Tunisia - Fifth Education Project

Document of i C The World Bank FOR OFFICIAL USE ONLY Report No. P-3429-TUN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPME TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN THE AMOUNT EQUIVALENT TO US$27 MILLION TO THE REPUBLIC OF TUNISIA FOR A FIFTH EDUCATION PROJECT November 30, 1982 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - Tunisian Dinar (TD) I Tunisian Dinar (DT) = US$ 2.0 I US Dollar = DT 0.5 FISCAL YEAR January I to December 31 PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ATC Agricultural Training Center DERV Directorate of Education, Research and Extension Services (Direction de l'Education, de la Recherche et de la Vulgarisation) in the Ministry of Agriculture Ecole de Base The nine-year system of basic education HLAI Higher Level Agricultural Institute MOA Ministry of Agriculture MOE Ministry of Education MOHE Ministry of Higher Education MOPF Ministry of Planning and Finance  FOR OFFICIAL USE ONLY REPUBLIC OF TUNISIA FIFTH EDUCATION PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Tunisia Amount; US$27 million equivalent in various currencies, including a capitalized front-end fee. Terms: 17 years including 4 years of grace at the standard variable interest rate. Project Description: The project would improve the planning and management capacity of the Ministry of Agriculture (MOA), and assist this Ministry in the restructuring and quality improvement of its agricultural education and training system. It would assist the Ministry of Education (MOE) in expanding and improving its primary teacher training capacity to meet the demand for qualified primary school teachers, and improve the Government planning capability and training capacity in the industrial, commercial and services sectors. The project would consist of: (i) equipping and providing technical assistance to the recently established Bureau of Agricultural Education Studies and Planning of MOA; (ii) providing didactic and farming equipment to six higher-level institutions; the Tunis National Institute of Agronomy, five Higher-Level Agricultural Institutes, four Agricultural Secondary Schools, and fifteen Agricultural Training Centers; and equipment and technical assistance to the National Agricultural Instructor Training Center; (iii) constructing and equipping four new Primary School Teacher Training Colleges under MOE; and (iv) financing studies for the assessment of the country's needs for middle and higher level technicians in the industrial, commercial and services sectors, and in the design of appropriate methods and systems for their training. Benefits/Risks: The proposed project would expand the country's capacity for the training of qualified primary school teachers. It would build up the MOA's institutional capacity for human resources development; provide the agricultural sector with an increased number of qualified instructors, and a well trained body of middle and high level technicians and specialized personnel, and ensure the efficient dissemination of modern knowledge and skills to local farming communities. It would also assist in the design of investment strategies and programs for the training of 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.  - ii - technicians in the industrial, commercial and services sectors, and reduce recurrent costs in the agricultural education and training system. A risk of delays in the implementation of the project's agricultural sector component, because the responsible Directorate in MOA has not had previous experience in administering a project of this size, would be minimized by the establishment and appropriate staffing of a Project Implementation Unit, and the support to be provided by the more experienced Directorates of Planning, and Administration and Finance of MOA. Project Costs; Local Foreign Total ------------US Million------------ Construction 7.0 3.0 10.0 Equipment 1.6 14.0 15.6 Furniture 0.7 1.7 2.4 Technical Assistance 0.4 2.2 2.6 Professional Services 0.9 0.0 0.9 Baseline Cost 10.6 20.9 31.5 Contingencies Physical 1.0 2.3 3.3 Price Increase 2.1 3.4 5.5 Subtotal 3.1 5.7 8.8 Total Project Cost* 13.7 26.6 40.3 Front-end Fee -- 0.4 0.4 Total Financing Required 13.7 27.0 40.7 Financing Plan: IBRD -- 27.0 27.0 Government 13.7 -- 13.7 Total 13.7 27.0 40.7 Estimated Disbursements: 1983 1984 1985 1986 1987 Annual 0.6 4.9 9.6 8.1 3.8 Cumulative 0.6 5.5 15.1 23.2 27.0 Staff Appraisal Report-. "Fifth Education Project - Republic of Tunisia" (No. 4153-TUN, dated November 29, 1982). * The project is exempt from taxes and duties  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECO2EENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR A FIFTH EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed Bank loan to the Republic of Tunisia for US$27 million equivalent, to help finance a Fifth Education Project. The loan, which includes a capitalized front-end fee of 1.5 percent of the Bank loan, would have a term of seventeen years, including four years of grace, at the standard variable interest rate. PART I - THE ECONOMY 1/ 2. The last economic report entitled "Tunisia - Country Economic Memorandum" (No.3399-TUN) was issued on September 15, 1981. Economic missions visited Tunisia in October 1981 and