrigation, energy,industrial finance and port projects has generally been above the countryaverage, while longer than average disbursement delays have been experienced

1/ Part II is substantially the same as Part II of the President's Report No.P-4351-TUN of June 6, 1986 for an Energy Conservation DemonstrationProject.

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for agricultural credit, education, highways, urban and fisheries projects,due to project-specific problems that are being addressed through supervisionmissions and sector discussions. In a number of sectors, importantinstitutional improvements have been achieved, and autonomous agencies havebeen created or strengthened to ensure the efficient management of the relatedsectors or subsectors.

21. The Bank's lending strategy in Tunisia aims at supporting thecountry's transition from a situation of reliance on petroleum exports to asectorally-balanced post-hydrocarbon era through appropriate changes ineconomic policies and programs. This adjustment process will require furtherdiversification of exports, greater savings efforts, reduction in consumersubsidies, gradual liberalization of all sectors of the economy, and strongerincentives to the private sector particularly in agriculture and industry,while taking measures to increase employment and target development tolow-income groups. In support of the above, the overall objective of Banklending is to emphasize projects which have a direct and rapid impact onproduction, employment and exports (or import savings) and which minimizeGovernment net contributions. The focus of lending for agriculture andindustry meets this objective. In addition to the above, proposed Banklending would focus on improvement of public enterprise performance,conservation and development of energy resources, and continued support to thesocial sectors and operations targeted to low-income groups. For the latter,attention would be given to increased efficiency and cost-effectiveness ofinstitutions and investments, and to linkages with directly productive sectors(e.g., education reforms stressing vocational training). We envisage onlymarginal lending for basic economic infrastructure, focussed in areas whereBank guidance would still be useful, such as rural water supply and highwaysmaintenance.

22. Past Bank lending emphasized support for long-term investments ininfrastructure and social development, each of which accounted for aboutone-third of Bank/IDA commitments since 1971. The rest of the commitmentswere almost equally distributed between agriculture and industrial financing.In addition, the Bank has made two loans for technical assistance. Within thebroad framework noted in para. 21, we expect a significant shift in ourlending, with well over half going to agriculture and industry. In additionto the proposed Fourth Urban Development Project, programmed lending in thenext couple of years would include projects for highways maintenance, grainstorage, credit lines for small-scale industries and agriculture, and sectorloans for agriculture and industry.

23. The Bank's economic and sector work will address the increasingcomplexity of the macro-economic and sector problems that Tunisia will face inthe medium term, and continue to focus on strengthening the macro-economic andsector base for our lending program. Eowever, while in the past it was mainlydevoted to the study of major structural problems, it is now focussed onimplementing the policy recommendations of these studies through sectorlending in agricultwre, manufactured exports, public enterprises andtransport; it will therefore concentrate on the following main tasks: (a)preparation of the macro-economic framework of the Seventh Plan, which willprovide the policy base of sec-or lending; (b) review of public expendituresunder the Plan to provide guidance for the necessary reductions in budgetoutlays; (c) assessment of public enterprise reforms prepared by the

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Government to reduce their drain on the State budget; and (d) monitoring ofthe agreed macro-economic and sector policy changes. The progra alsoincludes studies on education administration and finance, municipal financeand development, energy pricing, and the impact of the adjustment program onvarious income groups.

24. The Bank and IDA accounted for about 27.8 percent of totalcommitments from official sources to Tunisia during 1982-1984. Their share intotal debt outstanding and disbursed at the end of 1984 (including loans fromprivate sources) was an estimated 14.8 percent, and their share in debtservice during 1984 was 11.7 percent. The share of the Bank and IDA inTunisia's disbursed external debt is expected to increase to about18.7 percent and their share in the debt service to about 17.3 percent in 1986.

25. As of March 31, 1986, I%. s net commitments in Tunisia totalled about$7.5 million. IFC has supported the Economic Development Bank of Tunisia(BDET) to foster development projects, and the National Bank for TourismDevelopment (BNDT) to promote and invest in tourism projects. It has alsoassisted the Societ6 Touristique et Hoteli6re (RYM), a large hoteldevelopment; the Industries Chimiques du Fluor (ICF), a producer of aluminumfluoride from local fluorspar for export; and the Societe d'Etudes et deD6veloppement de Sousse-Nord for an integrated tourism development project.In FY84, IFC approved two new equity investments in Tunisia: (i) Fluobar, aproject to privatize, rehabilitate and expand an existing fluorspar mine; and(ii) Tunisia Leasing Company, the first leasing company in Tunisia to providefinancing to the industrial sector. IFC's approval in FY86 of an equityinvestment in Societ6 Industrielle de Textiles (SITEX) would help privatize anexisting state-owned textile mill.

PART III - THE URBAN SECTOR

26. Urbanization Patterns. Tunisia is a rapidly urbanizing country, withan urban population accounting for about 53 percent of its total population ofabout 7.5 million. Urban population has grown by 3.7 percent per year since1975, and is projected at over 6 million in the year 2,000. This rapidincrease in the past decade is due to a relatively high natural populationgrowth (2.6 percent), the return of migrant workers from abroad, andrural-urban migration. Although Tunis still receiTes the largest number ofmigration flo-ws, it has a much lower population growth than the rapidlyurbanizing North-West and Center-West Governorates.

27. The high rate of urban population growth has strained the publicsector's ability to provide shelter and basic urban services to the majorcities, and the 125 agglomerations of 5,000 or more inhabitants. Publichousing, which accounted for about 20 percent of the addition to the urbanhousing stock since 1975, was provided at high cost in terms of investment anddirect subsidies. More important, however, was the public sector's inabilityto provide, in a coordinated and timely manner, enough urban infrastructure tomeet the demand for serviced land. This resulted in the spread of spontaneousunregulated settlements, on land lacking services and legal titles. Thespread of these predominantly low-income settlements led to inefficient urbangrowth patterns and excessive investment requirements for ex post provision ofinfrastructure and services.

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28. Institutional Framework. Tunisia is divided into 23 Governoratesunder the supervision of the Ministry of Interior (MOI). At the local level,in urban areas, authority is vested in municipalities, which are subdivisionsof the Governorates. With few exceptions, municipalities have insufficientstaff, limited management capacity, and little control over their financialresources. For their operating and investment budgets they rely on directGovernment budgetary allocations, or subsidized loans through the Caisse dePrrts et de Soutien des Collectivites Locales (CPSCL), a municipal fundmanaged oy the Banque de D1veloppement Economigue de Tunisie (BDET), under thedouble tutelage of MOI and the Ministry of Finance and Economy.

29. In August 1984, the Ministry of Housing merged with the Ministry ofEquipment under a Ministry of Equipment and Housing (MOEH), havingjurisdiction for all activities related to shelter as well as for public worksincluding roads and highways, and for regional planning. To carry its newresponsibilities in the shelter subsector, MOEH has established technicaldepartments for housing construction, assistance to housing, research andstudies, upgrading and urban renewal, and legal matters. It has under itscontrol three major public agencies: a land development agency: AgenceFonciere d'Habitation (AFH); an upgrading and renewal agency: Agence pour lak&habilitation et la Renovation Urbaine (ARRU); and a national real estatecompany: Soci6t6 Nationale Immobiliere de Tunisie (SNIT). The CaisseNationale d'Epargne-Logement (CNEL) is the major national housing savings andloan agency under the Ministry of Finance and Economy and the technicaltutelage of MOEH. The design, construction, operation and maintenance ofutility networks and services in urban areas are the responsibility ofnational utility companies attached to different Ministries: Soci6teNationale d'Exploitation et de Distribution des Eaux (SONEDE) under theMinistry of Agriculture, for water supply and distribution; Office Nationald'AsEainissement (ONAS) under MOER, for urban sewerage; and Societe Tunisienned'Electricite et de Gaz (STEG) under the Ministry of Energy and Mines, forpower production and distribution.

30. Urban Poverty. About 10 percent of Tunisia's urban population livesbelow the Bank-defined absolute poverty threshold, estimated in 1984 at TD 80per household/month, with an average household size of 5.3 persons. Thisrepresents a considerable improvement over the 1977 figure of about 20percent. However, the access of low-income groups to housing and basicinfrastructure services remains a matter of major social concern, especiallyas real wages have declined in real terms in recent years.

31. Urban and Housing Issues. Intense construction activity,particularly since 1980, increased housing stock at an annual average rate of4 percent, to 1.3 million dwellings in 1984, of which 55 percent in urbanareas. Housing conditions improved during 1980-1984: rudimentary housingdecreased from 13 percent to 9 percent, and one room dwellings from 31 percentto 21 percent of all housing units. About 50 percent of all dwellings builtsince 1975 bypassed urban development regulations, and were undertaken by theinformal sector in areas lacking adequate utility services and communityfacilities, and relying on self-help and low-cost construction methods.According to the most optimistic projections, housing construction by thepublic and formal private sectors will fall short of the estimated housingdemand throughout the decade. Since the gap will be filled by informal,unregulated construction, it is essential that preventive action be undertaken

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through the increase of suitably located serviced land, at prices affordableto the poorest segments of the population, which constitute the majority ofnew arrivals in the urban areas. Rent control regulations apply only tohousing built prior to 1970, representing a small percentage of stock. TheGovernment is aware of the distortions created by the controls-and intends toreduce them.

32. Access to basic utility services has improved considerably in recentyears in most urban areas. STEG's electricity network covers about 97 percentof urban areas, while SuiRFE 1s distributing water to 80 percent of the urbanpopulation through housenold connections, and 10 percent through standpipes.Despite an ambitious and successful program, ONAS, a relatively neworganization, has only been able to provide sewerage services to about 55percent of urban areas to date. The gap between water and sewerageavailability aggravates environmental problems. Triggered by the recognitionof associated health hazards, solid waste collection has been recentlyimproving considerably in city centers. Although overall housing conditionsand access to basic utility services have substantially improved in recentyears, supply of infrastructure and urban services is still poor in the urbanperiphery and in rapidly expanding urban areas, and there is littlecoordination between the various responsible agencies. A feature of theproposed project is to improve these agencies' efficiency and theircoordination, and to provide the financing to extend their services inexpanding urban areas (see para. 53).

33. Government Policy. Until the mid-1970s, the Government response tothe growth of spontaneous, under-served settlements consisted mainly of slumclearance and subsidized rehousing schemes for displaced families. SNIT, themain operator of public housing construction, created in 1957, expandedrapidly; it applied high standards unrelated to its prospective clients'financial ability or willingness to pay; only recently it has become moreresponsive to market demands, and started building at lower costs andstandards. The magnitude of the housing problem led to the creation of AFHand CNEL in 1973 and 1974, respectively; however, these agencies did notaddress the fundamental problem of providing affordable land andinfrastructure in the rapidly growing informal settlements in the urbanperipheries.

