Tunisia - Second Urban Sewerage Project

Document of The World Bank !2tILE COPY FOR OFFICIAL USE ONLY Report No. P-2485-TUD REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR A SECOND URBAN SEWERAGE PROJECT March 7, 1979 This document has a restricted distribution and may be msd by recipients nly In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Unit Tunisian Dinar (DT) The exchange rate of the Tunisian dinar is floating. The rate used in the staff appraisal report, which approximhates the current rate is: US$1 - DO.425 Dl - $2.35 Dl,OO0 = $2,350 Dl,000,OOO - $2,350,000 Fiscal Year January 1 to December 31 Abbreviations AEG Agence Fonciere de l'Habitat EEC = European Economic Commission GTZ = Deutsche Gesellschaft fur Technische Zusammenarbeit ONAS Office National d'Assainissement ONP = Office National de la Pgche ONTT = Office National du Tourisme Tunisien PRA Plan Regional d'Ameinagement SIDA - Swedish International Development Agency SONEDE = Societe Nationale d'Exploitation et de Distribution des Eaux WHO = World Health Organization  FOR OFFICIAL USE ONLY REPUBLIC OF TUNISIA SECOND URBAN SEWERAGE PROJECT Loan and Project Summary Borrower: Republic of Tunisia Beneficiary: National Sewerage Authority (ONAS) Amount: $26.5 million Terms: The loan would be repayable in 17 years, including a 4-year grace period, on a level principal payment basis; interest would be at 7 percent per year. Relending Terms: The loan would be on-lent by the Government to ONAS on the same terms as the proposed Bank loan. The Government would assume the foreign exchange risk. Project Description: The proposed project would support Government's overall policy of extending sewerage facilities to match the national program of water supply expansion. It would consist of: (i) a second stage of sewerage for greater Tunis which would provide additional treatment capacity and facilities to improve the existing sewerage and storm water systems to serve greater Tunis; (ii) a component for Sfax which would complement existing treatment capacity and extend and improve the sewer/stormwater system; and (iii) technical assistance to strengthen the project planning and control capability of ONAS. The main bene- fits of the proposed project would be pollution control of the Lake of Tunis, increased access of urban dwellers in the target group in Tunis and Sfax to sewerage facilities with a decrease in health hazards attributable to poor methods of waste disposal, and institutional improvements for ONAS, the Sewerage Authority. I This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: $ Millions Local Foreign Total 1. Tunis A. Sewer System 9.4 3.0 12.4 B. Stormwater System 9.8 3.1 12.9 C. Sewage Treatment 13.0 8.2 21.1 D. Total 32.2 14.3 46.4 2. Sfax 3.5 1.9 5.4 3. Technical Assistance 1.4 2.6 4.0 4. Base Cost Estimate 37.1 18.8 55.8 A. Physical Contingencies 3.9 2.1 6.1 B. Expected Price Increase 10.0 5.6 15.6 5. Total Project Cost 51.0 26.5 77.5 Financing Plan of ONAS' Program 1979-83 $ Million Percent Sources Net cash generation 42.8 21 Reduction of cash balances 3.3 2 Government contribution 56.9 27 Other public funds 8.2 4 EEC grant 2.1 1 Long-term loans World Bank - Loan 1088-TUN 20.5 /I - Proposed Second Loan 24.7 /1 Saudi Fund 20.7 EEC 25.9 91.8 45 Total ONAS Requirements 1979-83 205.1 100 /1 Covers disbursements between 1979 and 1983 only. Rate of Return: 18 percent for pollution control components of the First and Second Urban Sewerage projects. This rate applies to about $38.6 million of total project costs. Appraisal Report: No. 2252-TUN dated March 6, 1979  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR A SECOND URBAN SEWERAGE PROJECT / 1. I submit the following report and recommendation on a proposed loan to the Republic of Tunisia for the equivalent of US$26.5 million to help finance a Second Urban Sewerage Project. The loan would have a term of 17 years, including 4 years of grace, with interest at 7 percent per annum. PART I - THE ECONOMY 2. An updating economic mission visited Tunisia in June 1978; its report entitled "Economic Position and Prospects of Tunisia" (No. 2201-TUN) was issued on November 16, 1978. Country Data sheets are attached in Annex I. 3. Tunisia is rather poorly endowed with natural resources. Much of the country is arid or semi arid. Agricultural activity is concentrated along the coast, in the North West, and in a few oases, but continues to play an important role in Tunisia's economic structure. During 1970-77 agriculture generated some 17 percent of GDP and accounted for some 40 percent of total employment. The main crops are wheat and olives. These crops are subject to sharp year-to-year output fluctuations because of irregular rainfall in the case of wheat and a natural output cycle for olives. Tunisia's most important raw materials are phosphates, petroleum and natural gas; except for phosphates, known reserves are relatively small. Industrial development, albeit impres- sive, has been hampered by shortages of industrial entrepreneurs, the limited size of the domestic market and difficulties in marketing Tunisian products abroad. The most important sector is services, which, during 1970-77, gener- ated about half of GDP, a quarter of that sector's contribution consisting of government services. Tourism has developed rapidly during the 1970's. Workers' remittances have become a significant item in the balance of payments, generating about 10 percent of current account receipts during 1970-77. 4. Against this background, Tunisia's economy has performed remarkably well, especially during the 1970's. During 1970-77, real GDP grew at an average annual rate of 8.6 percent, nearly twice as fast as during the 1960's. Per capita GNP in 1977 reached $860, which in real terms is some 72 percent above its level of 1969. According to the 1978 World Bank Atlas, Tunisia was one of the few countries in the world whose per capita GNP during 1970-76 increased by 6 percent and more. 5. This performance was partly attributable to improved economic man- agement and partly to fortuitous factors. During the 1960's, Tunisia's policy orientation centered on an inward-looking investment strategy based on state predominance in all important economic activities. Economic management relied on a complex system of government regulations. In 1969, new policy orientations were announced, which, during the 1970's, resulted in change  - 2 - towards a more open and export-oriented economy in which private initiative could play an increasing role. A number of decontrol measures were introduced, albeit slowly. Overall, the new policy orientation proved highly beneficial for the country. In addition, the economy benefited from favorable weather conditions resulting in good agricultural crops while the change in world mar- ket prices during 1973/74 brought sizeable windfalls as the terms of trade improved sharply. This allowed domestic savings to increase to 22 percent of GDP during 1970-77, compared with 15 percent during the 1960's. Tunisia's dependence on external financing declined from about 32 percent of investment in 1969 to 25 percent in 1977; the share was as low as 15 percent during 1973-76, when gains from the terms of trade were at their peak. The balance of payments had been in continuous overall surplus since 1967, but after 1975 this was no longer the case as the terms of trade began to deteriorate while imports continued to increase rapidly. However, Tunisia's debt service ratio in 1977 was still a low 8.9 percent, compared with 20 percent in 1970. 6. Rapid economic growth allowed Tunisia to make impressive social gains during the 1970's. By 1976, primary school enrollment had reached 96 percent and secondary enrollment 20 percent of the relevant age groups. Education is free virtually through university. Public health services have been expanded, with many services provided free. A family planning program has been introduced and since 1973 has met with substantial success. The birth rate declined from 43.8 per thousand in 1966 to 36.4 per thousand in 1976 while the rate of natural growth declined from 3.0 to 2.6 percent in the same period. Attempts have been made to correct regional imbalances and to improve income distribution. The share of the population living in absolute poverty declined from 30 percent in 1966 to 18 percent in 1975. However, important disparities remain between income levels among individuals and regions. In coping with the social aspects of development, Tunisia faces strongly increased aspirations of its population in the face of limited natural and financial resources. 7. The most important problem facing the Tunisian economy is widespread open and hidden unemployment. In 1977, about 13 percent of the labor force-- some 220,000 people--were unemployed and the unemployment rate is rising. In addition, there is considerable hidden unemployment in agriculture, which employed about 35 percent of the labor force in 1977. If one considers that about 40 percent of this labor force do not have full time jobs, the effec- tive unemployment rate is more like 25 percent. An increasing number of young people born during the high birth rate years are reaching working age and a growing number of women are joining the labor force. About half of the registered unemployed are young people seeking their first employment. These are mostly relatively educated people whose job aspirations cannot be met. 8. During 1970-77, agriculture provided about 40 percent of total employment, 25 percent of merchandise exports and 17 percent of GDP. Food processing accounted for another 4 percent of GDP and comprised 35 percent of value added in manufacturing. During this period agricultural production rose substantially, largely as a result of favorable weather. Large infra- structure investments were made during the last decade. Current policy, which emphasizes projects that make a rapid and direct contribution to production,  - 3 - recognizes various constraints on agricultural development: insecurity of tenure; inadequate access to agricultural credit; inadequate extension ser- vices; insufficient agricultural education; and underutilization of irrigation investments. Under the Fourth Plan (1973-76) about $140 million was allocated to a rural development fund executed by the provincial administrations. 9. During the 1960's, manufacturing production in Tunisia increased by 8 percent annually. This growth rate accelerated in the 1970's to 11 percent annually, due in part to record years for the olive oil processing industry and to favorable developments in the textile and chemical industries. The early thrust of industrialization was supplied by large import substitution projects. These suffered, however, from the limited domestic market and from shortages of experienced staff and management. Since 1970, more emphasis has been put on export-oriented private industries, particularly in food processing, textiles, fertilizers and mechanical and electrical industries. Foreign and domestic private investment is now stimulated by a comprehensive incentive framework and facilitated by streamlined approval procedures of the investment promotion agency. Foreign investors are expected to contribute know-how and overseas marketing capability. Although an agreement between Tunisia and the European Community signed in April 1976 provided for duty free entry into the Community of nearly all Tunisian industrial products, new restrictions have recently been imposed. The Government has established a special fund to encourage growth of small industries and industrial decentral- ization, and it has started a program to establish industrial estates. 