March 1982 to review a draft of the Sixth Development Plan (1982-86); this part reflects their preliminary findings. Country Data sheets are attached in Annex I. 2/ 3. Much of Tunisia is arid or semi-arid. Only three percent of arable land is irrigated, and areas where rainfed agriculture is possible are subject to severe year-to-year fluctuation in rainfail. Tunisia's most important raw materials are phosphates, petroleum, and natural gas. While the known exploitable reserves of oil and gas are approaching depletion, and the phosphate deposits are of relatively low quality, there have recently been promising indications of new reserves, although it is too early to assess their exact potential. There is also considerable tourism potential, and efforts have been made during the last decade to develop it rapidly. 4. Since independence in 1956, Tunisia has undertaken a massive effort towards development of its human resources, paying special attention to famiily welfare, education, and technical and vocational training. As a result, the infant mortality rate declined from 150 in the early 1960s to 90 at the end of the 1970s, the adult literacy rate increased from under 15 percent to about 62 percent, and average caloric supply per capita increased from about 80 to 115 percent of minimum standard requirements. The sharp decrease in mortality rates was not fully compensated by the simultaneous decrease in fertility and birth rates, despite an active family planning policy pursued by the Government. Therefore, the annual natural demographic growth rate decreased only slightly from 2.6 percent in the 1960s to 2.4 percent in the 1970s. Moreover, after 1976, the net emigration of Tunisians abroad was sharply reduced by restrictive measures taken in the EEC countries and Libya. As a consequence, the residential population of 6.57 million by the middle of 1981 exceeds the level projected five years earlier by 130,000. 1/ Part I is substantially the same as Part I of the President's Report No. P-3431-TUN of November 24, 1982, for a Third Urban Development Project. 2/ Country data have been updated on the basis of this review, and thus sometimes differ from the country data sheets in Annex 1.  - 2 - 5. Agriculture still occupies nearly one out of every three Tunisians in the labor force. To accelerate job creation, more than half of total investments of the Fifth Plan (1976-81) was allocated to directly productive sectors, but the direct employment effects of the leading sectors (petroleum, phosphate mining and processing, and tourism) are small. These sectors, however, make a vital contribution to GDP, public savings, and exports. They provided 65 percent of the country's foreign exchange earnings in 1980 while manufacturing activities, except phosphate-based chemicals, provided 17 percent. 6. Recent Economic Developments. During the Fifth Plan the growth performance differed from the impressive growth achieved from 1971 to 1976, not so much in terms of overall growth as in terms of the underlying growth factors: output in agriculture and in food industries has grown on average below the demographic rate since 1976, partially as a result of bad weather conditions; textile production and tourism development grew at a slower pace than projected mainly because of the slump in European markets. By contrast, manufacturing industry other than textiles, as well as energy, phosphate processing, construction, and construction materials expanded at a fast pace. 7. In spite of the considerable increase in domestic demand, particularly in investments, the balance of payments situation remained favorable from 1976 to 1981. Imports in current prices grew at a slower pace than exports, and the terms of trade improved significantly due to sharply higher post-1974 export prices for crude oil. As a result, the resource gap remained relatively small, and domestic savings financed on average over 76 percent of investment, which increased from an average of 23 percent of GDP for 1972-76 to 30 percent for 1977-81. The current account deficit averaged $450 million per year (1977-81), and was easily financed; grant aid and private investments (mainly for oil exploration) provided about 30 percent, while the remainder was mainly covered by long-term foreign borrowing. Thus, during the 1970s total foreign debt increased little relative to GDP, and the debt service ratio dropped. 8. The public sector has played a major role in mobilizing and redistributing domestic resources. Central Government revenues were equivalent to about one-third of GDP on average for the Fifth Plan period, one of the highest shares among middle-income countries. Over 30 percent of these revenues was saved, and public savings financed close to two-thirds of total Government capital expenditures. This comfortable public finance situation permitted a rapid increase in subsidy payments to private consumers and public enterprises. Such tranfers including for social security accounted for 19 percent of total current budget outlays and over 7 percent of GDP in 1981. 