34. With the priority given to investments in productive sectors, and theobjective of containing investments in housing, the Sixth Plan allocated TD 1billion, or 12.5 percent of total investments, for the construction of 160,000housing units. However, by end-1983, these investments were projected toreach TD 1.5 billion or 16.6 percent of total investments by 1986. There wasGovernment concern that housing was taking too great a share of totalinvestments. The Bank recommended, and the Government intends to pursue as astrategy during the Seventh Plan (1987-1991), to reduce public investment inhousing. Priority wiLl be attached to upgrading under-served settlementsthrough the provision of basic infrastructure, leaving the major part ofinvestments in housing to private initiative, accompanied by suitablefinancing targeted to low-income groups. This would help mobilize domesticresources, and utilize the potential of the informal housing sector. Savingscould be achieved by gradually lowering subsidies and building standards, andinstituting full-cost pricing and recovery and more efficient coordination andprovision of services. A number of these measures have already been agreedupon and the proposed project addresses these issues.

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35. The Bank's Role in the Sector. Since 1966, the Bank has maintained aclose sector dialogue with the Tunisian authorities. During the 1970s, underthe Fifth Plan (1977-1981), the Second Urban Development Project and similarUSAID operations laid the foundation for new and more rational housingpolicies consisting of upgrading squatter settlements instead of demolishingthem, developing low-cost serviced sites, and starting the recovery of thecost of infrastructure and improvement works from beneficiaries. The 1983Housing Sector Review (Report No. 4013 of August 1, 1983) represented a majorcontribution to the formulation of the Sixth Plan's housing policies andprograms. It identified the lack of serviced land as the major constraint tobalanced urban growth, and stressed the need for improving services inspontaneous settlements, for efficiency of the sector's institutions, and forreducing subsidies and ensuring cost recovery. The Institutional HousingSector Review (Report No. 5199 of July 18, 1984) provided a framework for thereform of the housing finance system; its main findings were that housinginvestments during the Fifth Plan (1977-1981) came mostly from privatesavings, institutional finance representing only 37 percent of theseinvestments, with CNEL as the largest provider of housing finance. The reportelaborated a strategy to strengthen CNEL and gradually transform it into ahousing bank, by modifying its structure and diversifying its activities andproduct. The proposed strategy implied a sector-wide review of deposit andlending interest rates, an extension of maturities, and a study of the meritsof contractual versus open banking schemes.

36. The Bank's recommendations have been well received by the TunisianGovernment, which intends to proceed with their implementation progressively,through a phased approach. The Bank is providing assistance in defining thespecific reform measures to be introduced in the Seventh Plan. Part of theenvisaged reforms, including increases in interest rates in housing lending,and in deposits for contractual savings, have been introduced in the course of1985-1986. The proposed project supports the continuation and broadening ofreform measures.

37. Experience with Past Lending. Past urban lending activities includedtwo urban transport and two shelter operations. The first operation, theTunis District Urban Planning and Public Transport Project (Loan 937-TUN andCredit 432-TUN of 1973: $11 million) improved traffic conditions in Tunis,renewed and expanded the bus fleet of the Tunisian National Transport Agency,and constructed a suburban railway. It supported the establishment of theDistrict of Tunis, the first regional planning authority in the country. TheProject Completion Report (No. 5013 dated March 27, 1984) concluded that theMunicipality of Tunis carried out a larger than planned public transport andtraffic improvement program; however, it fell short of meeting managementimprovement targets. Continued support under follow-up projects resulted inimprovements in several municipal departments. The District was influentialin its early years in gtiding policies related to low-income housing, solidwaste management and spatial patterns of development of Greater Tunis.However, its performance fell short of expectations, because of insufficientGovernment support. The Second Urban Development Project (Loan 1705-TUN of1979: $19 million, which was closed on December 31, 1985; an amount of $4.0million was cancelled in 1984 mainly because of the US dollar appreciation,and about $1.0 million will remain undisbursed by the closing of the projectaccounts in June 1986 and be cancelled) included upgrading and site servicingin low-income settlements in Tunis and Sfax, a solid waste collection and

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disposal operation in Greater Tunis, a line of credit for small-scalebusinesses, and technical assistance to the Central Project Unit within MOI.This Unit was later transferred to MOER to constitute its upgrading and urbanrenewal department. Technical assistance also strengthened the Municipalitiesof Tunis and Sfax, which geared up well for project execution. The solidwaste collection and disposal operation, initially delayed as a result ofdifficulties in establishing an executing agency, is now executed well withONAS in charge. Measures were also taken resulting in improved coordinationbetween the various agencies involved in tbe project, and more effective costrecovery procedures were introduced.

38. The on-going Third Urban Development Project (Loan 2223-TUN of i983:$25 million, of which $3.4 million was disbursed as of May 31, 1986) includesupgrading in four settlements, and site servicing in three of these, a pilotprogram of upgrading and reconstruction in the Medina of Tunis, and credit forplot acquisition and housing. Three of the five project sites are in GreaterTunis, and two in the Northwest area. Most of the major civil workscontracts, representing about $13.5 million of loan commitments, have beenawarded. The low disbursement level is due to delays in the start of worksand the appreciation of the US dollar. Under this project, ARRU is developinginto an efficient autonomous agency, with broad powers and capacity tocoordinate urban renewal and upgrading activities. The fourth project wouldentrust ARRU with larger responsibilities and increased autonomy for projectpreparation and appraisal. A Second Urban Transport Project (Loan 2429-TUN of1984: $33 million), which became effective in June 1985, will improve theGreater Tunis highway system, and provide for bypasses to the city center; italso aims at improving the Sfax regional transport company, and addressespolicy issues related to traffic parking management, and the potential of theprivate sector to provide transport services. While the civil works andtraffic and transport policy components are now, after a delay because of thelate effectiveness, progressing, the Sfax regional transport company componenthas not been started because of financial and managerial constraints, anddiscussions on this component's execution are underway.

39. In the next five years, the Bank's urban lending operations will bedirected to municipal development, shelter, and the strengthening of theinstitutions involved in the sector. A Bank Municipal Finance and ManagementStudy may lead to a municipal project involving the strengthening of CPSCL.In the shelter subsector, we would continue assistance in improving policiesrelated to land management and development and adequate supply of suitablylocated serviced land at prices affordable to low-income groups; providingexpanded and more efficient urban services in unregulated and under-servedsettlements; and further strengthening of key sector institutions.

PART IV - THE PROJECT

40. The proposed project was identified in January 1983, and prepared bythe Government with Bank assistance during 1983/84. It was appraised inOctober 1984 and April 1985. Negotiations were held in Washington D.C. fromJune 2 to June 6, 1986. The Tunisian Delegation was led by Mr. Ben Ali of theMinistry of Planning, and included representatives of the Ministries ofFinance and Economy and Interior, and of ARRU, AfH and CNEL. The StaffAppraisal Report No. 5444, entitled Republic of Tunisia - Fourth UrbanDevelopment Project, dated June 9, 1986, is being distributed separately to

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the Executive Directors. The main features of the loan and the project arelisted in the Loan and Project Summary at the beginning of this Report and inAnnex III. A map of Tunisia showing identified project sites is attached.

41. Proiect Obiectives and Description. The objectives of the proposedproject are to improve shelter and urban services in low-income under-servedsettlements; develop serviced land affordable to low-income households; andstrengthen key institutions responsible for upgrading operations, landdevelopment, and the provision of shelter, and improve their coordination. Aspart of a long-term national program, it would extend upgrading andsite-servicing operations across the country. The project would consist of:(i) an upgrading component which would include land acquisition, compensationor rehousing of households affected by demolitions, regularization ofoccupancy status, and construction or extension of infrastructure networks andcommunity facilities; (ii) a site servicing component includinginfrastructure works, and subdivision and servicing of land for housing andcommunity facilities; and (iii) technical assistance to strengthen themanagement capacity of AFH. The assistance also includes the provision ofcomputer equipment to both AFH and to the Direction des Collectivit4s Localesin the Ministry of Finance and Economy. The Bank would finance part of thecost of the upgrading and site servicing operations (inter alia throughbudgetary allocations for infrastructure works and community facilityconstruction) (see para. 53), and extend loans to beneficiaries for houseconstruction in serviced areas, and for house construction on in-fill plotsand house improvements in upgraded areas. Two pipelines of upgrading and siteservicing subprojects have been identified. ARRU has already identified 18sites for upgrading, for an estimated cost of about $40 million, and AFH hasalready identified 20 sites for servicing for a total cost of about $26.8million. For 16 of the upgrading sites, engineering studies are alreadycompleted. For the site servicing component, land for all sites has beenacquired and subdivision plans completed; most subdivision plans have alreadybeen approved by the municipalities. The Bank loan would only financesubprojects that meet agreed eligibility criteria. As this is the first urbanproject in Tunisia taking a program approach, there would be no free limit foreligibility. Approval by the Bank would be a condition of disbursement foreach subproject. The final commitment date for subprojects would be December31, 1989.

42. Upgrading Component. ARRU would act on behalf of the municipalitiesas the executing agency, and would liaise with the Bank on all matters relatedto this component. Established in 1981 as an autonomous body, ARRU was givenresponsibility and broad powers to coordinate urban renewal and upgradingactivities. All ministries and national utility companies involved in theurban sector are represented on its board. ARRU has attracted and retained ahighly qualified staff of professionals, and established itself as the leadagency for upgrading activities. It has a technical department of 12engineers/architects, and well-staffed departments of finance, legal mattersand socio-economic studies. At end-1985, ARRU's total assets amounted to TD9.9 million of which about 66 percent represented works in progress. Itsrelatively high short-term debt is due to ARRU's role as an institutionimplementing works for its clients. By the end of 1985, ARRU's financialsituation was satisfactory; unlike 1983, 1984 and 1985 showed a small profit,a trend that is expected to continue in the future. ARRU's resources comefrom budgetary allocations, and from fees for its services to the Governmentand the municipalities.

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43. Under the proposed project, ARRU would expropriate and/or acquire theland to be upgraded, and compensate or rehouse people displaced bydemolitions. It would prepare the necessary studies and bid documents,coordinate with the ministries, and enter into agreements with themunicipalities, contractors and utility companies. Model agreements betweenARRU and the municipalities, and between ARRU and the utility companies werereviewed and agreed upon during negotiations. For each upgrading subproject,the signing of an agreement between ARRU and the municipality concerned,satisfactory to the Bank, would be a subproject eligibility criteria; thesigning of the agreements between ARRU and the utility companies (ONAS, SONEDEand STEG) would be conditions of effectiveness of the Bank Loan . To ensureARRU's ability to initially cope with its increased responsibilities under theproject, the Government would ensure that ARRU would continue to employ, untilJune 30, 1987, two consultants as urban planner and engineer, respectively,with qualifications and experience satisfactory to the Bank.