10. The development of tourism in Tunisia is relatively recent. Foreign- visitor arrivals reached 1 million in 1977, with an average annual rate of growth during 1970-1977 of 12 percent -- sharply higher than that of the Mediterranean tourism market as a whole. Since 1970, tourism has become a major source of foreign exchange earnings, reaching $315 million in 1977; this was slightly more than earnings from all manufacturing exports and was exceeded only by petroleum exports. The rapid development of tourism in Tunisia has unfortunately not been accompanied by adequate development of infrastructure (particularly recreational facilities), trained manpower, or related services. The Government is endeavoring to alleviate these con- straints through a variety of measures including revised investment incentives, increased marketing and training efforts, codes to enforce quality standards, and more stringent zoning laws. 11. The main objectives of the current Five-Year Plan (1977-81) are: (i) full employment of the additional labor force; (ii) self-sufficiency in major foodstuffs (defined as a balanced trade account for agricultural goods); (iii) increases in the standard of living; and (iv) social stability through incomes policies and wage and price harmonization. The Plan foresees an average annual rate of real GDP growth of 7.3 percent. This is somewhat below the 9.2 percent achieved during 1970-76, mainly because the fortuitous factors prevalent during the early 1970's were not expected to continue. Investment is projected at D 4.2 billion ($9.8 billion) in current prices during the Plan. In real terms, average annual investment would be 54 percent greater during 1977-81 than during the preceding Plan period. Nonetheless, the targeted average annual rate of growth of real investment during the Fifth  - 4 - Plan is only 4.1 percent, as this rate is influenced by the very high invest- ment level achieved in 1976 in an effort to meet targets of the preceding Plan. 12. The Fifth Plan's strategy emphasizes in particular export-oriented industrial development and agricultural growth. Special attention is given to employment creation and to balance of payments considerations. Substantial investments are to be made in hydrocarbons, manufacturing, water development, transport and housing. The Plan prescribes increased domestic production and processing of Tunisia's mineral resources (phosphates, petroleum) to export as much value-added as possible. Extraction and distribution of newly discovered offshore gas deposits in the Gulf of Gabes rank prominently in the list of major projects. This gas will substitute for petroleum-based fuels, freeing the latter for export. Eventually, gas will also be used as an input for the chemical industry. Private sector initiative is expected to dominate invest- ment in textiles, mechanical and electrical industries, and tourism. It is in these activities that the authorities expect most employment creation to take place. Employability of the labor force is to be increased through education and training programs. Efforts towards regional development are to be pursued through establishing regional planning structures, strengthening regional administration and developing incentives for the decentralization of produc- tive activities. The strategy proposed for the Fifth Plan does not represent any major departure from the strategy pursued successfully during the preced- ing Plan. 13. Tunisia's existing resource base, its institutional and infrastruc- tural framework, its excellent performance in the earlier part of this decade, and the desire of the authorities to support further development with appro- priate policy measures and institutions are fundamental factors pointing towards continuing rapid economic growth during the Fifth Plan. The 7.3 percent growth target is in line with the possibilities of the economy. The investment priorities formulated in the Plan are considered necessary to support the sectoral strategies. There are, however, some less favorable signs. Tunisia's development recently benefitted from the structural changes in world market prices and from excellent weather conditions. As noted above, it cannot be expected that these fortuitous factors will continue in Tunisia's favor to the same extent as in the past. Hence, Tunisia will have to rely increasingly on its own resources. As the resource base is relatively narrow, available resources should be efficiently deployed. Achieving the Plan tar- gets presupposes the timely introduction and successful execution of measures to ti) strengthen the absorptive capacity for investment, especially for labor intensive projects; (ii) promote exports; (iii) base economic management on an efficient price and incentive system and improve productivity; and (iv) mobilize the resources needed to realize the comprehensive social development targets while maintaining domestic and external financial stability. The Tunisian authorities have begun to introduce measures in these respects. 14. Substantial efforts in domestic and external resource mobilization in particular will be of crucial importance to finance the planned level of investment. On the domestic side, there is a great need for increased savings  and improved financial intermediation. The Government sector, in particular, will again be called upon to contribute substantially to the savings effort. The Plan suggests that this should be done by prudent expenditure policies and increased revenue collections (selective tax increases and better tax collec- tion). In addition, the public enterprise sector will have to increase sub- stantially its contribution to public savings through better management and especially through cost-related increases in the sale prices of selected enterprises. Externally, Tunisia would have total financing requirements (disbursement basis) of some $2.8 billion during 1977-81. Given the country's creditworthiness, Tunisia should be able to mobilize such financing without putting undue strain on the country's debt servicing capacity (see below, para. 16). 15. Since the early 1960's, Tunisia has obtained large amounts of official aid. A Consultative Group chaired by the Bank has provided a forum for aid-coordination among major donors (see para. 24). During 1970-77, annual loan commitments from public sources averaged $235 million, or about $43 per capita. About 73 percent of these commitments came from bilateral public sources, chiefly from France, Canada, and the Federal Republic of Germany. About 17 percent came from oil-producing countries whose share increased rapidly from 8 percent in 1970 to 29 percent in 1977. Commitments from the Bank Group during 1970-77 accounted for 20 percent of total public commitments. Most aid has been obtained on concessionary terms; in 1977 the average terms of borrowing were 5.8 percent interest and 20 years maturity, including 6 years of grace. During 1970-77, Tunisia also received annually some $43 million in grants. Loan commitments from private sources averaged $34 million a year. While direct foreign private investment has been compara- tively small, it has recently picked up momentum following increased activity in the petroleum sector and new incentives offered to foreign investors in manufacturing. Net direct foreign investment increased from $19 million in 1970 to $75 million in 1977. 16. At the end of 1977, total foreign debt (disbursed and outstanding) was estimated at about $1.6 billion, or 32 percent of GDP compared with some 40 percent in 1970. According to preliminary estimates, it has reached about $2 billion at the end of 1978. The debt service ratio in 1977 was 8.9 per- cent, compared with 20 percent in 1970. This significant decline in the debt service ratio was mainly due to the sharp increase in export earnings follow- ing the changes in world market prices in 1973/74. External borrowing at the rate projected in the 1977-81 Plan (para. 14) would increase debt service obligations in relation to exports to around 13 percent by 1981 and 17 percent by 1986, according to current Bank projections. At these levels, the debt service burden would be a manageable one, particularly when seen in the light of Tunisia's long record of prudent and skillful balance of payments and external debt management. Tunisia is therefore considered creditworthy for further Bank lending.  - 6 - PART II - BANK GROUP OPERATIONS IN TUNISIA 17. Since 1962, Tunisia has received a total of thirty-one loans and eleven credits amounting respectively to $470.5 million and $70.1 million, net of cancellations. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of December 31, 1978, and notes on the execu- tion of ongoing projects. While disbursements of some loans and credits have been slower than foreseen at appraisal, on the whole, project execution has been satisfactory. As of September 30, 1978, total disbursements amounted to 53 percent of initial appraisal forecasts, and to 67 percent of revised fore- casts. In a number of sectors, important institutional improvements have been achieved and independent agencies have been created or strengthened. 18. The Bank's lending strategy in Tunisia aims at supporting Government efforts to (a) increase employment, (b) encourage more balanced growth and distribution of income among regions and income groups, (c) promote export- oriented policies and investments, and (d) provide selective support for the development of infrastructure and for institution building in key public serv- ices. The main supporting feature of this lending strategy is to encourage the Tunisian authorities in timely and well-coordinated preparation of proj- ects, with emphasis on technical assistance. The Bank is also cooperating with the Government in its efforts to increase the mobilization of domestic and foreign resources, in part through encouraging project cofinancing; the latter is particularly important in view of the extent of Tunisia's external resource needs, the large size of many priority projects, and the limited availability of Bank resources relative to the country's needs. 19. Within this broad framework, past Bank Group lending has emphasized support for long-term investments in infrastructure and social development. Lending for urban and social development, including water supply, sewerage, education, family planning and the Tunis urban planning and public transport project has accounted for 26 percent of Bank/IDA commitments in Tunisia since 1971. Lending for transport, power and tourism infrastructure has accounted for 30 percent. Agriculture and fisheries have received 19 percent of total commitments. Industrial and hotel financing through the Banque de Developpe- ment Economique de Tunisie (BDET) has accounted for 19 percent, and the Gafsa phosphate development project received 6 percent of total commitments. 20. The Bank Group has financed four projects in the water supply sector, and two projects in the sewerage sector in Tunisia, totalling $69.5 million and about $45 million respectively. In the water supply sector, the first two projects aimed to support the work program of Societe Nationale d'Exploitation et de Distribution des Eaux (SONEDE) by financing water supply works for Tunis, the Sahel Region and the rapidly expanding tourism areas. Both projects have now been completed satisfactorily. The third and fourth water supply projects further contributed to improving and extending water distribution systems for Sfax, the second largest city, and to increasing SONEDE's water production and distribution capacity in the five northern  .7- Governorates and in Greater Tunis. A fifth water supply project, which would help expand SONEDE's water distribution systems in small urban and rural centers, is scheduled to be presented to the Executive Directors during the current fiscal year. In the sewerage sector, part of the loan for the Tourism Infrastructure project, currently nearing completion, aimed to upgrade sewerage facilities in five priority tourism development zones. The first urban sewer- age project aimed to expand the capacity for sewerage treatment and sewerage and storm-water collection systems in Greater Tunis. In both sectors, impor- tant institutional results were achieved with the establishment in 1969 of SONEDE, the National Water Production and Distribution Company, and in 1975 of ONAS, the National Sewerage Authority. The creation of a separate authority for sewerage was appropriate in view of the backlog of work to be tackled and close cooperation between ONAS and SONEDE has been maintained. 