Announcement of Fourteen Million Dollars World Bank Loan, Ten Million Dollars IDA Credit, and DM Forty Million KfW Loan to Tunisia for a Tourism Infrastructure Project on September 28, 1972

INTERNATIONAL BANK FOR • RECONSTRUCTION AND DEVELOPMENT l • l 8 18 INTI~RNA'"I'IONAL D:EVELOPMENT ASSOCIATION H ST REF.: T, N W WASHINGTON D.C.20433 TELEPHONE. EXECUTIVE 3-6360 Bank Press Release No. 72/61 Subject: $14.0 million World Bank loan, IDA Press Release No. 72/49 $10.0 million IDA credit, and September 28, 1972 DM 40 million KfW loan to Tunisia for a tourism infra- structure project The World Bank Group and KredH 'f1nstalt £Ur Wiederaufbau (KfW) in Frankfurt/Germany will finance a tourism infrastructure project in Tunisia. The project is expected to assist Tunisia's tourism industry in achieving continued rapid growth and to have a very favorable impact • on the country's balance of payments situation • Tunisia, the World Hank and its affiliate, the International Develop- ment Association (IDA), today signed a $14.0 million loan and a $10.0 mil- lion credit for the project. Together with an amount of Deutsche Mark 40 million (equivalent to about $12.4 million) provided by KfW, they will cover the full foreign exchange cost plus a portion of local cost of the project's estimated $55.0 million total cost. The project consists of high priority infrastructure works such as sewer- age, roads, water supply, power and teleconmunications to be implemented in six tourism zones, along Tunisia's Mediterranean coast, within a carefully planned framework. It includes training, investment promotion, preparation of detailed master plans, assistance of consultants to help execute the project as well as • /more Bank P.R. No. 72/61 - Tunisia -- Tourism infrastructure IDA P.R. No. 72/49 r • - 2 - studies on future inveotment and training need.:;. Equipment and civil works in the DJerbo an<l Zarzis zones would be pri111arily financed fror.1 KfW funds, while .mch ex- penditure in the other four zones Tunis-North, Tunis-South, Hmrunamet/Nabeul and Sousse would be covered from Bank and IDA funds. Engineering, project administra- tion, planning services and promotional expenses would he financed jointly. Tourism has been the fastest expanding sector of Tunisia's economy. However, infrastructure investments in this sector have been lagging behind construction of new hotels. The present project aims at correcting this situation and also providing the infrastructure for a further expansion of the industry until 1981. For the World Bank Group it will be the first operation which attempts to meet the comprehensively planned infrastructure needs of almost the entire tourism • sector of a country. KfW has financed in southern Tunisia since 1963 several tourism infrastructure projects including an airport, roads and water supply from Gennan capital aid funds totaling some Deutsche Mark 38 million. International tourism in Tunisia started from a low level in the early 1960s and has expanded vigorously since. Foreign exchange receipts climbed from $3 mil- lion in 1961 to an estimated $110 million last year. Tunisia has a good chance of winning a subs~antial part of Western Europe's rapidly increasing tourism traffic if sufficient hotel capacity can be provided. About 1.5 million foreign visitors are expected by 1981, up from 600,000 in 1971. The project aims at implementing the first phase of an infrastructure program. The six coastal zones selected cover a total of 90,000 acres. The Government in- tends to concentrate investment efforts for some time in these zones. In 1971, employment within the hotel industry in the whole country stood at 13,000. It is estimated that the project, when in full operation, will directly • provide 12,500 additional jobs, and will also have a marked employment effect on other sectors. /mnr.e •· • Bank P.R. No. 72/61 - Tunisia -- Tourism infrastructure IDA P.R. No. 72/49 - 3 - The KfW loan, the Bank loan and the IDA credit are being made to the Republic of Tunisia, and will be used by the Office National du Tourisme et du Thermalisme which will be responsible for the overall execution and coordination of the project. The KfW loan is provided from German capital aid funds for 30 years, including a 10-year grace period, at an annual interest of 2i. The Bank loan is for 25 years, including a five-year grace period, at 7 1/41 interest per year. The IDA credit is for a period of 50 years, including a 10-year grac~ period, and is interest free except for a 3/4 of 11 service charge to cover IDA's administrative extenses. • The IDA credit and the World Bank loan were approved by the Executive Directors of the Association and the Bank during the fiscal year ended June JO, 1972. The approval was subject to completion of IDA's Third Replenishment. With the coming into effect of the Third Replenishment of the resources of IDA (amounting to a total of $2,442 million) on September 22, the loan and credit were signed today. - 0 - •  " I • September 28, 1972 TECHNICAL DAT! PROJECT: Tourism infrastructure project COUNTRY: Tunisia TOTAL COST: $55 million BANK/ IDA FINAllelll;: Bank $14 mi 11 ion IDA $10 million OTHER FINANCING: Kreditanstalt fur Wiederaufbau (Frankfur(/C,e.rmany) Deutsche Mark 40 million (about $12.4 million) IMPLEMENTING ORGANIZATION: Office National du Tourisme et du Thermalisme (ONT!') COMTOURISM Tunis, Telex 381 ~ PROJECT DESCRIPl'!ON: The project finances preparation of master plans in six coastal tourism zones and infrastructure works such as sewerage, roads, water supply, power, telec0111Dunications. It also provides for consultant's assistance in project execution, training, investment priomotion, as well as studies on training and further infrastructure investment needs. PROCUREMENT: Equipment (mainly pipes, treatment installation, power distribution and telecommuni.cation equipment) and civil works contracts (except for small contracts) for sewer and treatment plant construction, water supply and road works will be tendered internationally. CONSULTANTS: For the preparation of master plans ONTT intends to engage ITALCONSULT and SCET-Cooperation. BCEOM is expected to prepare the detailed engineering for sewerage works and assist in their execution and BCEOM/Studi and SCET- Cooperation to prepare the detailed engineering for the road works. Con- sultants still to be selected will assist ONTT in project execution and supervision. ESTI.MA'lED COMPLETION DATE: End 1976 •