44. As under the Second and Third Urban Development Projects, CPSCL wouldbe responsible for channelling project funds, including proceeds of the Bankloan, to municipalities for the upgrading operations. Established in 1975,CPSCL serves as the intermediary for channelling Government long-term,low-interest loans to municipalities for community facilities andinfrastructure projects. It extends two types of loans: at 2 percent for upto 20 years including two years of grace for non-income earning projects, andat 4 percent for up to 10 years including four years of grace forincome-generating projects. CPSCL has a Board of Directors made up ofrepresentatives of the Ministries of Finance and Economy and Interior and theTunisian Towns' Confederation, but it has no staff of its own; the managementof its resources is handled by BDET. It was agreed during negotiations thatthe BDET-CPSCL Management Agreement signed in 1979 would be maintained duringthe execution of the proposed project. CPSCL's resources come from Governmentappropriations and loan repayments; its spread is all profit, and iscapitalized. At end-1984, its total assets amounted to TD44.5 million.CPSCL's financial operations are overall satisfactory; however, thisinstitution is not using its considerable borrowing capacity and potentialleverage. As its role increases, there will be a need to expand itsoperations and strengthen its management. Also, its current administrativesituation and lending policies have to be overhauled to allow effectivefinancial autonomy, expansion and growth. As this is directly related to theadministrative and financial situation of the municipalities, a Bank municipalfinance and management study will review CPSCL's role and recommend neededreforms.

45. The main eligibility criterion for CPSCL loans to municipalities isa debt ceiling set at 15 percent of the municipality's operating budget.Draft model agreements between CPSCL and municipalities under the upgradingcomponent, establishing the cost and the terms and conditions of subloans,were reviewed during negotiations. These agreements would be executed afterthe approval by the Bank of each subproject. The Government has duringnegotiations agreed to take the necessary measures to authorize eligiblemunicipalities to borrow from CPSCL.

46. Site Servicing Component. AFH, the executing agency for thiscomponent, was established in 1973 as a non-profit, self-financing institutionto develop serviced land for housing. It has departments for administration

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and finance, studies, technical matters and real estate, well staffed withabout 30 professionals including 15 engineers. By end-1985, it had acquiredabout 4,350 hectares of land mostly in and around Tunis. However, AFH hasrecently started operating in other cities, and 48 percent of the 800 hectaresit recently acquired are outside the capital area. APE's land stockrepresents a considerable asset, which is currently undervalued because theland is not priced at its replacement cost; it is priced and sold at cost ofacquisition and servicing, plus a charge for overhead and administrativeexpenses. Full payment in advance is required for individual lots.Comuercial lots are sold to the highest bidder after servicing. For realestate developers, terms and conditions are negotiable. AFH requests 60percent as downpayment upon approval of sale, 30 percent at start of work, and10 percent when the land title is transferred. About 70 percent of AFH'sresources come from advance payments. Its equity capital has not increasedsince its establishment. However, assurances were obtained duringnegotiations that a plan for the conversion of AFH debt to the Government intoequity will be submitted to the Bank by June 30, 1987 for review and comment,and, after taking into consideration the Bank's comments, will be executed.

47. AFE would prepare detailed financial and economic feasibilitystudies, and technical and bid documents for each subproject, for appraisa. byCNEL prior to Bank review and approval. It would also participate in the siteservicing component, contributing in land equity, studies and administrativefees and services. It would establish the sale prices of plots, and, inconjunction with CNEL and the municipalities, would select beneficiaries.AFE's land sale policies do not allow auction, selling for profit or settingdifferent lot prices according to size, use or location; this has preventedcross-subsidization and adequate margins. The regular large size of its plots(between 250 and 650m3), and the required substantial advance payments incash, excluded low-income groups and buyers with limited saving capacity; italso forced moderate income purchasers to delay construction on their acquiredplots for several years. In addition, because of its limited capital, APE hasbeen unable to accumulate sufficient land reserves to adequately respond toprivate and public demand. Reform measures will be introduced under theproposed project to address these constraints. APE would be required toservice and sell smaller plots (between 80 and 160m1) and establish a plotpricing system that would allow the replacement of its land stock, and ensurea continuous flow of funds without Government subsidies. Plot sale priceswould include the actualized price of the serviced land, financial charges,and the cost of administrative studies and other overhead incurred by AFH.The Government has agreed to take measures, satisfactory to the Bank, toensure appropriate plot pricing and cross-subsidization benefitting smallerplots, and the introduction of these two measures would be a condition ofdisbursement for the site servicing component of the project. Also, withsupport provided under the technical assistance program, AFE would improve itsadministrative and accounting procedures, and introduce a computerizedmanagement system.

48. CNEL would manage Government and Bank funds for the site servicingcomponent; and would contribute about $6.0 million equivalent to thefinancing of this component from its own resources. Established in 1974,CNEL is today a large, autonomous, well-managed public savings and loanagency, with some 540 employees. It has been successful in mobilizingdomestic resources through contractual savings plans linked to housingconstruction loans. CNEL subscribers may borrow up to twice the amount saved

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plus accumulated interest, with an established ceiling of TD 13,000. Savingscontracts periods are either 4 or 5 years, at the subscriber's choice,entitling them to a 10 or 15 years maturity. CNEL also manages the Fonds pourla Promotion du Lo2ement des Salaries (FOPROLOS), a Government fund thatgrants housing loans to wage earners whose wages are up to 1 1/2 times theminimum wage (currently about TD 90 per month). Interest rates on depositswere raised in March 1986 to 6.75 percent per annum. CNEL also raised itsinterest rate for lending to 8.25 percent p.a. Though its initial target wasonly to attract 8,000 savings contracts annually, the number of contracts iswell over this goal, though declining inter alia because of bottlenecks inhousing and serviced land production. By the end of 1985, the balance sheetshowed TD 168.9 million of savings balances by savers.

49. CNEL also finances SNIT and other public and private developers,which cater to the housing needs of upper and middle income populationgroups. At end-1985, its total assets amounted to TD 319.1 million. As CNELhas no capital of its own, its debt to equity ratio is not a meaningfulindicator. Its resources, which come from savings contracts and themanagement of FOPROLOS, are not all converted into loans, because ofbottlenecks in the supply of developed land and low-cost housing. Thisresults in considerable liquidity. At end-1984, only 66 percent of resourcesfrom savings contracts, and 58 percent from FOPROLOS resources were convertedinto loans; the balance was used to finance SNIT and other developers. Ithas, at present, a comfortable spread, and has consistently shown profit. Aslong as deposits largely exceed withdrawals and account cancellations, CNEL'sfinancial balance will remain sound. This depends inter alia on the supply ofdeveloped land to its contractual savers.

50. Under the proposed project, CNEL would partially finance the siteservicing operations of AEI, and provide loans for plot acquisition and houseconstruction on sites serviced by AnE, as well as for house construction onin-fill plots and house improvements in areas upgraded by ARRU. It wouldappraise subprojects to be executed by AFE, prior to their submission to theBank for approval.

51. Technical Assistance would improve the administrative and accountingprocedures of APR and the management of its land stock, introduce acomputerized management system, and provide the required expert services andcomputer equipment. It would include 2.75 man-years of consultant services inland management, public administration, and computer science. AFH has agreedto employ the required consultants under terms and conditions satisfactory tothe Bank. In addition, computer equipment would be furnished to the Directiondes Collectivites Locales in the Ministry of Finance and Economy, whichsupervises the municipalities' budgets, so as to improve its data collectionand management.

52. Proiect Cost and Financing Plan. The total cost would be about $67.4million equivalent, of which $30.2 million (44.8 percent) in foreignexchange. The loan would cover the full foreign exchange cost of the project,and would be made to the Government at the standard variable interest rate,with a repayment period of 20 years including three years of grace. The localcost contribution ($37.2 million) would be provided by the Government ($24.2

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million) and two of the agencies involved in the project: CNEL ($6 million)and AFH ($7 million). An amount of $0.6 million has been allocated fortechnical assistance. These amounts do not include taxes and duties fromwhich the project; is exempt. The Government would bear the foreign exchangerisk, and the interest rato risk.

53. Allocation of Funds. To finance the upgrading component, an amountof $7.52 million out of the proceeds of the loan would be onlent to CPSCL bymeans of a Subsidiary Loan Agreement. For the site servicing component,$14.53 million of the loan amount would be managed by CNEL on behalf of theGovernment, through a Management Agreement between the Government and CNEL.Part of this amount ($7.85 million) would be onlent to AFH through a Financi-=Agreement, and the balance ($6.68 million) to beneficiaries for houseconstruction. An amount of $8.15 million would be channelled by theGovernment through budgetary allocations to the ministries and agenciesresponsible for the provision of infrastructure and community facilities.This amount includes $0.6 million of technical assistance to AFE. The signingof the Subsidiary Loan Agreement between the Government and CPSCL, theManagement Agreement between the Government and CNEL and the FinancingAgreement between APH and CNEL would be conditions of effectiveness of theBank loan.

54. Onlending Terms. For the upgrading component a total of about $12.9million equivalent of combined Government and Bank funds would be onlent toCESCL at 2 percent for Government funds (4 percent for income generatingoperations) for 20 years including 2 years of grace, and, for Bank funds, atthe cost of borrowing at the date of the Bank loan agreement, for a term of Oyears, including 3 years of grace. CPSCL would then onlend these funds tomunicipalities at its regular terms and conditions for Government funds, andat cost for Bank funds. This is expected to produce a weighted averageinterest rate of about 6 percent. CNEL would manage on behalf of theGovernment a total amount of about C26.2 million of combined Bank andGovernment funds, of which it would onlend about $13.5 million to finance AFEfor its site servicing works, at 11 percent interest p.a. for a maximum termof 3 years, and about $12.7 million for house construction loans in bothupgraded and serviced areas at an interest rate of 8.25 percent p.a. for thosebeneficiaries earning more than 1 1/2 times the minimum wage and of 7 percentp.a. for those beneficiaries earning equal to or less than 1 1/2 times theminimum wage, in each case for 20 years, with two years of grace. Aftercompletion of the site servicing works, CNEL would consolidate short-termfinancing of AFH works into plot acquisition loans. To acquire a plot on aserviced site, the beneficiary would make a total downpayment of 30 percent ofthe plot price, of which 10 percent would be paid at the time of reservation,and 20 percent in installments during the execution of site servicing works.The balance would be financed at the time of plot delivery, through a loanfrom CNEL at the above terms.

55. Interest rates under the project are compatible with or above theinflation rates estimated at about 7 percent for the coming years. They takeinto account the capacity to pay of municipalities, and of the low-in._.ometarget population. The Government is in the process of reviewing further theoverall structure of interest rates. It has agreed to review with the Bank,by December 1 of each year, the interest rates charged in the housing sectorand to take all necessary measures to ensure that financial intermediaries

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apply interest rates sufficient to cov2r at least the cost of capital and earna spread sufficient to cover their operating cost. With Bank assistance, theGovernment is designing further reform measures in the housing sector to beintroduced progressively during the Seventh Plan period (1987-1991). Thesereforms would include institutional measures for the agencies involved in thesector.