21. In addition to the proposed loan for a Second Urban Sewerage proj- ect, loans for a second fisheries project, a fifth water supply project and a second urban development project are expected to be presented to the Executive Directors in the current fiscal year. In the next and subsequent fiscal years, Bank lending intends to support the two objectives set by the Govern- ment to balance its economy, namely promotion of agriculture, and of export- oriented and employment-generating industries. Thus, emphasis will be placed on agricultural production projects in less developed regions, such as an irrigation project in Southern Tunisia, an agricultural development project in the Northwest, and continued assistance for agricultural credit. Bank assis- tance to industry will focus on small-scale industrial enterprises, mechanical and electrical industries and possibly rehabilitation of the textile subsector; this assistance may also include financing for the Miskar project for the development and distribution of Tunisia's offshore gas resources. The program would also continue financing selected priority social development projects, such as a second population project, a vocational training project and further assistance to education. 22. The Bank Group accounted for about 20 percent of total public com- mitments to Tunisia during 1970-77. The Bank Group's shares in total debt outstanding and disbursed at the end of 1977 (including loans from private sources) and in debt service during 1977 were 14 percent in both cases. The Bank Group's share in Tunisia's disbursed external debt by 1986 is expected to remain unchanged from about 14 percent in 1977, but its share in debt service would decline to about 12 percent of total. 23. IFC has invested in NPK Engrais (a fertilizer plant), in BDET, in Compagnie Financiere et Touristique (COFIT, a company to promote and invest in tourism projects), in Societe Touristique et Hoteliere RYM (a large hotel development) and in Industries Chimiques du Fluor, which will produce alumin- ium fluoride from local fluorspar for export, and in the Sousse-Nord inte- grated tourism development project. IFC's net commitments in Tunisia total $16.1 million. IFC's Board has approved the sale of IFC shares in NPK Engrais to the Tunisian Government.  -8- PART III - THE WATER SUPPLY AND SEWERAGE SECTOR Water Supply 24. The volume of water available in Tunisia for urban, industrial and agricultural use is limited. Most of the fresh surface water sources are found very far inland in the mountains, mostly in the northern part of the country. Only limited volumes of surface water are found in the coastal areas where the bulk of the population is concentrated; Tunis and Sfax, the two largest cities in the country, are supplied from surface sources located more than 120 km away. Although some groundwater is available along the coastline, the volume that can be extracted is often limited because of the progressive intrusion of sea water into the aquifers. Demands for potable water and irri- gation are projected to exceed the total available supplies of fresh water by the year 2000. Beyond that time it will probably become necessary to resort to desalination of brackish or sea water and recycling of waste-waters to meet the demand. To conserve scarce water resources, Government enacted a water code in 1975 to regulate the collection and use of water and to estab- lish usage priorities. 25. The Ministry of Agriculture has traditionally managed all water resources in the country. The production and distribution of potable water are the responsibility of SONEDE, the national water authority, which is an autonomous public utility established in 1968 under the responsibility of the Ministry of Agriculture. By an accelerated program of house connections, SONEDE has increased its service ratio from 43 percent of the urban population at the time of its establishment, to a current level of 68 percent. Sewerage 26. The development of sewerage has lagged behind that of water supply. Thus, although the percentage of the urban population nominally served is roughly comparable to that for water, in many centers treatment capacity is now insufficient to cope with the volume of waste-water discharged, and sewer systems are suffering from inadequate maintenance. This situation resulted from the fragmentation of responsibility between municipalities, the low level of investment and lack of experienced staff. Recognizing the need rapidly to upgrade sewerage facilities and improve their operation, the Government estab- lished a national sewerage authority, the Office National d'Assainissement (ONAS), to assume responsibility under the Ministry of Equipment for the plan- ning, operation, maintenance, renewal and construction of all sewerage works located within the limits of the communes and within tourism or industrial development zones. ONAS started its work on July 1, 1975, and has taken over the sewerage systems of Tunis and several other cities. Considerable progress has already been made in rehabilitation of systems and expansion of treatment capacity.  Sector Development Strategy 27. The basic objectives of sector policy are as follows: (a) to extend the provision of potable water to an increasing proportion of the total population of 5.9 million in mid- 1977 (of which 47 percent live in urban areas), with a target of 76 percent of urban residents by 1981 and. 81 percent by 1985; of the rural population, potable water would be provided to about 1 million inhabitants in rural agglomerations; the remaining rural population lives in isolated dwellings which cannot readily be served by public water distribution and sewerage systems; and (b) to eliminate the imbalance between water supply and waste- water treatment capacity by the mid-1980's. 28. The Government has prepared three master plans for water resource development in Northern, Central, and Southern Tunisia. In 1969, the Bank made a technical assistance grant for preparation of the Plan for Northern Tunisia, and acted as Executing Agency for the study. The Plan envisages multipurpose development of resources, with priority to development of irriga- tion and domestic uses. The Bank-financed Sidi-Salem Multipurpose Project (Loan No. 1431-TUN) aims to contribute to implementation of the first phase of this master plan. Preparation work is advancing for an irrigation development project in the South, as part of implementation of the Master Plan for the South. The Water Master Plan for Central Tunisia is currently under Bank review. 29. To maximize the benefits obtainable from limited resources -- both physical and financial -- Government is giving priority to water supply devel- opment in the areas of highest population density. This leads to increased volumes of wastewater to be collected, treated and disposed of in centers which lack, in many cases, adequate sewerage facilities, Government's recog- nition of the need for sewerage to catch up with water supply is evidenced by the growth of budgetary allocations for sewerage, which at DT 73 million (US$172 million) for the Fifth Plan (1977-81) represent an increase of 50 percent in real terms over the Fourth Plan allocations. 30. To implement this expansion of urban sewerage, ONAS retained consul- tants to carry out a general study of the sewerage subsector in order to estab- lish a national program of works in order of priority. On the basis of these studies, ONAS has planned an investment program covering the remainder of the Fifth Plan and the first two years of the Sixth Plan (through 1983). This plan provides for continued expansion of sewerage works in major urban centers, in tourism zones, and in small urban communities. Performance under previous Bank-financed projects 31. Performance under the various water projects has been good. How- ever, two projects with sewerage components have suffered considerable delays  - 10 - and are currently about 18-20 months behind schedule. The Tourism Infrastruc- ture Project (Loan 858-TUN/Credit 329-TUN) is being implemented with delays and had to be revised as the result of changes in the Government's tourism development objectives in 1975 and of the recommendations of detailed studies on the six priority tourism zones financed under the project. As regards the First Urban Sewerage Project (Loan 1088-TUN), difficulties were encountered in staffing ONAS, the new sewerage Authority created under the project, and in transferring to it the systems and employees from the centers taken over by ONAS. Despite these difficulties ONAS has greatly improved its operating efficiency. Recalibration of the sewer system in Tunis and construction of new sewers in Tunis and other towns are now under way; the Cherguia treatment plant has been rehabilitated and extended to serve about 800,000 inhabitants, and two other treatment plants, one each for the northern and southern suburbs of Tunis, are under construction. When these works are completed in 1981, pollution of the Lake of Tunis will abate and its northern bank will be available for various uses. Consultant studies financed under the first Sewerage project to determine the use of land around the lake have been completed and "Agence Fonciere de l'Habitat" is systematically buying private land around the lake, to control its use. There remain, however, certain aspects of ONAS' management and technical competence which need improvement, to achieve greater effectiveness in project execution. These are being addressed in the context of the proposed project (see para 43-44). PART IV - THE PROJECT 32. In late 1977, Tunisia asked the Bank to assist in financing a second urban sewerage project, comprising works in Greater Tunis and Sfax. The proj- ect represents priority segments of the sewerage master plan for Tunisia recently completed by consultants retained by ONAS. The project was appraised in June/July 1978 and negotiations were held in Washington from December 15 to 21. The staff Appraisal Report (No. 2252-TUN) is being circulated separately to the Executive Directors. The main features of the Loan and the Project are mentioned in the Loan and Project Summary and in Annex III. A map showing the location of the two cities covered by the Project is also attached. Project Objectives 33. The proposed project would contribute to correcting the serious imbalance between water supply and wastewater treatment and disposal capacity, and to extending sewerage service to a larger proportion of the population. Thus, by 1985, 89 percent of dwellings in Tunis would be served with sewerage facilities (including virtually all those provided with piped water), compared with 77 percent at present; in Sfax, a significant reduction would be made in the flood hazard and associated health risks which currently affect large parts of the city. In addition, the proposed project would further develop the managerial and technical capability of ONAS to implement its investment program.  