9. The main objectives of the Fifth Development Plan were achieved, except for the employment target. The actual GDP growth fell short by 1.2 percentage points of the planned rate of 7.3 percent p.a., mainly because of poor performance in agriculture, while the investment objective of $9.8 billion in current prices, or 30 percent of GDP, was fully met. Completion of some large projects in the public sector (steel, expansion of the oil refinery) were, however, delayed, but private sector investments, both foreign and national, exceeded Plan targets.  - 3 - 10. Open and hidden unemployment is a serious problem for the Tunisian economy at present. During 1977-81, although job creation objectives were achieved in all non-agricultural sectors except construction, these sectors could only absorb 90 percent of new job seekers at a time when migration to Libya and Europe slowed down. The overall unemployment rate, estimated at about 13 percent of the labor force in 1980, has therefore not declined. II. Medium-term Prospects. The Sixtb Development Plan (1982-86) was approved by the Parliament in July 1982. The main objectives are employment generation, export promotion, and more rapid growth in the three least developed regions of the country (North-West, Center-West, and South). Sectoral priority is to be given to agriculture, tourism, and electrical and mechanical industries. 12. The outlook for investment and growth during this period and beyond will partly depend upon future developments in the oil and natural gas sector. Oil and gas exploration programs under way have been encouraging. Based on known reserves, and with the possible exploitation of smaller fields that recently became profitable,. it is generally expected that domestic oil and gas production would at best be stabilized at about its present annual level of 5-6 million tons of oil equivalent until the end of the decade. However, barring large new oil or gas discoveries, and given the rapid rise in domestic demand for energy, Tunisia will bave to face the consequences of a relative decline in energy revenues. The Government considers that the situation requires immediate policy changes and is analyzing the most urgent ones to be included in the Sixth Plan. By introducing these changes on time, Tunisia expects to reduce the associated economic and social strains, and avoid major balance-of-payments problems. 13. The Sixth Plan recommends a GDP growth objective in the range of 5.9 to 6.1 percent depending on agricultural performance. This growth rate is in line with recent trends. Projected growth of traditional exports (tourism, textiles, and phosphates-based chemicals) is insufficient to compensate for the projected decline in oil export revenues; these exports should be supplemented by new ones, in particular electrical and mechanical products. Production diversification and export promotion will, however, take time to bear fruit given, in particular, the depressed world market prospects. The Plan strategy therefore rightly aims at containing domestic demand in order to control import growth. The macroeconomic scenario assumes no improvement in terms of trade, as was brougbt about by oil price rises in 1973-74 and in 1979-80. This would not only affect the external account but also result in slower growth of domestic savings, particularly public savings. - 14. Consequently, the Sixth Plan projects a drop in the fixed investment rate from 30 percent of GDP in 1977-81 to about 25 percent for the Plan period. This would still imply an increase of 24 percent in constant prices relative to the Fifth Plan investment. A major objective is to correct recent capital intensive biases in projects by appropriate sectoral allocation of investments. More resources would be allocated to small and medium manufacturing enterprises in the underdeveloped regions, in order to ease the unemployment problem and reduce income disparities between rural and urban areas. Since June 1981, a new set of policy measures has targeted the  -4- incentive system toward this objective. The Investment Code was modified to offer free industrial zones and direct subsidies to job creation for new projects in underdeveloped zones, and a Promotion Fund for Handicrafts and Household Workshops was created. In order to promote a more efficient technical and financial management of the public and private modern sector, the Plan assigns a major role in project promotion and supervision to an expanded network of new Development Banks (two opened in 1981 and three are planned for 1982); they are to be joint ventures with foreign investors and should alleviate the pressure on the budget to finance too large a share of public investments. 15. Increasing budgetary constraints will require a reassessment of the present policies of subsidies for energy, basic foodstuffs, transportation, and public sector enterprises. In addition, interest rate policy and a better-adjusted fiscal system sbould be used to restrain final consumption and stimulate savings. As first encouraging steps in 1981 and in early 1982, sizeable price increases in energy and agricultural products were implemented, and the whole interest rate structure was revised upward, rates on saving accounts and term deposits being increased by 1.5 to 2 points. There was a sizeable increase of the legal minimum wage (30 percent) in March 1982, mainly to improve the low-wage earners' living conditions, but the Government recognizes that overall wage and salary policies should keep labor cost increases (including social costs chargeable to enterprises) in line with productivity increases, particularly since Tunisia wants to stimulate tourism, and improve its international competitiveness for exports of manufactured goods. 