56. Procurement. Civil works for upgrading and site servicing would bedispersed over about 40 sites across the country; they would be contractedseparately for each category of works over three years, and executed andadministered by different agencies and utility companies over a period ofabout 5 years. As it would be impractical to aggregate the contracts intopackages large enough to attract international contractors, all procurementwould be carried out through local competitive bidding in accordance with Bankprocurement guidelines. LCB procedures have been reviewed in the Bank; theyare generally consistent with the need for economy and efficiency in theexecution of the project. However, some exceptions were required to make themconsistent with the Bank's procurement guidelines and were agreed upor duringnegotiations.

57. Computer equipment for AFH and the Direction des CollectivitesLocales in the Ministry of Finance and Economy, costing about $70,000 intotal, would be procured on the basis of quotations from three qualifiedsuppliers. SONEDE and STEG would execute the water and electrical worksaccording to their procedures. They would call for tenders to selectcontractors through LCB or execute their works by force account through theircontracts with ARRU and AFH. The works to be executed by force account areunsuitable for competitive bidding as their quantities cannot be definedaccurately in advance; also, for ease of maintenance, the material must becompatible with the existing utility company stocks. These companies have thecompetence and experience to ensure rapid, efficient, and least cost executionof water and electrical works under the project.

58. The large number of small contracts (300), their similarity, and thecapability of the Borrower's agencies to procure efficiently would make theprior review of most of these contracts unnecessary. Only contracts exceeding$1 million would be reviewed by the Bank prior to award. All other contractswould be reviewed by the Bank after their award, and prior to the firstapplication for withdrawal.

59. Disbursement. The proposed loan of $30.2 million equivalent isexpected to be committed over a period of 3 years. Disbursement would startin calendar year 1986 (FY87), and would be extended over 9 years. The ClosingDate is December 31, 1994. Disbursement for each item will be as follows: 58percent of total expenditures for civil works; 50 percent of totalexpenditures for rehousing costs; 54 percent of total expenditures for houseconstruction and improvement loans; and 100 percent of total expenditures fortechnical assistance. The Bank would not finance the cost of land,administrative and overhead costs, or engineering studies. Disbursement wouldbe made on the basis of standard Bank disbursement procedures with theexception of house construction loans, and expenditures below $20,000. Forthese items, statements of expenditures would be required. The Borrower wouldretain all documentation to support the disbursements, and will keep recordsof all expenditures for examination by Bank missions.

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60. An amiunt of $0.4 million for retroactive financing, coveringexpenditures after July 1, 1986, would be provided for rehousing costsincurred for families displaced as a result of the need to demolish houses forinfrastructure works in upgrading areas. A revolving fund of $1 million wouldbe established in the Banque Centrale de Tunisie (BCT) to cover alldisbursements, and would be replenished against withdrawal applications.Documentation to support all withdrawala and replenishment of this accountwill be kept by BCT, and audited annually.

61. Reporting. Accounts and Audits. Accounting systems for CPSCL, CNEL,AFX and ARRU would follow the Tunisian Plan Comptable Commercial, whichadequately provides for recording of project expenditures. Each institutionhas agreed to keep separate accounts for project-related financialtransactions, and CNEL, AFH and ARRU will in addition to its project accountshave its annual accounts audited by independent auditors acceptable to theBank; all will submit these accounts to the Bank within 6 months after the endof each fiscal year. ARRU would prepare and consolidate accounts, and carryresponsibility for monitoring, coordination, and evaluation for the upgradingcomponent. AFE would submit to CNEL the details of the site servicingexpenditures; CNEL would consolidate AFE accounts and would keep accountsrelated to all house construction and plot acquisition loans.

62. Cost Recovery. About 80 percent of total project costs would berecovered as follows: for the upgrading component, cost of on-siteinfrastructure works would be recovered by the municipalities throughimprovement charges under the Contribution des Riverains, a frontage taxsystem, over a period of 20 years at an interest rate which shall cover thecost of their borrowings from CPSCT. These terms would be reflected in thedecrees establishing the frontage tax for all municipalities concerned.Utility connection costs would be recovered through utility tariffs. Cost ofland acquisition associated with the regularization of ownership, and cost ofland for the in-fill plots in upgrading areas, would be recovered throughdirect sales. For the site servicing component, cost of land and servicingwould be recovered through sales. The pricing policy for land sales wouldensure both affordability and effective cost recovery.

63. Selection of Beneficiaries. For the upgrading component,beneficiaries for the in-fill plots would be selected by a committeerepresenting ARRU and the municipality concerned. First priority would begiven to the families whose houses have been demolished, second priority tofamilies in the site whose houses are condemned for sanitary ox safetyreasons, and third priority to families who owa no house and who would bedisplaced to reduce overcrowding. Other beneficiaries would be selected onthe basis ef application date, among families with income of up to two timesthe minimm wage and who own no house. For the serviced sites, a selectioncommittee including AEH, CNEL and the municipality concerned would select thebeneficiaries. An upper limit of 30 percent of the lots would be reserved forCNEL and FOPROLOS subscribers. First priority would be given on the basis ofapplication date, to families with income of up to two times the minimum wageand taking into account the family situation. All beneficiaries would berequired to own no house, and document that they have sufficient income toafford the purchase of the plot.

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64. Income Profiles, Affordability Analysis and Urban Poverty Impact.The 1984 income distribution of the urban population of Tunisia was estimatedon the basis of the 1980 Household Consumption Survey, and the increase ofprivate consumption per capita during 1980-1984, assuming no major changes inthe urban income distribution pattern. The estimated 1984 overall medianurban household monthly income is TD 183. In the identified upgrading sites,it averages TD 93, and ranges between TD 55 and TD 140. According to theeligibility criteria for acquiring serviced sites, monthly charges should notexceed 15 percent of the median monthly income, or 33 percent of this incomewhen combined with a house construction loan. Overall, about 38 percent ofthe beneficiaries would be those living below the Bank-defined absolutepoverty threshold, estimated in 1984 at about TD 80 per household/month; theywould benefit from 36 percent of the project costs. With regard to theupgrading component, 38 percent of the beneficiaries would be urban poor andwould benefit from 39 percent of the component's costs. With regard to thesites serviced by AFH, 37 percent of the plots would be affordable by theurban poor, who would benefit from 30 percent of this component's cost.

65. The average monthly improvement charges for beneficiaries of upgradedsites would be TD 2.7 per household, or 3.1 percent of the monthly averagemedian income. Even if this percentage is increased to 8 percent, improvementcharges become affordable by an average of 96 percent of beneficiaries. Thecost of the smallest in-fill plot option, together with a construction loan,would be affordable by the families to be rehoused, and would represent nomore than 25 percent of their monthly income. Monthly repayments for theacquisition of the smallest AFH plot (80mZ) would be affordable by 95percent of all urban households (92 percent of all urban households for suchplot acquisition combined with a housing construction loan). For thesehouseholds, the first (and largest) portion of the downpayment required uponthe start of works (10 percent of the plot price) would not exceed 2 months'income.

66. The Economic Rate of Return (ERR) of the combined subprojectscurrently in the pipelines is estimated at 20 percent. It is expected thatthe rate of return of all individual subprojects financed under the loar wouldbe within the same range. Quantifiable benefits are based on estimates ofincreased renta; values for housing as a result of upgrading, and higher landvalues for newly serviced land. Indirect project benefits to neighboringareas would also be reflected in the increased rental and land values, butsince their measurement is difficult they have not been included in thebenefit stream. Sensitivity analyses show that either a 20 percent increasein costs, or a 20 percent decrease in benefits would drop the ERR to about 16and 15 percent, respectively; a simultaneous 10 percent increase in cost and10 percent decrease in benefits would drop it to 15.6 percent, and a one-yeardelay in benefits would result in an ERR of 16.6 percent.

67. Proiect Benefits and Risks. The project would assist the TunisianGovernment in alleviating the problems associated with poorly servicedcommunities, and would extend the benefits of upgrading such communities topractically every region of the country. It would also provide plots atprices affordable to low-income groups, thus helping to resolve one of themain constraints affecting the housing market. The project would continue aprocess of strengthening the overall institutional framework in the urbansector. During project preparation, both ARRU and AFH prepared upgrading andland development programs throughout the country; the implementation of these

- 21 -

programs would establish these agencies as the principal instruments fordeveloping, executing and monitoring well established national programs intheir respective areas of competence. The project would implement one of themajor recommendaticas of the Housing Sector Review by extending CNEL'sactivities to include the financing of land development and plnt acquisition.The project is geared towards low-income segments of the population. It wouldbenefit directly about 150,000 persons, of which 90,000 from improvement ofurban services in t1sir current residence, and 60,000 from acquisition ofserviced plots at low, affordable prices. The population of settlements andowners of vacant land adjacent to the project areas would also benefitindirectly from their proximity to improved services and environment.

68. In the past, AFH catered only to middle and upper-income groups, anddeveloped large lots, relying on future beneficiaries for prefinancing itsoperations. Under the project, AFH would introduce changes in itsadministrative and management procedures, adjust to a new financing system,and develop amaller, affordable lots to cater to the needs of low-incomegroups. The risk that these objectives may not be fully attained is reducedby the willingness of AFE's management to adjust its policies, the steps ithas already taken to change its mode of operation, and the support providedander the project through the technical assistance program. There is also arisk of delay in implementation, attached to the heavy administrative loadimplied by the large number and geographical dispersion of project sites.However, the experience gained under the Third Urban Development Project, thereinforcement of AtRU's staff, and the technical assistance program to AFHwould improve the capacity of these institutions to cope with their increasedresponsibilities.

PART V - RECOMMENDATION

69. I am satisfied that the proposed Loan would comply with the Articlesof Agreement of the Bank and recommend that the Executive Directors approvethe proposed Lean.

A. W. ClausenPresident

AttachmentsJune 9, 1986Washington, D.C.