Project Description 34. The proposed project would consist of: (i) a second stage development of sewerage facilities for Greater Tunis; (ii) improvement and extension of existing sewerage facilities for Sfax; and (iii) technical assistance to strengthen the planning and control capacity of ONAS. Sewerage Works in Tunis 35. The component envisaged for Greater Tunis would be a continuation of the sewerage improvement program initiated under the first Urban Sewerage Project (see para 31). A new treatment plant would be built to augment exist- ing treatment capacity. This plant would discharge treated sewage through the Khelidj canal into the Mediterranean Sea, where the pollution effects of treated sewage would be minimal; the Lake of Tunis would thus be protected from further sewage discharge. It is expected that in the medium-term treated wastewater would be used for irrigation. The project would also complete the recalibration -- i.e. replacement of existing pipes with wider ones -- of the combined sewer/stormwater system in Central Tunis initiated under the first sewerage project. Trunk sewer additions and sewer system extensions would provide service to about 394 ha presently without service, including the three major squatter settlements in Greater Tunis, with an estimated population of 120,000. Individual sewer connections in two of the three squatter areas are being provided under the proposed Second Urban Development project which is scheduled to be presented to the Executive Directors later this fiscal year. Stormwater systems would also be extended in the suburbs most prone to flood- ing. 36. The configuration of the project works for Greater Tunis follows the sewerage master plan for that city recently completed by consultants retained by ONAS. This plan, which reflects the Tunis regional development plan pub- lished in 1977, has been accepted by ONAS and approved by the District of Tunis (the planning authority). It represents the results of the review of a number of alternatives in a search for flexibility to accommodate alternative patterns of population distribution, and the least-cost method of sewage treatment and disposal. Sewerage Works in Sfax 37. In Sfax, the project consists of facilities to improve the existing system and to convey the sewage from the combined system to the treatment plant presently under construction. A new pumping station will be built. About 2.2 km of stormwater/sewage collectors and 2.8 km of stormwater col- lectors would be installed to overcome the serious problem of flooding and sewage overflow, and about 15 km of sewer extensions would be built. The Sfax scheme is also based on studies carried out by consultants.  - 12 - Implementation 38. ONAS will be responsible for project implementation, including design, contract preparation and construction. Consultants to assist with final design of the first component of the project (the outfall) have already been recruited; during negotiations, ONAS agreed to recruit, by August 1, 1979, consultants for design of the remaining project works (Draft Project Agreement, Section 2.02). About US$2.0 million is provided in the proposed loan to cover the foreign cost of these services. Final designs and tender documents will be completed by end 1979 for urgent works and end 1981 for the later works. According to the project time schedule agreed upon by ONAS, construc- tion would be completed by end 1983. 39. The construction program which ONAS is now embarking on will be both bigger and also more widely dispersed geographically than anything the authority has tackled so far, and it is important that planning and control should be coordinated and strengthened. ONAS has agreed to hire experienced specialist consultants to strengthen the project planning and control capacity of its divisions (Draft Project Agreement, Section 3.03). These consultants would help (i) coordinate the planning and design of all parts of ONAS' pro- gram; and (ii) develop and install a proper system of project planning and control, and train the personnel of ONAS in its use. About $0.6 million of the proposed loan is earmarked for these consultant services. An under- standing was also reached during negotiations on the consultants' terms-of- reference. Cost Estimates and Financing Plan 40. The total cost of the project is estimated at DT 32.9 million (US$77.5 million) including allowances for physical contingencies and expected price escalation. The cost estimates are based on current bid awards for pipes, pumps, treatment equipment and civil works procured under the on-going first sewerage project. The foreign exchange component is estimated at US$26.5 million or about 34 percent of total project costs; this is on the assumption that, in view of the underemployment currently affecting the Tunisian construction industry, most of the civil works contracts will go to local firms. The proposed Bank loan would cover all the estimated foreign exchange costs of the project. About 102 man-months of consultant services for project planning and control would be financed at an average total cost of about $9,100 per man-month (see para. 39). 41. The Republic of Tunisia will be the borrower of the proposed loan, and will on-lend the proceeds of the loan to ONAS. Direct lending to ONAS was considered, but deemed inappropriate, because ONAS is at present dependent on the Government for more than half of its income. Decreased dependence of ONAS on Government payments in the future, coupled with strengthened manage- ment and financial control, would better qualify ONAS to receive direct Bank assistance eventually. Present domestic long-term commercial bank lending rates in Tunisia range from 5.5 to 8.75 percent. Inflation in the past three years has averaged 7.2 percent as indicated by the cost-of-living index; the inflation rate forecast for the next three years is 6 percent.  - 13 - In keeping with standard Tunisian policy, the Government would assume the foreign exchange risk. Considering the public utility character of ONAS, on-lending at terms similar to those of the Bank loan would be appropriate and reasonable (Draft Loan Agreement, Section 3.01b). The execution of a subsidiary loan agreement between the Government and ONAS on these terms would be a condition of effectiveness (Draft Loan Agreement, Section 6.01b). 42. The local funds required for project completion would be provided in part from ONAS' cash flow, and the remainder by Government in the form of equity contributions to ONAS. The amounts of such contributions required through 1981 are within the limits allocated by the Planning Ministry for the Fifth Plan period. Government would provide these funds promptly to ONAS, and also any funds necessary to meet foreign cost overruns (Draft Loan Agreement, Section 3.01a and c). Organization and Management 43. ONAS is a semi-autonomous agency, established in 1974 under the Ministry of Equipment. Responsibility for executive management is vested in a President Director General (PDG) and that for policy in a Board of Directors. The PDG is assisted by four department directors and five heads of services, who report individually to him. While most of these directors and service heads are qualified and capable, many of them are young and relatively inexperienced. As a consequence, they tend to refer decisions to the PDG, whose attention is thus fragmented between many matters of detail. With the projected growth of ONAS' activities in the medium-term, there is need to strengthen its management to allow greater delegation of decision- making and enhance the effectiveness of operation. During negotiations, ONAS' PDG discussed with the Bank and agreed on a number of measures to strengthen management. These measures will be put into effect by December 31, 1979 (Draft Project Agreement, Section 3.02). Other measures to strengthen ONAS' capacity to implement its expansion program are discussed in paragraph 39. 44. ONAS' past audit reports revealed weaknesses in internal control and errors in the records. The seriousness of this situation and the need for urgent remedial measures, to be taken in consultation with the auditors, have been brought to the attention of ONAS' PDG. As a result, a crash improvement program has been initated and staff and procedural changes were made. Further remedial measures are linked to management improvement proposals discussed in paragraph 43 above. Financial Position of ONAS 45. ONAS derives its revenues from a number of charges and contribu- tions, including a payment from Government, whose structure and levels were established in consultation with the Bank in the context of the First Urban Sewerage project. The authoritiy earned a positive net income in the 1975-77 financial years and is expected to do so again in 1978. The cost of ONAS' increasing scale of operations and the burden of debt service will require, however, a three fold increase in revenues by 1983. About 60 percent of this increase would be provided by new consumers, whose number is expected to  - 14 - increase through takeover by ONAS of sewerage systems not presently operated by ONAS, and through new connections planned in ONAS' capital work program. The remaining 40 percent of the needed additional revenue would have to be secured by rate increases. 46. ONAS' latest rate structure became effective as recently as December 1978. The combined charges for water supply and wastewater disposal in Tunisia are well in line with neighboring countries, and are kept affordable to poor consumers by the use of preferential rates for low consumption. Further sewer rate increases would not be practicable before 1980. In that year a tariff increase of about 50 percent on average will be necessary. Another increase of about 20 percent would also be necessary during 1983. The Project Agreement for Loan 1088-TUN calls for a review of Government payments to be completed by July 1, 1980 and each five years thereafter. During negotiations, ONAS agreed to review its user charges not later than December 31, 1980 and each year thereafter and to consult with the Government and the Bank on any subsequent tariff adjustments (Draft Project Agreement, Section 4.04). 47. On the basis of these tariff adjustments, which are considered rea- sonable and feasible, ONAS will continue to earn a positive net income through the period of project construction. Net operational cash flow will be at least twice the debt service throughout the period. Cash generation will remain a minimum of 4 percent of net assets (Draft Project Agreement, Section 4.03). During negotiations, ONAS provided informal assurances that it would initiate a study to determine an appropriate formula to revalue its assets for purposes of calculating this ratio. At the end of 1983 (the last year of project construction) the debt/equity ratio will be about 40:60, leaving the authority reasonably capitalized to embark on subsequent stages of its investment program. Procurement 48. Local contractors are capable of competitively carrying out works such as the manufacture and installation of pipes, and the civil works of pumping stations and treatment plants. Only mechanical and electrical equip- ment of pumping stations and treatment plant will be imported. The project works will comprise about 25 contracts, which, except as noted below, will be awarded on the basis of international competitive bidding in accordance with the Bank's Procurement Guidelines. For bid evaluation purposes, a 15 percent margin of preference or an amount equal to custom duties, whichever is lower, would be applied in the case of equipment manufactured in Tunisia. Contracts for civil works, materials and equipment of less than $150,000 aggregating not more than $1,500,000 would be awarded on the basis of competitive bidding advertised locally. Certain specialized equipment, up to an aggregate value not exceeding $500,000 may be obtained by procurement procedures acceptable to the Bank (Draft Project Agreement, Schedule 1, para C). The Bank loan would be disbursed between mid-1979 and mid-1984. Monitoring Arrangements 49. To evaluate the performance of ONAS in implementing this project, ONAS has agreed to follow monitoring criteria in addition to normal reporting  - 15 - procedures to the Bank (Draft Project Agreement, Schedule 2). These criteria will include: total cumulative sewer connections, connection rates for popu- lation served, and financial and performance indicators. Benefits and Risks 50. In Tunis, the proposed project,which follows the Master Plan prepared by consultants for the phased development of sewerage in Greater Tunis, is the least cost solution selected by consultants among five possible alternatives. It would consolidate and protect the benefits expected from the pollution con- trol program initiated under the First Urban Sewerage Project for the Lake of Tunis. Expressed in terms of the increased value in lakeshore land thus released for development, and the potential value of the fish catch in the Lake, this aspect of the first and second projects shows a rate of return of 18 percent. In addition, the proposed project would contribute to improving sanitary conditions in Tunis and Sfax, with a greatly reduced risk of infec- tion from inadequate human waste disposal methods, overflowing septic drains and polluted water. In Sfax, a significant reduction would be made in the flood hazard and associated health risk which currently affect large parts of the city. 51. Together with the Second Urban Development Project, for which a Bank loan is expected to be submitted to the Executive Directors for approval this fiscal year, the proposed project would make a significant contribution to the Government's Municipal Development Programs for Tunis and Sfax. Together, the projects will provide improved housing and sewerage facilities to about 120,000 urban dwellers (or about half the estimated number of urban poor) in the Tunis District. Finally, the proposed project would strengthen ONAS' capacity to implement its sewerage investment program (see paragraph 39, 43 and 44 above). 