16. Social Issues. Tunisia's social performance has been impressive since independence, and the country has come a long way towards meeting the basic needs of its population and reducing absolute poverty. About 16 percent of GDP is now devoted to social programs. However, unemployment among the young and regional pockets of poverty still present serious social problems. 17. Recently published data show that the continued attention of the Government to poverty oriented social programs resulted in a reduction of the ratio of people under a minimum standard income from 17 percent of the total population in 1975 to 13 percent in 1980. During this period, the overall number of this group declined in urban areas but remained the same in some rural zones in the center of the country, as a consequence of poor agricultural performance. Income differentials between the coast (East) and the interior (West) widened, in part because the system of price controls and subsidies as well as budgetary expenditures had a weak redistributive impact. The Government is using the forthcoming Plan to focus on the largest zones of poverty, with a view to eradicating them before the end of this century. Reducing the demographic growth rate is considered an important factor in this endeavor. 18. Education expenditures rank first among budgetary outlays. The comprebensive education system provides free access to all students, and the gross enrollment rate has reached 100 percent for primary education, and 30 percent for secondary education. The performance of the system could, however, be improved by expanding vocational training programs, improving their relevance and responsiveness to labor demand, and to the special needs of the poor and rural groups.  19. Public health services are second among social expenditures, and their overall beneficial effect is reflected in the improvement of the vital statistics (para. 4). There remain, however, regional disparities in the availability of hospital beds, doctors and nursing personnel; health services have concentrated largely on curative medicine, and the medical referral system is not functioning properly. As a result, the rural poor are often excluded. Closely linked to nutritional deficiencies, infant mortality remains high relative to middle-income countries. 20. In the Sixth Plan, investment in education, health, housing and water supply is focussed more on deprived areas, provided at lower costs (health, shelter), and made more relevant to the needs of the economy (training). In education, two reforms are under discussion: the first one would provide a nine-year schooling period for all children, and the second would create polytechnical high schools combining basic and technical education. In health, the Sixth Plan allocates more resources to preventive medicine and nutrition education. Finally, as regards housing, public subsidized programs will be directed to the neediest population groups. The housing demand from households above the minimum standard income limit will be satisfied by the private sector. 21. External Assistance and Foreign Debt. As mentioned above, the growth of foreign borrowing was modest during the second half of the 1970s, and a growing share of foreign funds was provided by public sources at relatively soft terms. During the 1977-80 period, foreign loan commitments averaged about $700 million per annum, 62 percent of which in the form of official assistance (ODA). About 65 percent of ODA commitments came from bilateral sources, chiefly France, the Federal Republic of Germany, Canada, and some oil-surplus countries. About 24 percent of total ODA was committed by the Bank Group, and some 11 percent by other multilateral sources. Borrowing terms were favorable, averaging 5.8 percent interest and 18.5 years maturity, including a grace period of 5 years. At the end of 1981, debt outstanding and disbursed was estimated at about $3.4 billion, or 40 percent of GNP; debt service was 12 percent of exports of goods and services, as compared with 17.7 percent in 1970. 22. The external trade deficit reached $608 million in 1981, and is projected to grow to about $1.2 billion in 1986. New loan commitments from abroad, projected at $1.2 billion per year on average (at present dollar exchange rates), should not be difficult to obtain, with ODA providing half of the total. Leaving aside the possibility of major oil and gas discoveries, external debt service would be about 13 percent of total export revenues in 1986. 