-22- ANNEX IPage I of 7

TUEst.. -WSOCIA INIECAT DATA SHUETTUNISIA RXFIECxE mug (WICIWED AVERAGES)

MOST (MOST RECENT STRUT!) lbRCENT MIDDLE tINcomE IDOI T=ti

1960kL 19701k uTimgTrJb N. APIECA & KID EAST LAT. AMRIECA CAR

AREA IUUUD 3. U)TOTAL 163.6 163.6 L63.6AGRtICULTURAL 68.8 70.3 81.4

GNP R CIU1 (M) .. .. 1290.0 1134.9 1873.9

CKILOGRAMS OFIL 0 qUVLELrNT) I19.0 230.0 £96.0 623.9 993.6

EMUTION AN VTAL UTATICUPOPULATl0,MID-YEAR (THOUSANDS) 4221.0 3127.0 686.0URAN POPULATTON (2 OF TOTAL) 36.0 43.5 53.6 *9.0 67.7

POPULATION PROJCTIDNSPOPULATIOK L EA 2000 (MILL) 10.0STATIONARY POPLATION (MILL) 19.0POPULATIOH IOIE I 1.9

POPULATION DENSITYPER SQ. t. 25.5 31.3 42.1 37.6 48.0PER SQ. Dt. ACRt. LAND 61.4 72.9 82.4 470.1 91.1

POPULATION AC STRUCTURE (2)0-14 Us 43.3 46.2 40.3 43.3 38.3

15-64 YES 52.4 49.9 53.7 53.0 57.165 AND ABOE 4.1 3.7 3.8 3.3 4.2

POPULATION CRJI RATE (2)TOTAL 1.8 /c 1.9 /c 2.3 Z.8 2.47UAII 3.2 3.8 4.0 4.4 3.6

CRUDE XRTII RATE PER THOUS) 48.9 40.6 32.6 40.0 30.9CRUDE DEATa RATE (PER T7OMS) 21.0 14.6 9.1 11.5 8.0GROSS REPiODICTION RATE 3.5 3.2 2.4 2.8 2.0

FAMILY PLAINItICACCEPTORS. ANtUAL CTUS) .. 29.2 180.9 /dUSERS (C OF MARRIK 1EN*-) 41.0 21.4 45.3

IOOD AMD NZUIDWEX OF FOOD PROD. PER CAPITA(1969-71-100) 97.0 96.0 128.0 95.1 109.6

PR CAPITA SUPPLY OFCAI.ORIS (Z OF REAUR.ENTS) 95.0 96.0 111.0 118.2 113.2PROTEVIS (GRAIS PER DAY) 59.0 60.0 74.0 77.a 69.4

OF J;iCa AJNLLAL AND PLSE 13.0 14.0 n.0 Ia 17.8 34.2

CHILD (ACES I-4) DEATH RAE 36.1 23.9 8.0 12.8 4.8

LIFE EXPECT. AT BIRTH TEARS) 48.1 54.2 61.5 57.8 64.8IANFAST URT. RATE (PEU THOUS) 157.5 131.0 63.0 96.8 59.7

ACCESS TO SAFE WATS (C10P)TOTAL *- 49.0 70.0 67.2 65.3URBA .. 92.0 91.0 93.4 76.5

RURAL . 17.0 46.0 45.8 44.2

ACCESS T0 EXCETA DISPOSAL(2 OF POPUATION)

TOTAL *- 62.0 56.0 /f 45.9 56.3URaN .. 100.0 42.0 63.0 73.4RURL .. 34.0 .. 28.6 25.5

POPULATION PEat PhlSICIa 10030.0 5930.0 3690.0 If 4331.0 1909.7POP. PER NURSIR PERSON .. 730.0 890.0 o7 1U45.0 808.2POP. PER NOSPTAL II0

TOMTL 410.0 410.0 460.0 Id 621.8 362.0URBAN 230.0 310.0 350.0 r 545.0 422.0RURAL t010.0 j 1270.0 1230.0 7 2511.3 2716.7

ADMISSIONS PER HOSPITAL BED .. 24.1 25.0 lh 25.7 27.3

AVERAGE SIZE OF IOUSEHOLDTOTAL .. 5.1 7iURBAN .. 5.17 .RURAL .. 5.17

AVERAGE NO. OF PERSONSIROOTOTAL .. 3.2 /7URBAN .. 2.7 7rRURAL .. 3.6 7

PERCENTAGE OF UJELLIS WMH ELECT.TOTAL .. 24. O 7URBAN .. ..

RURL .. ...

-23- ANNEX IPage 2 of 7

_TII - SOCUL INDICATORS DATA ISESTTUNISIA REVERNC GROUPS (IIIQTED AVERAGS) ^

:E1ST (MOST RECST ESTIMATS) lbRECENT MIDDLE INCO1E MIODDLE T-om

INO 1970l sTWATR/b N. AFRICA A MrD wM LAT. AMRZCA CAU

ADJUSTEO ROLINENT RATIOSPLIItYV TOTAL 66.0 101.0 111.0 89.8 106.7

ALE 8U.O 121.0 123.0 10? .7 108.5FEMAL 43.0 80.0 98.0 75.2 104.6

SECONDART: TOTAL 12.0 23.0 32.0 42.9 44.2ALz 19.0 33.0 39.0 50.9 42.7

VfCLW 5.0 13.0 25.0 34.6 44.9

VOCATIOHAL tS oW SECONDAIY) 23.5 11.1 23.6 10.0 13.3

PPIL-TZACH0R RATIOPRIM 61.0 47.0 36.0 29.7 29.9SUCODAR 16.0 28.0 19.0 18.8 16.7

PASNUR CARS/THOUSAND POP 10.5 13.0 .. 17.6 46.0RAOW 1CEIVERS/TEOUSAND O POP 40.3 75.7 166.0 175.9 328.3TV RSCKIVSRS/?HOUSAID FM 0.1 14.0 52.2 51.2 112.410SPER (eDAILT GENEALIX=IZST`) CIRCULATIONPER THOUSAND POPULATION 1.6 15.9 40.5 37.2 81.1

CXriEA ANNUAL ATTENDANC/CAPITA 1.6 .. 1.5 2.4 2.4

LA ORTOTAL LABOR FORCE CTHOUS) 1138.0 1215.0 1770.0

FEMALZ (PERCENT) 6.0 7.7 8.6 11.0 23.6AGRICULTURE (PRCENT) 56.0 50.0 35.0 If 42.4 31.4INDUSTRY (PRCENT) 18.0 21.0 32.0 7F 27.9 24.3

PARTICIPATION RATE (PERCENT)TOMAL 27.0 23.7 25.7 26.2 33.5MALC 50.2 U.2 46.4 46.2 51.3FZiALE 3.3 3.6 4.6 5.8 15.9

ECONOMIC DRPENDENCT RATIO 1.8 2.1 1.7 1.6 1.3

a~m DISTRIrmIPERCENT OF PRIVATE INCOME,RECIVED JS

HIGHEST 52 OI HOUSEHOLDS ..nIGCHST 20S OP WOUSEHOLDS ..LOCUST 20S OF HOUSEHOLDS ..LOWEST 4020 HOUSZEOLDS ..

povm lRGI CROSESTIMATE ASSOI MOV INCWMLEVL (US$ FMB CAPITA)

URBAN .. .. 204.0 /a 226.3 288.3RURAL .. .. 97.0 7e- 134.0 185.3

ESSTIMTD RELATIVE POVET INCMLVL (USS PEQ CAFITA)

URBAN ,, .. 193.0 /a 431.5 519.8RURAL .. .. 193.0o7W 326.0 359.7

ESTIMATED POP. SELOW ABSOLTEPOEny DCOME LEVEL (Z)

URBAN .. .. 20.0 /aERuL .. .. 15.0o 29 Z90

.. MT AVAILABLEMOT APPLICABLE

N*oTs

/a The group arape for each indicator are population- eghted arithmetic mane. Coverage of countrlmmano Che indicators depends on availablity of data and is not unifors.

/b Y"%lsa otherisme noted. 'Data for 1960" refer to any year betwean 1959 and 1961; "Dat for 1970" between1969 and 1971; mad data for "tMot Rece gEtimate" betwee 1981 and 1983.

/e Dme to guigracioe. populatlo. grovth rate is lovwr then rate of natural acrteaoo; /d 1979; 1/ 1977;/f 1980; Ig 1962; b 1976; It 1966.

.TUZ, 1985

-24- ANNEX I- 24 - Page 3_of 7

DEFnNmONS OF SOCIAL INDICATORSNoUn: Alihough the daa amredawn from soucesgenerallyjuded the most authonrtive and reliabk. it should asJo be noted thait they mey not benternaiionallyconparatbe beoause of the tack of standardized deftndions and cocpu used by dilerent counaies in coilecting the data. The doa are. nonetheless ueul todescribe orders or magnitude, indicate trends and hiaraerize censin majpr diffefences between countries.Mte refere groups are I1) the same country group of the subjecg country and 121 a country group with somewhal higher average incomc lban ihe countrySroupofhesubjt country (excpt for "High Income Oil Eporners noupwcer-Middle Incomie Nonh Africa tiad Middk East- ischosen bccaule ofstrongersocio-cultiral aiitiel. In the reference yroup data the averages are population weighted arithmetic meant for each indicator and shown only when majortyorthe cotries in a roup hbuadatn for tht iiscitotw Since the cove orcountrie among the indicators dcpods on the svailability ofdata and is nor uniform.caution must beexercid in milting average ofone indicator to another. These averae a only usefu in compainng the value ofone tndiator at a ime amongthe county and referi groups.

AREA (thousand sq.kzn.) Crude Birt Rate (per rtohmud) -Number oflive births in the year

Total-Total surfaice area comprising land area and inland waters; per thousand of mid-year population. 1960. 1970. and 1983 data.

1960. 1970 and 1983 data. Cude Death Rate (per thonsand)-Number of deaths in the yearAgsikuskWE-Estimate of agricultural area used temporarily or per thousand or mid-year population: 1960. 1970. and 1983 data.pennanently for crops. pastures. market and kitchen gardens or to Grs RepiRofetioa Rat-Average number of daughters a womantie fallow. 1960, 1970 and 1982 data. will bear in her normal reproductive period if she experiences

present ag-specific fertility rates: usually five-year averages endingGNP PER CAPITA (USS)-GNP per capita estimates at current in 1960. 1970. and 1983.market prices. caulated by same conversion method as World fiamily Pmaniici-Accetors, Amnnl fthousandsj-Annual num-Bank Atlas (1981-83 basis). 1983 data, ber of acceptors orbirth-control devices underauspices ornational

ENERGY CONSUMPTION PER CAPITA-Annual apparent family planning program.consumption of comwercial primary energy (coal and lignite. Facdy PLa -LUsrs (percent of arriied mrwf-The percen-petroleum, natural gas and hydro-, nuclear and geothermal elec- tage of married women of child-bearing age who are practicing ortricity) in kilograms of oil equivalent per capita; 1960. 1970. and whose husbands are practicing any form ofcontraception. Women1982 data. ofchild-bearing age are generally women aged 1549. although for

some countries contraceptive usage is measured for other agePOPULAInoN AND VITAL STATITCS groups.