52. The major risks confronting the project are those of slippage in the construction program, and consequent escalation of cost. Experience to date with ONAS during the implementation of the First Urban Sewerage Project has been disappointing on these grounds although ONAS' performance in other respects has been acceptable (see para 31). This limited performance is attributable both to administrative bottlenecks and to ONAS' inexperience resulting from its recent creation. The execution schedule for the proposed project takes account of these constraints. It is envisaged that ONAS' effec- tiveness would be enhanced through the strengthening of its top management to allow greater delegation of authority and more effective decision-making and the provision of technical assistance to coordinate and strengthen its project planning and control capability (see paras. 39 and 43). By thus addressing both the technical and executive bottlenecks, there is reasonable ground to expect improved performance from ONAS in the future in both the First and this proposed project.  - 16 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 53. The draft Loan Agreement between the Republic of Tunisia and the Bank, the draft Project Agreement between the Bank and ONAS, and the Report of the Committee provided for in Article III, Section 4 (iii), of the Articles of Agreement are being distributed to the Executive Directors separately. 54. A special condition of effectiveness listed in Section III of Annex III is the execution of a project agreement between the Bank and ONAS and an agreement between the Government and ONAS for onlending proceeds of the proposed loan, on terms similar to those of the proposed Bank loan (Draft Loan Agreement, Section 6.01). 55. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 56. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments March 7, 1979 by I.P.M. Cargill Washington, D.C.  ANNEX I Page 1 of 5 TUNISIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES TUNISIA /a LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE) TOTAL 164.2 SAME SAME NEXT HIGHER AGRICULTURAL 76.1 MOST RECENT GEOGRAPHIC INCOME INCOME 1960 Lb 1970 Lb ESTIMATE Lb REGION /c GROUP /d GROUP Le GNP PER CAPITA (US$) 220.0 360.0 860.0 1438.5 867.2 1796.4 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 190.0 261.0 447.0 816.7 578.3 1525.0 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 4.0 5.0 5.9 URBAN POPULATION (PERCENT OF TOTAL) 32.3 42.6 47.0 45.8 46.2 52.2 POPULATION DENSITY PER SQ. KM. 25.0 30.0 36.0 23.2 50.8 27.6 PER SQ. 10M. AGRICULTURAL LAND 54.0 67.0 78.0 112.4 93.3 116.4 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 42.4 45.5 43.1 46.0 42.9 34.8 15-s4 YES. 52.6 50.5 52.7 50.6 53.5 56.0 65 YRS. AND ABOVE 5.0 4.0 4.2 3.3 3.5 5.7 POPULATION GROWTH RATE (PERCENT) TOTAL 1.8 /f 2.3 /f 2.3 /f 2.9 2.5 1.6 URBAN .. 3.0 /R 4.7 5.0 4.7 3.3 CRUDE BIRTH RATE (PER THOUSAND) 46.6 44.7 40.0 45.0 37.8 27.0 CRUDE DEATH RATE (PER THOUSAND) 21.5 16.9 13.8 13.7 10.8 9.9 GRGSS REPRODUCTION RATE 3.1 3.4 3.0 3.4 2.5 1.9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 29.2 58.1 L'SERS (PERCENT OF MARRIED WOMEN) .. 12.0 13.7 14.7 20.0 19.3 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 124.8 100.0 128.2 107.1 107.3 103.8 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 86.0 93.0 102.0 99.2 105.3 110.4 PROTEINS (GRAMS PER DAY) 54.0 63.0 /h 67.4 63.4 63.0 77.7 OF WHICH ANIMAL AND PULSE 13.0 14.0 lh 20.0 16.4 21.7 22.2 CHILD (AGES 1-4) MORTALITY RATE .. 1.5 I *- 8.0 1.9 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 46.1 51.6 54.1 53.7 57.2 63.0 INFANT MORTALITY RATE (PER THOUSAND) .. 125.0 62.6 /I 77.7 53.9 38.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 49.0 .. 59.1 56.8 67.7 URBAN .. 92.0 93.0 85.9 79.0 83.5 RURAL .. 17.0 .. 38.0 31.8 41.5 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL *- 62.0 .. 64.3 30.9 70.3 URBAN *- 100.0 .. 94.5 45.4 90.7 RURAL *- 34.0 *- 27.7 16.1 38.3 POPULATION PER PHYSICIAN 10000.0 5950.0 4620.0 4271.6 2706.8 1310.8 POPULATION PER NURSING PERSON .. 730.0 670.0 /k 2077.4 1462.0 849.2 POPULATION PER HOSPITAL BED TOTAL 360.0 /1 410.0 410.0 /k.m 580.2 493.9 275.4 URBAN *- 280.0 230.0 /k.m 310.0 229.6 129.9 RURAL .. 930.0 1040.0 /k,m .. 2947.9 965.9 ADMISSIONS PER HOSPITAL BED .. 24.1 . 22.0 22.1 18.9 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. 5.1 /t 6.0 5.4 5.2 3.9 URBAN .. 5.1 /t 5.8 .. 5.0 RURAL 5.1 /i 6.1 .. 5.4 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. 3.2 / i . .. 2.0 0.9 bRBAN *- 2.7 /i .. 1.8 1.5 0.8 RURAL .. 3.6 /t .. .. 2.7 1.0 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOtAl, * 24.0 /t .. 40.3 64.1 59.2 URBAN .. .. .. .. 67.8 78.0 RURAL .. .. .. 12.2 34.1 12.5  ANNEX I Page 2 of 5 TUNISIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES TUNISIA /a - MOST RECENT ESTIMATE) SAME SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 lb ESTIMATE /b REGION /c GROUP /d GROUP /e EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 66.0 100.0 95.0 80.8 99.8 97.6 FEMALE 43.0 79.0 75.0 61.8 93.3 87.4 SECONDARY: TOTAL 12.0 23.0 20.0 23.6 33.8 47.8 FEMALE 6.0 13.0 13.0 18.2 29.8 42.6 VOCATIONAL (PERCENT OF SECONDARY) 24.0 12.0 17.0 6.7 12.8 22.7 PUPIL-TEACHER RATIO PRIMARY 61.0 48.0 40.0 31.5 34.9 25.4 SECONDARY 16.0 28.0 23.0 22.3 22.2 24.9 ADULT LITERACY RATE (PERCENT) 15.5 24.0 L .. 50.1 71.8 96.3 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 11.0 13.0 18.0 14.5 12.4 32.3 RADIO RECEIVERS PER THOUSAND POPULATION 41.0 77.0 49.0 125.8 104.5 201.9 TV RECEIVERS PER THOUSAND POPULATION 0.1 10.0 27.0 34.5 28.1 97.7 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 19.0 16.0 28.0 17.4 45.2 70.9 CINEMA ANNUAL ATTENDANCE PER CAPITA 2.0 .. 2.3 1.6 4.6 4.4 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 1400.0 1300.0 /i 1880.0 FEMALE (PERCENT) 6.1 7.7 8.5 9.3 25.7 17.4 AGRICULTURE (PERCENT) 69.0 57.0 Ii 37.4 42.0 46.2 38.4 INDUSTRY (PERCENT) 17.6 21.0 PARTICIPATION RArE (PERCENT) TOTAL 27.0 23.7 23.7 26.9 33.8 33.7 MALE 50.2 44.2 44.0 46.6 48.1 50.8 FEMALE 3.3 3.6 4.0 5.3 17.3 12.6 ECONOMIC DEPENDENCY RATIO 1.3 1.8 /i 1.4 1.9 1.4 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. 17.0 .. 23.6 20.2 HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. 42.0 .. 52.3 47.9 LOWEST 20 PERCENT OP HOUSEHOLDS .. .. 6.0 .. 4.3 3.2 LOWEST 40 PERCENT OP HOUSEHOLDS .. .. 15.0 .. 13.1 13.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 198.0 .. 191.9 RURAL .. .. 94.0 142.0 193.1 157.9 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 500.0 236.1 319.8 448.8 RURAL .. .. .. 144.7 197.7 313.1 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 20.0 21.5 19.8 23.2 RURAL *- *- 15.0 37.4 35.1 54.5 Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1973 and 1977. /c North Africa & Middle East; /d Intermediate Middle Income ($551-1135 per capita, 1976); /e Upper Middle Income ($1136-2500 per capita, 1976); /f Due to emigration, population growth rate is lower than rate of natural increase; /g 1956-66; /h Av. 1964-66; /i 1966; Aj Registered only; /k 1972; IL 1962; /m Government hospital establishments only. September, 1978  ANNEX I Page 3 of 5 DEFINITIONS OF SOCIAL INDICATORS The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the nost populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. Due to lack of data, group averages for Capital Surplus Oil Exporters and indicators of access to water and excreta disposal, housing, income distribution and poverty are simple population-weighted geometric means without the exclusion of extrem values. LAND AREA (thousand sq. kl) Population per hospital bed - total, urban., and rural - Population (total, Total - Total surface area comprising land area and inland waters, urban, and rural) divided by their respective number of hospital beds Agricultural - Host recant estimate of agricultural area used temporarily available in public and private general and specialized hospital and re- or permanently for crops, pastures, market and kitchen gardens or to habilitation centers. Hospitals are establishments permanently staffed by lie fallow at lea-t one physician. Establishments providing principally custodial care are not included. Rural hospitals, however, include health and medi- CNP PER CAPITA (US$) - GNP per capita estimates at current market prices, cal centers not permanently staffed by a physician (but by a nedical as- calculated by sane conversion method as World Bank Atlas (1975-77 basis); sietant, nurse, midwife, etc.) which offer in-patient accommodation mod 1960, 1970, and 1977 data, provide a limited range of medical facilities. Admissions per hospital bed - Total number of admissions to or discharges ENERGY CONSUMPTION PER CAPITA - Annual consumption of commercial energy from hospitals divided by the number of beds. (coal and lignite, petroleum, natural ges and hydro-, nuclear and geo- thermal electricity) in kilograms of coal equivalent per capita. HOUSING Averagte size of household (persons per household) - total, urban, and rural- POPULATION AND VITAL STATISTICS A household consists of a group of individuals who share living quarters Total population, mid-vear (millions) - As of July 1; if not available, and their main meals. A boarder or lodger may or may not be included in average of two end-year estimates; 1960, 1970, and 1977 datar the household for statistical purposes. Statistical definitions of house- Urban population (percent of total) - Ratio of urban to total popula- hold vary. Lion; different definitions of urban areas may affect comparability Average number of persons per room - total, urban, and rural - Average num- of data among countries. ber of persons per room in all, urban, and rural occupied conventional Population density dwellings, respectively. Dwellings exclude non-permanent structures and Per sq. km. - Mid-year population per square kilometer (100 hectares) unoccupied parts. of total area. Access to electricitY (percent of dwellings) - total, urban, and rural - Per sq. km. agriculture land - Computed as above for agricultural land Conventional dwellings with electricity in living quarters as percentage only. of total, urban, and rural dwellings respectively. Population age structure (percent) - Children (0-14 years), working-age (15-64 years), and retired (65 years and over) as percentages of mid- EDUCATION year population. Adjusted enrollment ratios Population growth rate (percent) - total, and urban - Compound annual Primary school - total, and female - Total and female enrollment of all ages growth rates of total and urban mid-year populations for 1950-60, at the primary level as percentages of respectively primary school-age 1960-70, and 