23. These relatively favorable prospects would depend on a timely implementation of the already mentioned policy changes to curb domestic demand, promote exports, and improve public sector savings. It should be noted, however, that the Sixth Plan recommends a low growth scenario in order to preserve the country's relatively high financial stability and creditworthiness. This objective is even more crucial if the country is to succeed in mobilizing the large inflows of direct foreign capital assumed in the Plan. Foreign investments were small during most of the 1970s but have  -6- gained momentum during the last three years in line with increased activities in the oil sector, and new incentives offered to foreign investors in manufacturing. Such investments have increased from $50 million in 1976 to about $200 million in 1981, and have been equivalent to 10 percent of total investments for 1977-81. The Plan's growth scenario estimates that about 15 percent of total investment could be financed by foreign capital, equivalent to an annual inflow of $400 million. The newly created Development Banks (para. 14) are expected to play a significant role in this context. 24. In conclusion, the balance-of-payments outlook can be considered favorable in the medium term. In the longer term, much will depend on the policy changes to be initiated during the next few years, and on developments in the hydrocarbon sector. Considering its long record of prudent and skillful balance-of-payments and external debt management, there are good grounds to assume that Tunisia will formulate and implement the necessary policy changes and will continue to be creditworthy for future Bank lending. The Bank's close dialogue with the Government on several policy aspects at the macro and micro levels will be pursued in connection with the implementation of the Sixth Development Plan. PART II - BANK GROUP OPERATIONS IN TUNISIA 1/ 25. Since 1962, the Bank has committed to Tunisia fifty-three loans and eleven IDA credits amounting respectively to $1,056.3 million and $70.0 million (net of cancellations) of which twenty-one loans and all credits have been fully disbursed. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as of September 30, 1982, and notes on the execution of ongoing projects. Project implementation is generally satisfactory. As of September 30, 1982, overall disbursements amounted to 53 percent of appraisal estimates, which compares favorably with other countries in the region. Disbursement performance for irrigation, industrial finance and port- projects has generally been above the country average, while larger than average disbursement delays have been experienced for agricultural credit, education, highway, urban and fisheries projects, due to project specific problems that are being addressed through supervision missions and sector discussions. In a number of sectors, important institutional improvements have been achieved, and autonomous agencies have been created or strengthened to ensure the efficient management of the related sectors or subsectors. 26. 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 with particular emphasis on rural areas, and on operations targeted to low-income population groups; (c) promote export-oriented policies, technological changes and labor productivity; and (d) provide selective support for the development of basic infrastructure and for institution building in key public services. An important feature of this strategy is to support the Tunisian authorities in the timely and well-coordinated preparation of projects through missions and advice by Bank staff, the assistance of the IBRD/FAO Cooperative Program, 1/ Part II is substantially the same as Part II of the President's Report (No. P-3421-TUN) of November 24, 1982, for a Third Urban Development Project.  the use of the Bank's Project Preparation Facility, and the Technical Assistance Project (para. 27). The Bank is also supporting the Government in its efforts to increase the mobilization of domestic resources, and to secure cofinancing for the projects it assists. The latter is particularly important in view of the extent of Tunisia's external resource needs. 27. Within this broad framework, past lending emphasized support for long-term investments in infrastructure and social development. Lending for urban and social development, including water supply, sewerage, education, health, urban development, and the Tunis planning and public transport project has accounted for 25 percent of Bank/IDA commitments in Tunisia since 1971. Lending for transport, power and tourism infrastructure has accounted for 34 percent. Agriculture and fisheries have received 23 percent, and industrial and hotel financing, mostly through the Economic Development Bank of Tunisia (BDET), 18 percent of total commitments. In addition, earlier this fiscal year, the Bank made a first loan for technical assistance aimed at improving the Government's capability for project identification and preparation. 28. In line with its lending strategy, the Bank will pursue its efforts in key sectors of the economy that offer prospects for economic and social development. It will also assist projects which address the needs of the least developed regions of the country, develop research capabilities, increase productivity, and help reduce the gap between income groups, and between urban and rural areas. Particular attention will be paid to employment creation, institution building, and agricultural development. In addition to the proposed fifth education project aimed at improving the Government's capability to train primary education teachers and technicians in agriculture, industry and related commercial sectors, proposed future lending would include projects in agriculture, industry and mining, energy, health, water supply and urban sewerage. 