Tunisia - Highway Engineering Project

R tb I TI c I tD FILE COPY Report No. P - 7 0 1 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report muy not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE GOVERNMENT OF TUNISIA FOR A HIGHWAY ENGINEERING PROJECT May 14, 1969  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REFORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE GOVEREMENT OF TUNISIA FOR A HIGHWAY ENGINEERING PROJECT 1. I submit the following report and recommendation on a proposed loan in various currencies equivalent to $850,CA to the Republic of Tunisia for a highway engineering project. PART I - HISTORICAL 2. The Bank has already made two loans to Tunisia for transport totalling $15.5 million. Both were for ports. A loan and credit for the rehabilitation and modernization of the railway system -- $17 mil- lion divided equally between Bank and IDA --have recently been approved by the Executive Directors and will be signed shortly. 3. The present project would be the first for the Bank Group in the field of Tunisian highways. The particular roads which have been selected for detailed engineering were identified in a compre- hensive survey of the Tunisian transportation sector which was carried out in 1967/1968 by ITALCONSULT with the financial assist- ance of U-\dDP, with the Bank acting as executing agency. The project may lead to a loan for road construction if the results of the proposed study prove satisfactory and if appropriate reforms are undertaken in Tunisian highway administration. 4. The proposed loan would be the second financing by the Bank of technical assistance for Tunisia. In 1965 it made a $375,O00 grant to Tunisia for the preparation of school building plans. This grant was fully utilized in 1966 and paved the way for the 1966 IDA Education credit. 5. Negotiations for the loan took place in Washington on Nay 1-5, 1969. The Government of Tunisia was represented by Messrs. Taoufik Karoui, Secr6tariat d:Etat au Plan et a ltEconomie Nationale, and Sadok Bouraoui, Secr6tariat dfEtat aux Travaux Publics et a l*Habitat.  6. The proposed loan, the eighth for Tunisia, would increase the Bank's total lending to Tunisia to $66.8 million (including a loan of $8.5 million approved by the Executive Directors but not yet signed). In addition IDA has provided $32.4 million (likewise including a credit of $8.5 million approved but not yet signed). Following is a summary S+at.2;I.ent as of Apr'il 30, 1969 of those Bank loans and IDA credits to LLziLia already signed. Loan or Amount (US $ million) Credit Number Year Borrower Puxpose Bank IDA Undisbursed 29 1962 Republic of Tunisia Education - 4.9 - 380 1964 Republic of Tunisia Port Develop- ment 7.0 - - 449 1966 Societe Nationale Development d'Investissement Finance Co. 5.0 - .8 94 1966 Republic of Tunisia Education - 13.0 8.4 484 1967 Republic of Tunisia Cooperative Farm 12.0 - 9.6 99 1967 Republic of Tunisia Gooperative Farm - 6.0 4.8 512 1967 Societe Nationale Development d'Investissement Finance Co. 10.0 _ 8.4 573 1963 Office des Ports Transportation 8.5 - 8.5 Nationaux Tunisiens 581* 1969 SOEDE]' Water Supply 15.0 - 15.0 Total (less cancellations) 57.5 23.9 of which has been repaid to Bank and others .6 Total now outstanding 56.9 Amount sold 1.2: of which has been repaid .3 .9 Total now held by Bank and IDA 56.o 23.9 Total undisbursed 42.3 55.5 * Not yet effective. Amount sold includes $300,000 of this loan which the Bank has entered into an agreement to sell.  - 3 - 7. The slow disbursement of the cooperative farm loan and credit reflects the organizational difficulties encountered in the execution of the project. The Bank and IDA are keeping close watch on the progress of the project and are working with the Government of Tunisia to accelerate the pace of execution. 8. In May 1966, IFC made an investment of D300,OO0 (about $575,000) in Socift6 Nlationale d'Investissement. In addition to this, IFC has invested $1e5 million and lent $