1970-75. populations; normally includes children aged 6-11 years but adjusted for rude birth rate (per thousand) - Annual live births per thousand of different lengths of primary education; for countries with universal edu- mid-year population; ten-year arithmetic averages ending in 1960 and cation enrollment may exceed 100 percent since some pupils are below or 1970 and five-year average ending in 1975 for most recent estimate, above the official school age. Crude death rate (per thousand) - Annual deaths per thousand of mid- Secondary school - total, and female - Computed as above; secondary educa- year population; ten-year arithmetic averages ending in 1960 and 1970 tion requires at least four years of approved primary instruction; pro- and five-year average ending in 1975 for most recent estimate, vides general vocational, or teacher training instructions for pupils Gross reproduction rate - Average number of daughters a woman will bear usually of 12 to 17 years of age; correspondence courses are generally in her normal reproductive period if she experiences present age- excluded. specific fertility rates; usually five-year averages ending in 1960, Vocational enrollment (percent of secondary) - Vocational institutions is- 1970, and 1975. clude technical, industrial, or other programs which operate independently Family planning - acceptors, annual (thousands) - Annual number of or as departments of secondary institution. acceptors of birth-control devices under auspices of national family Pupil-teacher ratio - Primary, and secondarY - Total students enrolled in planning program, primary and secondary levels divided by numbers of teachers in the corre- Family planning - users (percent of married women) - Percentage of sponding levels. married women of child-bearing age (15-44 years) who use birth-control Adult literacy rate (percent) - Literate adults (able to read and write) as devices to All married women in same age group, a percentage of total adult population aged 15 years and over. FOOD AND NUTRITION CONSUMPTION Index of food production per capita (1970-100) - Index number of per Passenger cars (per thousand population) - Passenger cars comprise motor cars capita annual production of all food commodities, seating less than eight persona; encludes ambulances, hearses and military Per capita supply of calories (percent of requirements) - Computed from vehicles. energy equivalent of net food supplies available in country per capita Radio receivers (per thousand population) - All types of receivers for radio per day. Available supplies comprise domestic production, imports less broadcasts to general public per thousand of population; excludes unlicensed exports, and changes in stock. Net supplies exclude animal feed, seeds, receivers in countries and in years when registration of radio sets was in quantities used in food processing, and losses in distribution. Re- effect; data for recent years may not be comparable since most cosutries quirements were estimated by FAO based on physiological needs for nor- abolished licensing. m1 activity and health considering environmental temperature, body TV receivers (per thousand population) - TV receivers for broadcast to general weights, age and sex distributions of population, and allowing 10 per- public per thousand population; excludes unlicensed TV receivers in coun- cent for waste zt household level. tries and in years when registration of TV sets was in effect. Per capita supply of protein (gras pet day) - Protein content of per Newspaper circulation (per thousand population) - Shows tho average circula- capita net supply of food per day. Net supply of food is defined as tion of "daily general interest newspaper", defined as a periodical publi- above. Requirements for all countries established by USDA provide for cation devoted primarily to recording general news. It is considered to a minimum allowance of 60 gras of total protein per day and 20 grams be "daily" if it appears at least four tines a week. of animal and pulse protein, of which 10 grams should be animal protein. Cinema annual attendance per capita per year - Based on the number of tickets These standards are lower than those of 75 grams of total protein and sold during the year, including admissions to drive-in cinemas and mobile 23 grams of animal protein as an average for the world, proposed by units. FAO in the Third World Food Survey. Per capita protein supply from animal and pulse - Protein supply of food EMPLOYMENT derived from animals and pulses in grams per day. Total labor force (thousands) - Econoeically active persons, including armed Child (ages 1-4) mortality rate (per thousand) - Annual deaths per thous- forces and unemployed but excluding housewives, students, etc. Defii- and in age group 1-4 years., to children in this age group. tions in various countries are not comparable. Female (percent) - Female labor force as percentage of total labor force HEALTH Agriculture (percent) - Labor force in farming, forestry, hooting and fishing Life expectancy at birth (years) - Average number of years of life as percentage of tota1 labor for. remaining at birth; usually five-year averages ending in 1960, 1970, Industry (percent) - Labor force in mining, construction, manufacturing and and 1975. electricity, water and gas as percentage of total labor force. Infant mortality rats (per thousand) - Annual deaths of infants under Participation rate (percent) - total, ale, and female - Total, male, and one year of age per thousand live birhts. female labor force as percentages of their respective popoltions. Access to safe water (percent of population) - total, urban, and rural - These are ILO's adjusted participation rates reflecting age-sec Number of people (total, urban, and rural) with reasonable access to struoture of the poplati-r. -od long time t rnd. safe water supply (includes treated surface waters or untreated but tconomic denendency ratio - Ratio f popolation eder 15 and h5 and over to uncontaminated water such as that from protected boreholes, springs, the labor force in ge group of 15-64 years. and sanitary wells) as percentages of their respective populations. In an urban area a public fountain or standpost located not more INCOME DISTRIBUTION than 200 meters from a house may be considered as being within rea- Percentage of private income (both in cash and kind) received by richest 5 sonable access of that house. In rural areas reasonable access would percent, richest 20 percent, poorest 20 percent, and poorest 40 percent imply that the housewife or members of the household do not have to of households. spend a disproportiomate part of the day in fetching the family's water needs. POVERTY TARGET GROUPS Access to excreta disposal (percent of population) - total, urban, and Estimated absolute poverty income level (US$ per capita) - urhan and total - rural - Number of people (total, urban, and rural) served by excreta Absolute poverty income level is that income level below which a minimal disposal as percentages of their respective populations. Excreta nutritionally adequate diet plus essential non-food requirements 1. not disposal may include the collection and disposal, with or without affordable. treatment, of human excreta and waste-water by water-borne systems Estimated relative poverty income level (10$ per capita) - orban and cocci - or the use of pit privies and similar installations. Relative poverty income level is that income level less than one-third Pooplation per phvsician - Population divided by number of practicing per capita personal income of the country. physicians qualified from a medical school at university level, Eitimated Population below poverty i. n e level (percent) -urb and cocci - Population per nursing person - Population divided by number of Percent of population (urban and rural) who are either "absolctI poor" or practicing male and female graduate nurses, practical nurses, and "relative poor" whichever is greater. assistant nurses.  PAtE 4 0f 5 pxg9e TUNISIA - ECONOMIC DEVELOPIIENT DATA SHEET Actaal Eat. Projected j/ 1966-70 1971-75 1977-81 1977 1965 1970 1975 1977 1978 1979 1981 Diest MillitHn t Cee.tent 1972 Fetcoe Average Attoal Growth Rate Share of GDP A. NATIONAL ACCOUNTS Gr-et Doeetic Psodoot 656 824 1,286 1,465 1,608 1,792 1,976 4.7 9.3 7.0 100.0 GeEse from Ter.e of Trade -6 -2 53 49 50 48 66 . . . 3 33 Groes Do-ettic Incoe 650 822 1,339 1,515 1,658 1,780 2,042 4.8 10.3 7.3 103.3 Importt (I cd NP3) 179 221 384 495 521 525 561 4.3 11.7 5.5 33.8 Eptrt (G ted NGS) (Imart crparity) 195 183 333 372 391 410 497 11.7 12.7 8.0 25.4 R-eourcr Gap 74 38 51 123 130 15 64 . . . 8.4 Cenesapttoc 549 696 1,061 1,268 1,381 1,480 1,704 4.9 8.8 8.0 85.9 Invett-et 162 164 330 378 406 415 402 0.2 15.0 1.9 25.8 Do ettic S-eige 88 126 279 255 277 300 338 7.4 17.1 4.3 17.4 Satienel 67 104 274 248 269 286 316 9.2 21.4 4.1 16.9 GDP at turreet ptices (USH illiane) 1,004 1,444 4,324 5,035 5,841 6,668 8,520 7.5 25.0 13.5 B. SECTOR OUTVfIT Share is GDP at Cene..e tt1972 Ntiece in Percen t Acetate AHeal Grceth Eate Agtrirlture 22.1 20.4 2r.0 n8.9 18.3 18.4 17.7 - 10 3 3.3 led-etey 22.8 24.9 25.4 25.7 26.0 26.0 27.8 6.3 10.1 9.6 Ser-icee 55.1 54.7 53.6 55.8 55.7 55.6 54.5 5.8 12.3 7.0 C. hERCHANDISE TRADE Milli... of LS Dlate (carteat spices) Acesaa. As.... Growth Rate Eco-te Olive Oil 26 17 78 60 77 77 85 -9.0 36.0 - Crude Petrolee1 - 45 359 375 434 489 560 . 52.0 11.7 RefiEed Patroleum - 5 15 13 14 IS 14 . 25.0 4.5 PhoePhase Heck 22 24 115 49 15 63 103 1.7 37.0 11.1 Super Phe.phate 18 17 42 46 48 52 75 -1 2 36.9 21.5 Phesphtric Arid - - 38 49 52 53 77 . . . 10.7 Agalteltural Producte 32 40 92 87 97 109 174 4.6 18.1 17.4 Teetiec 2 2 53 166 588 207 299 - 93.0 26.5 Othar Meesfattuetd C-de 21 538 67 94 109 353 206 12.6 12.0 26.0 TateS Owed. 121 198 659 939 1_0?3 1,200 55853 9.2 35.5 15.1 Nee PaFttr Sarvcie- 68 128 497 583 646 701 978 _-.4 49.0 13.4 Totel Ecpertt 189 316 1,356 1,522 1,719 1,901 2,571 6.2 40.0 14.5 Imprtta (cif) Foedetuffs 34 80 225 216 213 219 274 18.7 23.0 7.8 Other C -see Goeds 42 41 218 317 355 385 507 -0.5 40.0 15.9 EertXy 55 13 140 190 223 217 148 3.4 60.0 -12.9 Intermediate Goede 38 113 4i1 552 631 631 840 5.1 29.5 13.7 Capital Geade 77 73 430 539 648 756 838 -5.1 43.0 11.4 Totel Crede 252 320 1,424 1,814 2,070 2,208 2.607 4.9 35.0 11,3 Other tIS 69 81 141 212 217 227 297 -2.2 18.2 16.5 Tetel GOcde .od B FS 320 381 1.565 2,026 2,287 2,435 2. 3.6 32.5 1i.7 D. PRICES 1972 - 100 Avea-t Ann.ual Groth Rate Eapert prior iedne 75.5 89.7 194.9 202.3 209.8 218.7 248.9 3.5 16.8 6.5 Impart pri.s iedes 85.8 90.7 164.1 175.7 183.1 191.1 2I1.7 1.1 12.6 5.3 Terne af trade index 88.0 98.9 118.8 I15.1 114.6 113.2 115.2 2.4 3.7 1.2 GDP deflat-r 70.7 92.0 135.2 147.4 155.8 165.2 185.0 5.4 8.0 6.1 AVc-ige enahege rate (TD par 5) 0.525 0.525 0.402 0.429 0.429 0.429 0.429 - 5.5 E. PUOLIC FINAk3CE o s e of GDPa Corent Pric. F. DETAIL ON GOVFT Sn Fnrctt of T.tel 1965 1970 1875 1976 1877 SCOINSTNT1972.74 17-77 Cerresst Neceee (Ganaral Goct.) 19.6 21.8 28.7 28.5 30.9 Current E- pendirore (Generel G04t.) 15.9 17.9 21.2 21.1 23.3 Satins Seetern 18.4 17.7 Correct Serplec 4.6 3.9 7.5 7.4 6.8 Agri.olsute 9.6 7.6 sertral Govt. Ineceteens 7.5 3.9 4.1 4.7 5.7 C-a portlqd 13.2 7.4 TStel GSvt. IlVe-tenet 2/ 11.7 8.1 11.9 13.4 17.1 Ieftectruetac. 6.2 5.1 G, 11E~~~~~~~~Alk oll ~~~~~~~~Other 2! 5...a 62.2 C. SETAIL at CONSENT HIIPENOITORE ~~~In Porten~t of Tetal TestS1 109.0 190.0 G. AI. GON T 5NT EXPENDITURE 1965 1970 1975 1976 1977 EdoHeRArLan07T. 25, 7 32. 1 22,3 28.3 21,0 FINA1CING Other Scci-l Service. 15.5 16,7 11.1 13.1 15.2 Agrticltu-e 5.0 3.4 5.4 7.2 5.7 Publio S-otot Saciega 59.2 50.3 Other Ereen.ia S-rcte 17.7 17.7 16.2 14.5 17.2 Otha- Fynecoing 12.4 20.5 Adeinlitastien ted Defenac 36.1 39.1 4.0 358.9 40.9 Oteactic Narrowin8 (nesS 6.3 7,6 100.0 199.0 100.0 190 .0 F-roign Pinenting (net) 22.1 21.6 Tests n1 at 109.0 100.0 H. LABOR FORCE (thaucand.) 