Tunisia - Third Agricultural Credit Project

Document of FILE Copy The World Bank FOR OFFICIAL USE ONLY Repwt No. P-2846-TUN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BANQUE NATIONALE DE TUNISIE WITH THE GUARANTEE OF THE REPUBLIC OF TUNISIA FOR A THIRD AGRICULTURAL CREDIT PROJECT June 6, 1980 This document has a restricted distribution and may be used by recipients only in the performnce of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  REPUBLIC OF TUNISIA Currency Unit Tunisian Dinar (TD) The exchange rate of the Tunisian dinar is floating. The rate used in the staff appraisal report, which approximates the current rate, is; US$ 1 - TD 0.4 TD 1 - US$2.5 WEIGHTS AND MEASURES 1 meter (m) - 3.28 feet (ft) 1 kilometer (kmk) - 0.62 miles (mi) 1 sq. kilometer (km2) - 0.386 sq. miles (mi2) 1 hectare (ha) - 2.47 acres (ac) 1 kilogram (kg) - 2.20 pounds (lbs) 1 metric ton (m ton) - 2,205 pounds (lbs) Fiscal Year January 1 to December 31 Abbreviations ACU Agricultural Credit Units BDET Banque de Developpement Economique de Tunisie (Economic Development Bank) BNT Banque Nationale de Tunisie (National Bank of Tunisia) CLCM Caisse Locale de Credit Mutuel (Mutual Credit Bank) CRDA Commissariat Regional du Developpement Agricole (Regional Agricultural Development Commission) FOSDA Fonds Special de Developpement Agricole (Special Fund for Agricultural Development) FOSEP Fonds Special d'Encouragement a la Pgche (Special Fund for the Encouragement of Fishery Investments) KFW Kreditanstalt fur Wiederaufbau PPAR Project Performance Audit Report SCM Societe de Caution Mutuelle (Mutual Guaranty Association) SIDA Swedish International Development Agency SONAMO Societg Nationale de Motoculture (National Company Providing Tractor and Harvesting Services) USAID US Agency for International Development  FOR OFFICIAL USE ONLY TUNISIA THIRD AGRICULTURAL CREDIT PROJECT Loan and Project Summary Borrower: Banque Nationale de Tunisie (BNT) Guarantor: Republic of Tunisia Amount: US $30 million equivalent, in various currencies. Terms: 14 years, including 4 years of grace, with interest at 8.25 percent per annum. Guarantor would bear the foreign exchange risk. Relending The Borrower would on-lend proceeds of the loan through Terms: medium and long-term sub-loans for farm development, as follows: (i) small farmers ($5.3 million), production cooperatives ($7.6 million) and service cooperatives ($2.0 million) at an interest rate of six percent; (ii) commercial farmers ($11.7 million) at an interest rate of seven percent; and (iii) agro-industries ($3.4 million) at an interest rate of eight percent. Repayment periods for sub-loans vary in accordance with the type of investment, from 3 to 15 years with grace periods from 1 to 8 years. Project The proposed project would finance part of BNT's Description: agricultural three-year lending program for medium and long-term credit to small and medium farmers, production and service cooperatives, commercial farmers, and agro- industries. It would also provide for the strengthening of BNT's and the Ministry of Agriculture's credit exten- sion program. Benefits The proposed project would improve the organization and and Risks: effectiveness of BNT's agricultural lending operations. The incomes of the direct credit beneficiaries, about 2,250 small and medium farmers, 900 large farmers, the members of 170 production cooperatives and 25 service cooperatives would be substantially increased. This would affect about 11,800 farm families totalling 70,000 members of whom 43 percent, or 30,000, are expected to come from the target group. About 1,100 permanent jobs, 900 seasonal jobs and 1,200 man-years of additional family labor would be generated from investments in farm development. This employment generation would affect another 12,000 people in farm families, of whom about 11,000 are expected to come from the target group. The main risks involved in the project would be adverse climatic conditions which would affect crop yields, thereby reduce incomes and increase default incidences, and failure to strengthen the credit extension program. In view of Government's This document has a restricted distribution and may be used by recipients only in the performance of their ofimcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - high priority for agriculture, it is expected that strengthening of the credit extension service would take place as envisaged. Estimated Costs: Local Foreign Total -------US$ Million------- Small and Medium Farmers 6.7 4.3 11.0 Production Cooperatives 5.8 6.2 12.0 Service Cooperatives 1.1 1.6 2.7 Commercial Farmers 7.5 9.5 17.0 Agro-industries 4.3 2.8 7.1 Incremental Personnel Cost 1.2 - 1.2 Total Base Cost 26.6 24.4 51.0 Physical Contingencies 0.4 0.4 0.8 Price Contingencies 3.8 5.2 9.0 Total Project Cost 30.8 1/ 30.0 60.8 Financing Plan: Local Foreign Total -