Total Pop iakia. Mid-Year (thomasr)-A of July 1. 1960. 1970. FOOD AND NUTRM ONand 983 data.[Urban Pop.sdmla (percent of total)-Ratio of urban to total Idx of Food Production Per Capita (199-71 - OOJ-Index of per

diffrefnt definiRtions Of urban areasmayaffecto totpar capita annual production of all food commodities. Productionpopulaton: dferent denions of urban areasnay affectcompar- excludes animal feed and seed for agriculture. Food commoditiesability of data among countries; 1960. 1970. and 1983 data. include primary commodities (e.g. sugarcane instead of sugar)

tpuato PrIojecdeu which are edible and contain nutrients (e.g. coffee and tea arePopdation in year 2000-The projction of population for 2000. excluded); they comprise ceeals. root crops. pulses. oil seeds.made for each economy separately. Starting with information on vegetabkls, Fruits, nuts. sugarcane and sugar bee livestock, andtotal population by age and sex. fertlity rates. monality rates. and livestock products. Aggregate production of each country is basedinternational migration in the base year 1980. these parameters on national average producer price weights: 1961-65. 1970. andwere projected at five-year intervals on the basis of generalized 1982 data.assumptions until the population became stationary. Per Capta Suply of C ries (percet ofreqmrnwtsJ -Comput-Stationary population-Is one in which age- and sex-specific mor- od from calorie equivalent of net food supplies available in countrytality ates have not changed over a long period. while age-specific per capita per day. Available supplies comprise domestic produc-fertility rates have simultaneously remained at replaemetnt level tion. imports less exports. and changes in stock. Net supplies(net reproduction rate= 1). In sucb a population. the birth rate is exclude animal feed. seeds for use in agriculture. quantities used inconstant and equal to the death rate, the age structure is also food processing. and losses in distribution. Requirements wereconstant, and the growth rate is zero. The stationary population estimated by FAO based on physiological needs for normal activitysize was estimated on the basis of the projected characteristics of and health considering environmental temperature. body weights.the population in the year 2000. and the rate of decline of fertility age and sex distribution of population. and allowing 10 percent forrate to replacement level. waste at household level: 1961. 1970 and 1982 data.

Popultion Momenum-Is the tendency for population growth to Per Cpita Spwy of fProtein (gr per day) -Protein content ofcontinue beyond the time that replacement-level fertility has been per capita net supply of food per day. Net supply of food is definedachieved; that is. even after the net reproduction rate has reached as above. Requirements for all countries established by USDAunity. The momentum of a population in the year t is measured as provide for minimum allowances of 60 grams of total protein pera ratio of the ultimate stationary population to the population in day and 20 grams of animal and pulse protein, of which 10 gramsthe year t. given the assumption that fertility remains at replace- should be animal protein. These standards are lower than those ofment level from year t onward. 1985 data. 75 grams of total protein and 23 grams of animal protein as anfPbopddo De-iry average for the world. proposed by FAO in the Third World FoodPer sqkns.-Mid-year population per square kilometer (100 hec- Supply; 1961. 1970 and 1982 data.tares) of total area; 1960. 1970. and 1983 data. Per Capita Potxein Spply frrom Animal and Pue-Protein suppivPer sq.km. agricultural land-Computed as above for agricultural offood derived from animals and pulses in grams per day: 1961-65.land only. 1960. 1970. and 1982 data. 1970 and 1977 data.

Pu'pulatiou Age Stdrawe (perceru)-Children (0-14 years). work- Chdld(ages 1-4) Deark Rate fperthousand)-Number of deaths ofing age (15-64 years). and retired (65 years and over) as percentage children aged 1-4 years per thousand children in the same ageof mid-year population; 1960. 1970. and 1983 data. group in a given year. For most developing countries data derivedPopaLutiow Growth Pote (PercentJ.-tarol--Annual growth rates of from life tables. '960. 1970 and 1983 data.total mid-year population for 1950-60. 1960-70. and 1970-83. HEAIXH

Popatio Growtk Rate ere aAnnual growth rates Life Erpectancy at Bith {years}--Number of years a newbomof urban population for 1950-60. 1960-70. and 1970-83 data. infant would livc if prevailing patterns of mortality for all people

-25- ANNEX I- Page 4 of 7

at the time of of its birth were to stay the same throughout its lire. Pupl-eeucher Rurio primary. and rtnndarv-Total students en-1960. 1970 and 1983 datL rolled in primary and secondary levels divided by numbers oflfr' Mutrtaft Jbe (pr tho*ssnd)-Number of infants who die teachers in the corresponding levels.before raching one year of age per thousand live births in a givenyear. 1960. 1970 and 1983 data. CONSUMPTIONAccess te Si* Wwr (Prp of ai-oti d Paseer Crs (per thozosad pp iouj-P.assenger cirs c'm-N -Numnber of people (total, urba and rural) with reasonable prise motor cars seating less than eight persons: excludes ambul-access to safe water supply (includes treated surface waters or ances. hearses and military vehides.untreated but uncontaninated water such as that from protected *AS Rkeefiws (per tlsosadpoepalti.u)-All types of receiversboreholes spings and sanitary wells) s percentages of their respec for radio broadcasts to general public per thousand of population:tive populations. In an urban area a public romtain or standpost exdudes un-licensed receivers in countries and in years whenlocated not more than 200 meters from a house may be considered registration of radio sets was in effect: data for recent years mayas being within rasonable amcss of tha houw. In rural areas not be comparable since most countries abolished licensing.reasonable accs would inply that the houwfe or members of thehousclhold do not have to spend a disproportionte part of the day TV Reeies (per Mosta idpopultji-TV receiverS ror broadcastin fetching the family's water needc to generd public per thousand population: excludes unlicensed TVAcce to Ete 0Di4_ (pecu of popba t-iar - . receivers in countries and in years when registration of TV sets wasad rural-Number of people (total, urban. and rural) served by in effec.xcreta disposal as percentages of their respective populations. NwsW' Crckteu (per thou-ad popwlationi-Shows the aver-

Excreta disposal may include the coflection and disposaL with or age circulation of -daily general interest newspaper." defined as awithout treatment, of human cxcraa and waste-water by water- periodical publication devoted primarily to recording gencral news.borne sysm or the use of pit privies and similar installations. It is considered to be -daily' if it appears at least four times a week.PopmUla pePr PAWddan-41opulation divided by number of prac- CixER Annua Attend,e pfr Capita per Year-Based on thetising physias qualified from a medical school at university levd. number of tickets sold during the year. including admissions toPUIUtIOA per N_rsin Pavow-Ibpulation divided by number of drive-in cinemas and mobile units.

praticing male and femaic graduate nurses, assistant nurses.pracical nurses and nursng auxiliaries. LABOR FORCEPoalwhm pr Hospital eBd-tot, urb=4 and ronl-Plopulation TOa Labor Foce (thousaxo6j-Economically active persons. in-(totaL urban, and rural) divided by their respective number of duding armed forces and unemployed but excluding housewives.hospital beds availabic in pubic and private,nral and students. etc.. covering population or aU ages. Definitions inhospitals and rehabilitation centes Hospitals are estabishments various countries are not comparable. 1960. 1970 and 1983 data.pernanndy staffed by at least one physician. Establishments prov- F.e (percent-Female labor force as percentage of total laboriding pnncipatty custodl care are not included. Rural hospitals, force.however include health and medicalcenters not pmanendy staffed Agrihwr (peicatj-Labor force in farming. forestry. huntingby a physician (but by a medical assistant. nurse. midwife, etc.) and fishing as percentage of total labor force: 1960. 1970 and 1980which offer in-patient accommodation and providc a limited range data.of medical facilities. Idstry (percet)-Labor force in mining, construction. manu-Ad.4iour pr Hospial Ae--Total number of admissions to or facturing and electricity. water and gas as percentage of total labordischarges fromn hospitals divided by the number of beds. force: 1960. 1970 and 1980 data.

HOUSNG _n Ror (prcentJr-oetl. web. audfemle-ParticipationHOUSING or activity rates are computed as totaL male, and female labor forceAvre Size of Hasehdt (pons pwr l fseJ t)-stota, vrhe, as percentages of total, male and female population of all ages

adrura-A householdconsistsof a groupof inivMduals who share respectively. 1960. 1970. and 1983 data. These are based on ILOasliving quartrs and dteir main meals A boarder or lodger may or panicipation rates flecting age-sex structure of the population. andmnay not be uicluded in the household for statistical purposes long time trend. A few estimates are from national sources.Avrae Nume of lArnaw per Room-_t.L u,bn. an wral- Eeaonmfc DepeudenKy Rad2o-Ratio of population under IS. andAverage number of persons per room in all urban. and rural 65 and over. to the working age population (those aged 15-64).occupied conventional dwelings respectively. Dwellings excludenon-permanent structures and unoccupied parts. INCOME DLSTRIBUTIONPferum of DweEags *it Elerr;ic&v-uota, urban ad rral- Aercute of Total Dnposablk Incow (boh i cas and ki.i -Conventional dwellings with elecicity in living quarters as percen- Accruing to percentile groups of households ranked by total house-tage of total, urban. and rural dwellings respectively. hold income.

EDUCATION POVERTY TARGET GROUPSAdjsed EvAlmeat Ratos The following estimates are vern approximate measures of povertvPmwary scdol - total. make and fenale-Gross total, male and levels. and should be interpreted with considerable caution.female enroUment of all ages at the primary levd as percentages of Estiaed Abselute Poperty 1ucoie Lerel USS per caitaJ j-urbmrespective prunary school-age populations. While many countries and rural-Absolute poverty income level is that incomc levelconsider primary school age to be 6-11 years. others do not. The below which a minimal nutritionally adequate diet plus essentialdiffernces in country practices in the ages and duration of school non-food requirements is not affordable.are reflected in the ratios given. For some countries with universal Estiuared Reaie Poverty Incom Level (LSS per caital-urbneducation, gross enrollment may exceed 100 percent since some and raral-Rural relative poverty income level is one-third ofpupils are below or above the countrg's standard pnmary-school average per capita personal income of the countrn. Urban level isage. derived from the rural level with adjustment for higher cost ofSecondary school - totat. male and femal-Computed as abovc, living in urban areas.secondary education requires at least four years of approved pr- E'dma.ed Poplain Below Absolte Poverty Income Level (per-rnary instrauction provides generl. vocational. or teacher training cent)-urbar and rual- Percent of population turban and ruralinstructions for pupils usually of 12 to 17 years of age. correspond- who are -absolute poor.-ence courses are geally excluded.Vocaional Enro/imea (percent of secandvry-Vocational institu- Comparalive Analysis and Data Divisiontions include technicaL industrial. or other programs which operate Economic Analysis and Projections Departmentindependently or as departments of secondary institutions. June 1985

-26- AN* Pane 5 of 7

7nITA - EaW c DWTsI

Axial QmK Date(at 196D prime)

(milvin US$ ActuFl PM1. Pmijete

zhicator at cut pi199w 1979 1960 1981 192 1983 199 1985 196 1991

NIWBM A_DLZGron damatic pwuct -/1 7,9W&5 6.6 7.4 5.5 0.1 4.9 5.5 4.5 2.1 3.6

Agdcu1lM 1059.2 -4.8 9.9 6.5 -10.3 2.5 13.3 1.0 -3.8 2.51uaty 2,41L8 10.8 9.0 6.8 0.5 7.3 3.2 1.1 2.6 3.8

Servic. 3,411.8 8. 7.7 6.6 2.4 3.9 5.0 4.3 3.9 3.8

Cmaim 6,387.4 4.0 27 7.4 3.4 6.2 4.8 3.3 1.9 3.0uM iu. 2,501.7 6.3 0.9 15.1 1.5 4.3 08 -124 -7.4 3.0

ortofgooaEiz d WS 2,720.7 21.5 0.0 3.5 4.9 L4 2.4 3.0 5.8 4.1liqmts of goodi N Ws 3,658.3 15.1 4.5 13.0 0.9 -1.8 5.2 -10.0 -1.3 2.3Gro sasmaml pdtct 8,011.6 6.9 7.9 5.8 0.2 4.6 5.2 3.5 2.2 3.7Gi.as 1Mdno p 1,624.2 15.2 -4.7 0.7 -10.1 -1.3 6.7 4.3 3.4 6.2

Pdefl=atr (1980D- 886 100.0 114 128.1 139.9 149.4 158.9Etbin mte 2.460 2A69 2.025 1.693 1.473 1287 L198

awre of (MP at uedit prices (Z) tismt Sapam pa*h mta(Z)(at awt pr) 2/ (at cmtat prie.)