1972 1977 Atiuiselte 3/ 127 532 Induetry 344 462 Seelrice 406 487 Uqnapley.d 173 246 1,450 1,727 1/ Ftjo-etd by W1rld Batk St-ff 2/ Oncledee tran.ferc to public nntnrpn tnt ,3/ Eteldtal October 5979  ANNEX I TUNISIA - BALANCE OF PAYMENTS AND EXTERNAL ASSISTANCE Page 5 of 5 pages (Amounts in millions of US dollars) 1/ Actual Est. Projected 2/ 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1986 A. SUMMARY BALANCE OF PAYMENTS Exports (incl. NFS) 316 408 567 714 1,254 1,356 1,309 1,522 1,719 1,901 2,206 2,571 4,821 Imports (incl. NFS) 381 442 593 782 1,242 1.565 1,669 2,026 2.287 2,435 2,659 2,904 4,967 Resource Balance -65 -34 -26 -68 12 -209 -360 -504 -568 -534 -453 -333 -146 Net Interest Payments -50 -18 -18 -13 2 -5 -42 -57 -75 -100 -125 -147 -240 of which: Interest on Public Loans (-17) (-20) (-22) (-27) (-31) (-37) (-39) (-53) (-68) (-95) (-122) (-147) (-275) Direct Investment Income -9 -10 -25 -35 -36 -37 -26 -21 -40 -60 -82 -93 -188 Workers' Remittances 29 44 62 98 119 146 143 168 210 236 264 295 521 Other Net Factor Services -8 -39 -41 -82 -103 -116 -127 -117 -129 -142 -156 -172 -276 Current Transfers (net) 10 16 6 4 1 -3 -1 -1 2 4 7 7 7 Balance on Current Account -93 -41 -42 -96 -5 -224 -412 533 -600 -597 -545 -443 -323 Private Direct Investment 19 24 31 57 49 48 63 75 86 110 121 133 267 Official Capital Grants 43 35 37 45 43 50 45 45 40 40 40 38 30 Public M + LT loans: Disbursements 82 107 140 153 174 211 327 440 632 612 610 550 695 - Amortization -45 -49 -70 -59 -59 -66 -65 -83 -109 -123 166 -193 -530 Net Disbursements 37 58 70 94 115 145 262 357 523 489 444 357 165 Capital Transactions n.e.i. 3/ 13 24 -19 -8 -99 -62 -3 -- -- -- -- -- -- Change in Net Reserves (increases - -) -19 -100 -77 -92 -103 43 43 57 -50 -43 -60 -85 -140 Net Foreign Reserves 15 115 192 284 387 344 305 248 297 340 400 485 1242 (months of imports equivalent) 0.5 3.1 3.9 4.4 3.7 2.6 2.2 1.5 1.6 1.7 1.8 2.0 3.0 B. PUBLIC LOAN COMMITMENTS Actual Debt Outstanding on Dec. 31/76 IBRD 37 36 25 64 37 60 80 Disb. Only In Percent of Total IDA 10 10 10 7 -- -- 5 __ EXTERNAL DEBT Other Multilateral -- -- I -- 12 11 96 8 World Bank 127.9 10.1 Governments 100 84 106 138 79 289 446 125 'IDA 64.1 5.0 Suppliers 8 5 7 12 2 27 8 54 Other Multilateral 22.8 1.8 Financial Institutions 21 28 28 17 12 20 19 -11 Governments 796.1 62.5 Total Public M + LT Loans 139 164 188 199 169 384 634 256 Suppliers 89.3 7.0 Financial Institutions 99.3 7.8 Bonds 50.4 4.0 Public Debt n.e.i. 23.0 1.8 Total Public M=+ LT Debt 1,272.9 100.0 D. DEBT AND DEBT SERVICE Public Debt Outst. + Disbursed '524 604 680 807 954 1,071 1,271 1,630 Interest on Public Debt 17 20 22 27 31 37 39 53 Amortization 45 49 70 59 59 66 65 83 Total Public Debt Service 62 69 92 86 90 103 104 136 Burden on Export Earnings 4/ (70) Public Debt Service 19.6 16.7 16.2 12.0 7.2 7.6 8.0 8.9 TDS + Direct Invest. Inc. 22.5 19.1 20.6 16.9 10.0 10.3 10.0 10.3 Average Terms of Public Debt Int. as 7, of Prior Year DO + D 3.3 3.8 3.6 4.0 3.8 3.9 3.6 4.2 Amort. as % Prior Year DO + D 9.5 9.1 11.6 8.7 7.3 6.9 6.1 6.6 IBRD Debt Out. + Disbursed 26 39 52 70 89 110 128 159 IBRD as 7, of Public Debt 5.0 6.5 7.6 8.7 9.3 10.3 10.2 9.7 IBRD as 7 of Public Debt Service 4.2 5.3 6.5 9.4 12.0 13.3 15.8 13.3 IDA Debt Out. and Disbursed 16 21 28 57 43 55 64 69 IDA as , of Public Debt 3.1 3.5 4.1 4.6 4.5 5.1 5.1 4.2 IDA as 7/ of Public Debt Service 0.1 0.2 0.3 0.4 0.4 0.4 0.5 0.5 1/ Exchange rates used for the various stocks and flows correspond to those published in IFS. 2/ Projected by World Bank Staff. October 1978 3/ Including errors and omissions. T/ Including non-factor services.  ANNEX II Page 1 of 7 A. STATEMENT OF BANK LOANS AND IDA CREDITS (as of December 31, 1978) Loan or Credit Amount (Less Cancellation) Number Year Borrower Purpose Bank IDA Undis. Twenty-one Loans and Credits Fully Disbursed 126.0 58.5 238 1971 Republic of Tunisia Population 4.8 2.1 270 1971 Republic of Tunisia Fisheries 2.0 0.2 858 1972 Republic of Tunisia Tourism Infrastructure 14.0 10.3 881 1973 Societe Nationale d'Investissement Development Finance Co. 14.0 0.6 937 1973 Republic of Tunisia Urban Planning & Public Transportation 11.0 1.9 989 1974 SONEDE Water Supply 23.0 2.7 1029 1974 Republic of Tunisia Hotel Training 5.6 3.9 1042 1974 Compagnie des Phosphates et Chemin de Fer de CAFSA Phosphate Development 23.3 7.5 1068 1974 Republic of Tunisia Irrigation Rehabilitation 12.2 7.0 1088 1975 Republic of Tunisia Urban Sewerage 28.0 23.2 1155 1975 Republic of Tunisia Education 8.9 8.9 1188 1976 Republic of Tunisia Highways 28.0 27.7 1189 1976 Banque de Developpement Economique de Tunisie (BDET) Development Finance Co. 20.0 3.2 238-1 1976 Republic of Tunisia Population 4.8 1.1 1340 1976 Banque Nationale de Tunisie Agricultural Credit 12.0 9.5 1355 1976 Societe Tunisienne de l'Electricite et du Gaz Power 14.5 1.6 1431 1977 Republic of Tunisia Irrigation Development 42.0 39.1 1445 1977 SONEDE Water Supply 21.0 20.5 1504 1977 BDET Development Finance Co. 30.0 30.0 1505 1977 Republic of Tunisia Small-scale Industrial Project 5.0 5.0 1601 a/ 1978 Republic of Tunisia Rural Roads 32.0 32.0 TOTAL 470.5 70.1 238.0 Of which has been repaid .. 46.6 4.5 Total now outstanding 423.9 65.6 Amount Sold 14.3 of which has been repaid 3.7 10.6 Total now held by Bank and IDA b/ .. 413.3 65.6 Total Undisbursed 234.6 3.4 238.0 a/ Not yet effective. b/ Prior to exchange adjustment. B. STATEMENT OF IFC INVESTMENTS IN TUNISIA (as of December 31, 1978) Amount in US $ Million Year Obligor Type of Business Loan Equity Total 1962 NPK Engrais Fertilizers 2.0 1.5 3.5 1966 Societe Nationale d'Investissement Development Finance Co. 0.6 0.6 1969 COFIT (Tourism) Development Finance Co. 8.0 2.2 10.2 1970 Societe Nationale d'Investissement (SNI) now (BDET) Development Finance Co. 0.6 0.6 1973 Societe Touristique & Hoteliere RYM SA. Tourism 1.6 0.3 1.9 1973 Societe d'Etudes & de Developpement de Sousse-Nord Tourism -- 0.0 0.0 1975 Societe d'Etude & de Developpement de Sousse-Nord Tourism 2.5 0.6 3.1 1974 Industries Chimiques du Fluor Chemicals 0.7 0.7 1978 BDET Development Finance Co. 1.3 1.3 Total Gross Commitments 14.1 7.8 21.9 Less cancellations, terminations, repayments and sales 4.2 1.6 5.8 Total commitments now held by IFC 9.9 6.2 16.1 Total undisbursed .. 1.5 0.7 2.2  ANNEX II Page 2 of 7 C. PROJECTS IN EXECUTION 1/ Cr. 238: Population Project; US$4.8 million credit of April 5, 1971; Date of Effectiveness: December 29, 1971; Closing Date: (Original) June 30, 1976; (Current) December 31, 1979. Cr. 238-1: Population Project: US$4.8 million Supplemental Credit of October 13, 1976; Date of Effectiveness: March 21, 1977; Closing Date: December 31, 1979. Under the Government's new decentralized and integrated health policy, the national family planning program continues to show good progress. The last of the 29 MCH clinics are expected to be completed by the end of March, 1979. Three of the four maternity hospitals are close to completion, and the fourth, at Bizerte, is scheduled for completion late this calendar year. Bids have been invited for the procurement of furniture and equipment. The Avicenne training school is completed, equipped, and functioning. Because of delays encountered in construction, the closing date of the project has been extended to December 31, 1979. Cr. 270: Fisheries Project; US$2 million credit of September 24, 1971; Date of Effectiveness: May 24, 1972; Closing Date: (Original) December 31, 1976; (Current) September 30, 1979. About 90 percent of project funds are now disbursed and all the 190 boats ordered have now been constructed. The Office National des Peches (ONP) shipyards in Bizerte and Sfax have completed 65 and 50 boats respectively and the shipyard in Sousse has completed 75 boats. More loan requests for the financing of additional fishing gear will have to be processed in 1979 to dis- burse the remainder of the credit, and it is estimated that project completion can be achieved by June 30, 1979. However, the recovery of loans provided under the project to the fishermen remains a matter of concern as the recovery rate has been low and measures taken to improve the situation have not yet given results. BNT have been advised to recruit without delay additional recovery agents in its branches along the coast whose main task would be the collection of installments in the places where fishermen land and sell their catch. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any prob- lems which are being encountered, and the action being taken to remedy them. They should be read in this sense, and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 3 of 7 Ln. 858: Tourism Infrastructure Project; US$14 million loan of September 28, 1972; Date of Effectiveness: June 29, 1973; Closing Date: (Original) December 31, 1977; (Current) June 30, 1980. The project has entered its final implementation stage. An esti- mated 50 percent of project works have been completed. All construction works should be completed by the end of 1979. Total project cost, including price escalation allowances, is still estimated at TD 31.5 million. Of the total Bank financing of $24 million (including the fully disbursed Credit 329), 57 percent, or $13.7 million, has been disbursed. Ln. 881: Fifth Development Finance Company Project; US$14 million loan of February 20, 1973; Date of Effectiveness: May 24, 1973; Closing Date: (Original) March 31, 1978 ; (Current) June 30, 1979. Ln. 1189: Sixth Development Finance Company Project; US$20 million loan of January 26, 1976; Date of Effectiveness: June 7, 1976; Closing Date: June 30, 1980. The closing date of Loan 881 has been postponed to June, 1979 to permit BDET to disburse the last $0.6 million in the Loan account toward a few subprojects which encountered implementation delays. The utilization of the loan has been generally in line with the appraisal report's projec- tions, which foresaw the loan to be fully disbursed by March, 1977. Dis- bursement on Loan 1189, which is also fully committed, reached $16.8 million as of December, 1978, about 6 months ahead of the schedule projected in the appraisal report. BDET has shown consistent improvements over the past three years in the key areas of management effectiveness, arrears recovery, finan- cial practices and resource mobilization. The institution plays an increas- ingly important role in financing industrial development, extending about one-third of all term credit available to the industrial sector in Tunisia. Ln. 937: Tunis District Urban Planning and Public Transport Project; US$11 Cr. 432: million loan and US$7 million credit, both of October 5, 1973; Date of Effectiveness: September 24, 1974; Closing Date: (Original) December 31, 1976; (Current) December 31, 1979. The major part of the project has been implemented and most of the objectives have been met. The project helped establish and strengthen the Tunis District, the first regional planning authority in Tunisia. Work carried out by the District in the housing and transport sectors has been instrumental in bringing about substantial changes in public programs and policies, such as the adoption of measures to encourage the use of buses and restrain the use and parking of private cars. The project also assisted the public transport company Societe Nationale des Transport (SNT) in renewing its bus fleet and railway rolling stock, improving its organization and finance, and upgrading the maintenance of its vehicles with the construction of a new bus depot. In parallel, the city of Tunis adopted a new traffic plan with a one-way street system, reserved bus lanes and restricted parking zones, which contributed substantially to the improvement of bus services in Greater Tunis. This, combined with an increase in the SNT bus fleet, and improved bus  ANNEX II Page 4 of 7 maintenance has led to an increase in the use of SNT transport facilities by about 27 percent above the level which would have been achieved in the absence of the project. The construction of the last project component, a bus depot, is now scheduled to start in May-June 