1971 1976 1981 1983 1986 1991 1971-76 1976-81 1066 198691

Gis dometic prdkict /A 100.0 100.0 100.0 0.0 100.0 100.0 7.1 6.1 3.8 3.6AgricutUre 19.4 17.8 13.7 12.4 14.4 L1.2 6.3 1.6 5.0 2.5Jmluutry 20.5 25.2 32.0 30.2 29.1 31.2 L6 .9 3.1 3.8Service 47.1 44.0 41.8 44.0 43.4 43.1 7.1 6.5 4.0 3.8

020RW2a2 80.5 77.3 76.1 80.2 80.8 78.4 8.9 7.4 4.1 3.4_ ts inieut 21.5 30.7 32.3 2B.8 24.9 23.1 5.9 6.6 -2.2 3.1

eeorts of goods mdFWS 24.1 29.1 41.4 35.4 32.9 34.3 7.1 .5 1.4 2.71ports of good. aNFS 26.1 37.0 49.8 44.4 38.6 35.9 U.6 10.8 -1.6 2.0Cam usiaza pno&ct 99.6 98.7 100.8 101.2 99.7 99.5 7.0 6.6 3.5 3.6No fw:or i --0.4 -1.3 0.8 1.2 -0.3 -0.5 8.5 0.3 -24.2 -16.4(kg. rsticoal aaViZW 19.1 21.4 24.6 21.0 18.9 21.1 -2.3 4.2 1.3 4.3

As Z of MP(at eajnrt prices)

1976 1981 1983 1984HM.IC FWLM(

Oirrct zwem 26.8 29.3 31.3 32.6Oarezt epnitnr 19.9 21.5 23.1 24.7Surphs (W) orefit () 6.9 7.8 8.1 7.9capital iadi±ur 11.8 15.3 15.2 16.5Foaenip figmrirg 1.0 1.0 1.7 2.3

1971-76 1976-81 1981-86 1986-91OIE fl)AM

G6P per CpiLta guwrth rate (Z) 5.0 3.6 2.9 l.9-mR 2.7 5.2 89 6.5margirsav iz aite -0.0 0.1 0.0 0.3Evort elastcity 1.6 1.8 -0.4 0.6

(*) World Bink Atl- MWvdolog11 GP at et price aid cmqpmxiat. at £ator cost./ Projected yea in ct= pries.

EM II-CApril 1986

1061S/2

-27- ^AM I- oM8IA Zf 7

Aiua mth Rat.Aount (at 1910 Prime)

(aLfim Us AcUml FMl. Pgoiat awegn pric)

Jalicatar 198k 1979 1960 1961 1962 L983 l966 1965 1966 1991

bpqet O 'pede 1,801.0 l9.0 -0.4 4.3 -6.9 3.8 0.7 -0.1 5.8 3.5Ptrolu 796.9 22.9 2.2 -7.3 -20.9 0.6 -1.7 -1.0 -8.6 -12.0

Agackule 92.7 1L4 -31.1 83.5 -38.3 -13.4 59.S -14.1 9.9 4.0Odor pdmtil 102.7 9.3 -18.2 12.4 -I3.8 27.9 -0.9 13.0 13.0 15.5PHmfactba ir 80.L7 13.3 2.5 13.3 LS 6.4 -1.4 L0 16.5 6.6

poatt of amind 3,232A 15.9 4.5 11.7 -0,9 -2.9 5A -1L29 -m1 2.0Fbod 467.3 17.4 -7.0 29.1 -7.7 20.7 2.6 -22.2 -9.9 4.0Yero1a 372.0 62.1 7.9 -6L7 -46.9 3.0 7.3 4.4 9.4 -3.4Jatimuaijtsodm 969.8 20.2 11.0 3.8 124 -4.6 7.9 -5.8 0l.1 3.4Cwpitsa Spxd 839.3 -9.6 -2.2 40.9 15.8 -19.5 9.8 -24.8 -4.9 0.3Odure 563.9 8.4 6.3 6.6 61 10.8 -3.6 -11.1 -M3T7 2.8

Prie 1nd

RsV jwic. WM 74.3 M0.0 9EL3 87.0 78.7 75.7 73.1 61.0 9L6'M It prie Wm 82.1 I00. 93.4 84.5 80.0 78L7 75.0 74.2 104.7

M of tmok im 90.6 10.0 1052 laL00 9S.4 96.l 97.4 82.2 90.3

{Oeiziot of Nschadiu. Je (2) eat Sq.m pmOth Rae (2)(at azrmw pies) (at autazt Priem)

1971 1976 19E1 1983 1996 991 1971-76 1976-8 I91-66 196-91

1aparts of po 100.0 I0.0 100.0 100.0 10.0 100. 5.0 8.1 0.5 LSDzo1M 26.9 42.3 53.3 44.7 21.3 11.4 3.4 7.4 -5.0 -13.1

Apiaabta 12.6 4.5 3.1 4.4 6.3 4.4 4.4 2.4 -0.5 4.0Other pdinim 21.3 lLl 4.4 4.8 7.4 11.3 2.9 0.5 L1 14.9

-mafaturizg 1 39.2 42.1 39.2 46.1 65.0 72.9 9.2 11 5.2 6.5

Ipozt of Soal. 100.0 1o0. 100.0 1 1o 00.0 14.2 10.4 -2.6 L6Food 19.6 123 11.4 13.9 1L9 13.2 -1.9 11.6 -3.3 4.0P Do1au 3.6 1L1 19.8 11 7.2 6.6 30.5 17.6 -4.2 -5.5Intediae good 30.1 21L8 2.L 29.9 40.0 41.5 12.1 10.2 2.6 3.4CPinl god 27.7 31.9 25.4 25.5 21.6 19.1 1LO 4.9 -7.4 0.1Odars 19.0 15.8 15.4 19.5 L83 19.6 21 11.4 -2.5 3.2

Sure of le with Sur of Trae with Sue of le with Sur of Tde witI1Ukatrial 0matdis (2) lDeloDpiz a iries (Z) Oil 1zT.M (O) Ca.tmlly Plmzud ('mries (Z)1970 1975 199D 1984 1970 1975 1990 198M 1970 1975 19D 109W4 1970 1975 1960 194

&zporcu 70.8 60.1 68.7 76.9 4.9 21.7 25.4 14.5 13.9 11.1 4.8 7.7 9.4 6.1. 0.4 0.9Tqurts 85.9 79.5 818 80.7 7.1 10.9 7.7 u1.8 0.7 6.3 7.5 3.6 6.3 3.1 3.0 3.9

1/ lxmes foo pmeru ig, phptes deriwtives, chanial. textile, aeunicl ad electrical inlutrim.

lD61513 El 1966-CApil1 986

N IIQro 7

-28-

muum - MAN= C MM. UIML CAIL AMDOW(miulmi UN6 at awmpt m)

,bal hal. t19S 1979 1D 196 196I 13 lob 'V91

LMAIZ OF FAUUEUNot balme of71 ie& _wlAc 416.7 450 -472.6 -67.3 -790. -437.2 -8.0 -437.8 46.3 -533.0

otWaz of soads & irvic 1,479.5 3,137.5 3,91L3 3,96.5 3,477.9 3,309.5 3,137 3,0.O 2,195.1 4,9662lwoa of p A XWLCM 1,196.2 3,4935 4,3849 4,613.5 4,2667 3,9467 4,020.7 3,567.7 3,557.1 5,519.2

1t t c . -0.S 10.3 5L5 18.2 23A 1L9 9.0 10.7 I1 16.9Dinat acwzt ba1g 417.2 -36M6 414.1 449.0 -767.4 4 2 875.0 -527.1 -549.2 -516.1

Dhut privam iaunit 102.6 50.9 236.0 367.2 402.2 22L38 36.0 131.8 24 1362Quts 53.2 50.7 41.5 3L3 19.0 25.3 21.6 2460 26.0 120ILT loan (not) 256.6 373.7 215.1 275.4 315.0 372.0 328.0 324.0 Y30.3 403.0

OfEicial 127.4 1L4 126.5 14L85 1S.2 M9.0 3660 409.0 194.0 397.0friwam 131.2 185.3 86L5 1269 .8 123.0. 40.0 45.0 1463 LO

Otdr caital 35.9 -5.7 1.3A -78.6 482 159 163.0 L9 0.0 0.0=o_ in wrm s- iwim izume) 38.7 -124.0 -6469 -9.3 -27.1 14.7 149.7 45.7 0.3 -34.9

owastil ad 273.0 357.9 422.9 51L2 5Y.3 527.6 377.9 332.2 331.9 52a2b.mz~ma/1qmit 1.8 1.2 1.2 1.3 1.5 1.6 1.1 1.1 1.1 1.1

kcbaa1976 1979 1910 1911 19 19B3 19t4

Official 53.2 50.7 41.5 2.3 19.0 25.4 25.8Groms diab s of ILN amm 250.8 637.8 559.1 607.2 629.0 741.8 821.6O,muinl 109.3 140.9 206.4 245.5 NA. 1 165.7 301.4

Bilatral 100.4 140.0 19.4 239.5 230.0 142.7 286L0t 8.9 0.2 LO 1.1 1.0 - -

ocl uitiacecl 0.0 0.7 7.9 6.0 16.2 23.0 13.4lNcos a 'muol 141.5 4969 352.7 361.7 3MM.9 576.1 520.1

pri-a3 71.6 37a3 Z35 224.4 255.0 366.0 258.0Official re dits 9.9 49.6 55.5 35.4 24.4 87.6 155.3IND 25.3 55.4 51.1 69.4 8L8 89.6 88.0Oter wald.latem 30.2 13.7 22.6 32.5 21.7 32.9 15.8

Is amDebc csaNti. i Diab=W 1,M18L6 3,021.5 3,227.4 3,280.9 3,4805 3,655.7 4,02D.5

officiaL 976.2 1,1.7 2,038. 2,149.1 2,384L0 2,478.0 2,&5.5IV127.6 2320 269.0 319.6 375.5 434.2 41D.9Mt 66.1 67.3 67.9 67.5 67.8 67.0 66.2other 78.3 1,554.7 1.7011 1,762.0 1.905.7 1,976.8 2,296.4

rivte 206.4 1,166.8 1,119.4 1,131.8 1,32.5 1,180.7 1,175.0Ubisbuded ddet 1,124.8 1,819.8 1,925.6 2,020.7 1.9007 2,065.9 1,961.0