1979. Ln. 989: Third Water Supply Project; US$23 million loan of May 29, 1974; Date of Effectiveness: September 24, 1974; Closing Date: (Original) June 30, 1979; (Current) December 31, 1979. Ln. 1445: Fourth Water Supply Project; US$21 million loan of July 5, 1977; Date of Effectiveness: January 30, 1978; Closing Date: December 31, 1982. Most of the civil works programmed under the third project are now completed. The project is expected to be fully completed by June 1979, some six months behind the appraisal schedule. Preliminary financial results as of September 30, 1978 indicate that SONEDE will meet the rate of return covenant and debt service requirement for 1978. The proportion of cash in SONEDE's current assets of 2.4 percent in 1978 is considered low. However, it is expected that from 1979 onwards, due to tariff increases and other contribu- tions, cash will gradually increase to an adequate level. As far as current assets are concerned, SONEDE agreed that attention would continue to be given to inventory management in order to reduce stocks to a more appropriate level. Good progress has been accomplished in the execution of the works included in the Fourth Water Supply Project. Final engineering design of the project components, with the exception of the water treatment plant, is completed, and laying out of the project facilities and soil tests are under way. It is now expected that, except for the treatment plant, procurement under the project should be completed by mid-1979. Ln. 1029: Hotel Training Project; US$5.6 million loan of July 17, 1974; Date of Effectiveness: November 4, 1975; Closing Date: (Original) October 31, 1978; (Current) October 31, 1980. Civil works for the first two centers started in July 1977. They have met with delays largely because of shortages in imported materials and are now expected to be completed by April 1979. For the remaining equipment contracts, bids were opened on October 30, 1978 and contracts are in the process of being awarded. Revised cost estimates indicate a project cost of TD 7.8 million (US$17.8 million), 45 percent higher than the appraisal esti- mate. ONTT has proposed that the third center be deleted from the project and that residual funds (US$1 million) be applied to the first two centers. This proposal is being evaluated in the Bank.  ANNEX II Page 5 of 7 Ln. 1042: Gafsa Phosphate Project; US$23.3 million loan of October 1, 1974; Date of Effectiveness: March 14, 1975; Closing Date: June 30, 1979. Underground mining operations using the longwall method were in- tended to supply phosphate rock to the Sehib beneficiation plant to be commis- sioned by the end of 1979. Following the failure of the related tests to reach satisfactory production levels a partial reformulation of the project will be carried out with the assistance of experienced consultants whose services will be financed by the unused portion of the Bank loan. The ser- vices will include (i) a 15-18 months assistance in further testing the longwall method, (ii) a feasibility study for dragline mining of an adjacent deposit, (iii) a review of the corporate five-year investment program with a view to designing and implementing an improved cost control system. In the next 5-6 years the beneficiation plant will be supplied with ore mined at a close-by small deposit until a new and bigger deposit will be ready for operations. Ln. 1068: Irrigation Rehabilitation Project: US$12.2 million loan of December 31, 1974; Date of Effectiveness: September 18, 1975; Closing Date: June 30, 1982. Progress in construction and rehabilitation work in the Medjerda sub-project area continues to be satisfactory, except for water supply to farmers on which a common decision is expected by SONEDE and OMVVM, regard- ing the latter's contribution to the investment costs. Some progress has been made since May 1978 in enforcing the Agrarian Reform Legislation. OMVVM continues to encourage large owners to improve cultivation of land and marked progress has been reported in credit distribution for medium and short term. In Nebhana, the land consolidation program is developing well and farmers have been settled on nearly 60 percent of the total area. Progress in construction and rehabilitation of irrigation, drainage and roads networks continues to be satisfactory. Ln. 1088: First Urban Sewerage Project; US$28 million loan of February 18, 1975; Date of Effectiveness: August 15, 1975; Closing Date December 15, 1979. The project has suffered considerable delay as a result of a number of factors, some beyond the control of the project entity, ONAS. As a result, considerable cost escalation has occurred, chiefly in local cost components. However, bids for most of the works have now been received and construction will shortly be under way on all major components. The project is expected to be completed in mid-1981. One of its major benefits will be release of land for development around Tunis Lake, which is presently impossible because of the pollution of the lake waters by untreated sewage. Consultants financed under the project have produced a land-use plan for the area, and acquisition of the land has begun by Government.  ANNEX II Page 6 of 7 Ln. 1155: Third Education Project; US$8.9 million loan of August 13, 1975: Date of Effectiveness: March 1, 1976: Closing Date: June 30, 1980. Following a change in the educational priorities in Tunisia, the government and the Bank have recently agreed to reformulate the project. Dis- bursements have commenced recently. Ln. 1188: Second Highways Project; US$28 million loan of January 26, 1976: Date of Effectiveness: June 16, 1976; Closing Date: December 31, 1979. Civil works of Lots 9 and 10 of the Tunis-Bizerte highway are behind schedule although quality of works is generally satisfactory. Construction has recently started on Lot 6: alternative bypasses of Nabeul, Hammamet and Korba are under study by the Sous-Direction des Etudes. Construction works of Lots 5, 7 and 11 have not started yet due to lack of local financing and, in the case of Sfax bypass, delays in expropriation. The local financing issue has been discussed with the Ministries of Public Works and Planning. The revised intermediate report of the transport coordination study is behind schedule, but the consultants expect to conclude the study on time. Ln 1340: Second Agricultural Credit Project; US$12 million loan of November 23, 1976: Date of Effectiveness: July 19, 1977: Closing Date: December 31, 1980. About 21 percent of the amount envisaged at loan signature was dis- bursed by the end of December. The appraisal of subloans for small farmers under category 1 of the Project is now progressing and BNT has made the first commitments. The funds earmarked for SONAM are fully disbursed and prospects are good for the commitment of funds for service cooperatives to small and medium size farms. Commitments of funds made by BNT under categories 2 and 4 are progressing satisfactorily but due to cumbersome administrative procedures and other technical problems, subloan applications of SCMVS under category 3 have been delayed. To overcome these difficulties, BNT and the Ministry of Agriculture have proposed new procedures, and BNT is expected soon to notify the Bank officially of the new standard loan conditions. Ln. 1355: Second Power Project; US$14.5 million loan of January 12, 1977; Date of Effectiveness: May 4, 1977: Closing Date: June 30, 1981. The Project comprises 7 gas-turbine units of equal size totalling 150 MW to be installed in different locations. Its cost is estimated at US$28.7 million equivalent, including a foreign exchange component of US$24.8 million equivalent. The Project has been almost completed. The energy pricing study has started after some delay.  ANNEX II Page 7 of 7 Ln. 1431: Sidi Salem Multi-purpose Project; US$42 million loan of July 5, 1977; Date of Effectiveness: July 31, 1978; Closing Date: June 30, 1984. The effectiveness of the loan was delayed because of difficulties in finalizing the cofinancing arrangements. This has not retarded project execu- tion. For the project as a whole, progress in implementation continues to be satisfactory. However, implementation of the diversion tunnels is about three months behind original schedule. Accelerated efforts to mobilize equipment and hire staff are needed to complete construction of both tunnels by the end of August 1979. Progress in implementation of the railroad substructure is also slightly behind schedule. The land reform and consolidation program has been developing on schedule. Ln. 1504/1505: Industrial Finance Project consisting of Seventh Loan to Banque de Developpement Economique de Tunisie (BDET) and a Pilot project for assistance to SSI; Loans of $30.0 million to BDET and of $5.0 million to the Government, of January 25, 1978; Date of Effectiveness: October 13, 1978; Closing Date: December 31, 1981. The start up of the project suffered from difficulties in finalizing legal arrangements concerning the SSI Pilot Project component, which delayed effectiveness by about six months. No disbursements have, therefore, taken place yet under either component of the project. Commitments under the loan to BDET have built up rapidly after effectiveness, so that the loan is expected to be disbursed on schedule. Under the project, BDET is giving priority in its financing to projects which are located in the least developed regions, sponsored by new entrepreneurs, characterized by high labor intensity, or export-orientation. No commitments have been made, yet, under the SSI pilot project; however, considerable progress have been made by the Tunisian authori- ties toward setting up a network of Tunisian and foreign technical assistance experts, specifically catering to the needs of SSI, as agreed under the project.  ANNEX III TUNISIA SECOND URBAN SEWERAGE PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Project first identified by Bank: December 1977 (b) Time taken by the country to prepare project: Six months (December 1977 - June 1978) (c) Agency which has prepared the project: The National Sewerage Authority (ONAS), assisted by a Dutch consulting firm, Ingenieurs Conseils Neerlandais (ICN) (d) First Bank mission to review project: March 1978 (e) Date of departure of appraisal mission: June 20, 1978 (f) Date of completion of negotiations: January 15, 1979 (g) Planned date of effectiveness: June 30, 1979 Section II: Special Bank Implementation Actions None Section III: Special Conditions 1. A special condition of loan effectiveness would be the execution of a project agreement between the Bank and the Government and an agreement between the Government and ONAS to on-lend the proceeds of the proposed loan, on terms similar to those of the proposed Bank loan (paragraph 42). 2. Other conditions are: (a) Government will promptly make available to ONAS all funds neces- sary to assure completion of the project (paragraph 43); (b) ONAS will (i) review its user charges not later than December 31, 1980 and each year thereafter (paragraph 47); (ii) appoint con- sultants to assist in the project design, by August 1, 1979 (paragraph 39); and (iii) implement measures to strengthen its management, by December 31, 1979 (paragraph 44).   . w X.S.w. . 7 __. IBRD 13846 g \(/ CdK-.eId, ,00. 43.a,= t Tunis51 1 TUNISIA ' \5 ee. eo eer t eeuerroe , SECOND URBAN SEWERAGE PROJECT \ TUNISIA GREATER TUNIS TUNISIA Fs Urbon S-ood U'b.n \ \ SercsP,q,ee Se--os P,.,.o ~- EXISTING PROJECT - - Collector Sewers - T ;- S b 5 h t Treated Sewage Discharge - -r AR ur --Force MaJins-- | /\ ) - ---- Stormwcter Interceptor Caznal - - - - - | TJRAN\A X - * Sewage Treatment Plants _/| 7-\ e '32 (t Pumping Strations , i Sewer Networks Coti Stormwater Droinoge MAs ~\ \ ) / < \z- ~ ' ; ;,LAMARSA Stcrmwter D,ainoge \ / \, v 9 Built-up Areas / | f ___ / ~ ~ ~~ ~~~~~~~~~~~~~~~~Notre RTAG LA( UB GOLETTE ~~/Xs 'Eaw1Sh4'tows' z::tvTUNI [ X 7 2 \ A 4 t K A AM L1F~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0C I * ' ' ' y V X ck-.