DMr SEzTorad dit service payq s 9L5 3L5.4 430.4 517.0 483.3 56D.2 661.7

lr.ezac 36.9 162.5 215.9 204.7 1W4.8 189.8 221.9Pryyinu as Z aswzcs 6.7 10. 1LO 13.1 13.9 16.9 21.7baqut, asn Z 1.9 3.6 4.2 5.3 5.1 6.1 7.7

AveMe interea me of ONa4 (L 5.5 7.2 6.8 8.1 7.6 8.2 9.5Official 4.3 5.6 5.9 6.9 7.1 - -Privae 7.9 9.8 10.5 12.7 9.4 - -

hArve mbzity of amwA (yars) 16.3 15.6 17.4 15.6 17.5 13.9 11.8Official 20.4 19.4 19.4 18.2 2.2 - -Private 8.6 9.2 9.2 5.8 10.2 - -

AI of Sb GGtGREqat Fad of mbat l_t

Year (1964)DEBTr Sn

biiy s*mtutc of diet omtstxdiN (JAnt'iation due wisxin 5 years 41.2Amartiration due wijdn 10 years 67.7

Intrest swgcare of debt agstang .t :)Inteet due within first year 4.1

/1 N1.- s my not aid up due to roundirg.14 CP 198C

1061S4 April 1986

ANNEX IIPa. 1 of 2

IN3 SUMlJS OF BANK UWP o0 ATf IN IINESIA

A. SrYT3E c' BAW LS AND Mi C)IS (As of March 31, 1986)

US $MillionLoan or Amout (leasCredit C11e11ation)Mats Year Borwwr fatpose Bk Di Undisburued

Forty-fawr la and Ckedits Fully Disurue 468.94 75.15

1601 1978 Republic of lbnisia Rurml Iads (Ihird 1igunya) 32.00 5.871675 1979 Reptblic of Tminiaa Secoud Urban Sergs 26.50 7.091705 1979 Republic of Uiisia Secemd Urbn 1 lopast 15.00 2.771746 1979 Republic of lmiuai Seccad Fileries 28.50 12.951796 1980 Republic of Tmisia Southem Irrigation 25.00 11.011797 1980 Office des Pbrts Nationam Third Fort 42.50 9.981841 1980 Republic of Thiuia Fourth Highsya 36.50 16.431864 1980 Socitfi Tuanisieme de

l'Electricit ect du GQz Seccnd Natural Grs Pipeline 37.00 14.211885 1980 Bhqie Rationale de limisie Third Agricultural Gtnwc 30.00 5.961961 1981 Republic of lbnisia Fourth Edation 26.00 21.601969 1981 Republic of lhisia Smill-Scale LAatry Developnt 30.00 16.981997 1981 Republic of lhnisia Nrthest Rural Developmumt 24.00 14.812D03 1981 Soci&t& lluisienne de

1'Electricitf et du Gaz hird Power 37.50 4.702DI5 1981 Republic of lmisia Health and Ptpulation 12.50 9.822052 1981 Republic of l)miaia Grain Distrihatic and Storage 38O. 21.712108 1982 Republic of enisia Fifth Highwy (Rnal Roads) 35.50 23.632113 1982 aDET Electrical and Methanical Idta,tries 30.50 13.112134 1982 SONE Sixth Water StVly 30.50 5.722157 1982 Republic of au isia Irrigation Dewelqmun 22.00 17.352197 1982 Rpublic of Mimisia Technical Assistare 4.50 2.992223 1983 Republic of Thnisia Urban Jeelopment III 25.00 21.992230 1983 Republic of lmiaia Eidwation V 27.00 25.482234 1983 Republic of Tlisia Central Ibnisia Irrigation 16.50 11.282255 1983 Republic oE Mnisia Urban Ss-erge m 34.00 32.162289 1983 Reptblik of limisia SEa Flowd Potection 25.00 22.322301 1983 SLFl& Industry (IV) Foundry 16.80 12.072346 1984 Republic of Mmisia Hining Technical Assisae 13.40 11.452368 1984 Republic of d misia Seventh Wat Sqly 50.00 47.612429 1984 Republic of Ibnisia Secd Urba Transport 33.00 32.922455 1984 Sociht4 Ilisiesu de

1'Electricict er du Gaz Fourth Fbwer 38.70 38.602502 a/ 1985 Republic of Manisia tbrth West Agricultural Pwduirtion 15.00 15.002522 1985 Republic of Ibnisia Export Tndustries 50.00 50.002554 1985 Republic of fimisia Second Electrical and Mechnical 54.00 54.00

ILdustries2573 al 1985 Republic oE Tenisia Lrrigation _ euaot Jp4wveAent 22.00 22.002605 ui 1985 Reptblic of Ianisia Gabes Irition 27.70 27.70

IGAL 1,481.04 75.15 663.26Of widch has been repaid 260.31** 9.84**Total nw outstandirg 1,220.73 65.31Amount Sold 23.38

of which has been repaid 14.33Total now held by Balk and DA lb 1.197.35 65.31

Ibtal tLdisbursed 663.26

a/ Not yet effectivebI Prior to echarge rate adjusment

June 1986

106LS/1

- 30 -

Page 2 of 2

SZADr OF Iy INJE:l1 IN IDNSTA (AS F UIM 31, 1986)

YbTr (bligetor ?Ap of DUiniS AwLmt of US Millionlow Eic TOCal

1962 NRK gi Fetilizers 2.0 1.5 3.51966 Saci6cf tktionle

d'lnvestieut (n. MV) Dev. Fini:e CD. 0.6 0.61969 CrFD (Cbaunm wu DM) IDv. Finmce Co. 8.0 2.2 10.21970 IlEi Dev. Fine Co. 0.6 0.61973 Socikt furiscque et

Hieliire ON Si. Imbri_ 1.6 0.3 1.91974 Idustrums Oiiques du Fluor Q6>cas 0.6 0.61975 SociSte d'Enxds et de

Dvelaoppint de Sm5sse4b Tiri m 2.5 0.6 3.11978 EInv. Fine Co. 1.2 1.21984 Sacite flzisieae de IAasing f-ing Co. 0.5 0.51984 Societ Miniare de Spor

Fluor ee de Barytin.(FluEbar) misin co. 0.3 0.3

Tbtal G(ss Cnuoei s l4.1 8.4 22.5LaS CADMelatios

Tenwllwcioos, Rayquts

ard Sales 13.2 1.8 L5.0

7ta r as now Yheld by IR 0.9 6.6 7.5

7htal UbAisbLrsed 0.0 0.3 0.3

Y In amitica, IEC appxaved an Jamnuy 7. 1986, an invest of appbacizcely US$ 8.2 million equivalent in Soci&tTmbistrielle des lctiles, "S=:.

0703S/84

- 31 -

ANNEX IIIPage 1 of 2

REPUBLIC OF TUNISIAFOURTH URBAN DEVELOPMENT PROJECT

Supplemental Proiect Data Sheet

Section I: Timetable of Key Events

(a) Time taken by the country toprepare the project: 22 months

(b) Agen: -s that prepared the project: ARRU, AFE, CNEL, MOEE

Cc) Project first identified by Bank: January 1983

Cd) Bank appraisal mission: October 1984 and April 1985

Ce) Negotiations completed: June 6, 1986

Cf) Planned date of effectiveness: September 30, 1986

Section II: Special Bank Implementation Actions

None

Section III: Special Conditions

1. Special Conditions of Effectiveness.

Signature of: (a) Agreements between ARRU and each of ONAS, SONEDE and STEG(para. 43); (b) a Subsidiary Loan Agreement between the Government andCPSCL; (c) a Management Agreement between the Government and CNEL; and (d) aFinancing Agreement between CNEL and AFH (para. 53).

2. Conditions of Disbursement. (a) for each subproject, approval by the Bankon the basis of agreed criteria (para. 41); and (b) for the site servicingcomponent, the establishment of a new plot pricing system and across-subsidization policy benefitting smaller plots (para. 47).

3. Other Features

(a) Upgrading and site servicing subprojects to meet agreed eligibilitycriteria (para. 41);

- 32 -

ANNEX IIIPage 2 of 2

(b) The Government to ensure that ARRU continue to employ an urbanplanner and an engineer until June 30, 1987 (para. 43);

(c) The Government to take necessary measures to authorize themunicipalities concerned to borrow from CPSCL (para. 45);

(d) AFH to employ consultants in land management, public administration,and computer science, under terms and conditions satisfactory to theBank (para. 51);

(e) The Government to ensure that: (i) interest rates are charged tomunicipalities by CPSCL at CPSCL's regular terms and conditions forGovernment funds, and at cost for Bank funds; (ii) interest rates of8.25 percent or 7 percent p.a. are charged (depending on whether thebeneficiary is earning more, or equal to or less than 1 1/2 times theminimum wage) for house construction or improvement loans and 11percent p.a. is charged for AFH's site servicing operations (para.54) and (iii) financial intermediaries' interest rates in the housingsector cover at least the cost of capital and a spread sufficient tocover their operating cost (para. 55);

Cf) Cost of on-site infrastructure works to be recovered bymunicipalities through the frontage tax system, and utilityconnection costs to be recovered through utility tariffs. Cost ofland and servicing to be recovered through sales and loan repaymentsto CNEL (para. 62).

IBRD 18756

TUNISIAFOURTH URBAN DEVELOPMENT PROJECT z .rlo/tntranwi ;1*

PROJECT CITIES oxo ea-w

A Upgrading ComnPonent .0 )° 4 \- s ton Golf

(3Site Serv,lcingComnporsne -\1 Fouchc~n -

* Provincial Capital$ (FI JoJuo f.gE } osl

-Sll takecs j_>~ ~~< u ~ - 0tn

+ Internotiaond Airports k 't §t fh ¢c14 fs

- -Provinciol Boundaries G\ te- I-nternational Boeundaries - on Bargof 1tamvt

LLI , Ka#trin^> < /z +~~~~~~~~~~Ka

-35- *Sidi Bouzd 31 ,

./ . \) ,,/~~~~~~~~Shia,j

* 3Tozw',J (Si'GooWN Nafttte/Z

\ / ~~~~~~~~ ~ ~~~~~~~~Mareth /

) / *3; je ~~~~~~~~~Idine;

FRANCE SLS^-AVIAI /-

_. _>, s k +> (333'Totooune J3V-

SPAIN - e t'g

i TUNISIA "AMU

t > x C X t~~~~~~~~~~~~~IOMtETERS

PI~~~~~~~~~ ~~~~~~~ Cf RIA bp -. .* - d. _ _ _IL B Y A

FEBRUARY 1 985