29. The Bank's economic and sector work will continue to focus on strengthening the macroeconomic and sector base for our lending program; it will be more centered in the future on the analysis of economic issues and policies related to the necessary adaptation process from a petroleum exporting to a petroleum importing country. A preliminary analysis of this issue was included in the last Country Economic Memorandum (Report No. 3399-TUN of September 15, 1981). The Plan Review Report, to be issued together with two sector surveys on agriculture and urban development towards the end of 1982, will deepen this analysis. Further economic and sector work will include a review of employment issues, of incentive and pricing policies (in association with the study on effective protection), of the long-term energy strategy and of the education, transport, and small scale industry sectors. 30. The Bank and IDA accounted for about 19 percent of total public commitments to Tunisia during 1979-1980. Their share in total debt outstanding and disbursed at the end of 1980 (including loans from private sources) was 11 percent and their share in debt service during 1980 was 9 percent. The share of the Bank and IDA in Tunisia's disbursed external debt is expected to remain at about 10 percent and their share in the debt service to increase to about 13 percent through 1986.  31. 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), in Industries Chimiques du Fluor, which produces aluminum fluoride from local fluorspar for export, and in the Sousse-Nord integrated tourism development project. IFC's net commitments in Tunisia totalled $10.6 million, as of September 30, 1982. IFC has recently arranged a $40 million loan package to COFIT, of which about $20 million equivalent for IFC's own account, and is looking into the possibility of loans for the expansion of a phosphoric acid fertilizer plant and of technical assistance to the recently established development banks. PART III - THE EDUCATION SECTOR 32. Soon after independence (1956), the Tunisian Government launched an ambitious education reform aimed at making the education system accessible to all children of school age, and more relevant to the cultural, social and economic needs of a modernizing society. With consistent Bank support since 1962, the expansion of education infrastructure is now commensurate with national needs. Gross enrollment ratios stand at 100 percent in primary, and 30 percent in secondary schools, with female participation rates at 42 percent in primary, and 37 percent in secondary schools. These rates compare favorably with other Arab countries. Education policies directed towards the "Tunisianization" of the teaching service have almost achieved their target: 100 percent of teachers in primary, 84 percent in secondary schools, and 81 percent in the tertiary system are currently Tunisians. Arabic continues to be promoted as the vehicle of teaching, including skill-training and university education. Policies aimed at increasing the relevance of education to the needs of the economy have focused, with a large measure of success, on the introduction of practical work at the primary and post-primary levels, on more emphasis on science and technology courses at the secondary and higher levels, and on improved training methods and systems that would improve the productivity and employability of school leavers and of the unskilled. 33. Primary and secondary public education is free; private schooling is available at the primary and secondary levels, but accounts for less than 1 percent and around 6 percent of total enrollment, respectively. At present, the formal education and training system under the Ministry of Education (MOE) comprises six years of primary schooling (grades 1 to 6), a secondary level of seven years, consisting of three years lower-level general or vocational education (grades 7 to 9), and four years upper-level general or technical education (grades 10 to 13). Two additional primary grades 7 and 8 were introduced in the mid-1970s to provide pre-vocational training for those who do not gain access to secondary schooling. Vocational training is also undertaken by the Ministry of Social Affairs through its Office of Employment and Training, and by other technical Ministries. Higher education is provided under the Ministry of Higher Education (MOHE) in the University of Tunis, and in specialized institutes linked to it, and under the technical Ministries in a number of specialized institutions, altogether totalling 53 establishments with about 33,000 students. Teacher training for the primary level is provided in four-year colleges (grades 10-13) for those completing the 3 years of lower-level general secondary education and, for the secondary level, in four-year general and technical training colleges attached to the University of Tunis.  -9 - 34. Agricultural education and training at the secondary, vocational and higher technical levels, is the responsibility of the Ministry of Agriculture (MOA). It is provided through a system consisting of: four Agricultural Secondary Schools, 28 Agricultural Training Centers (ATC), and nine Higher Level Agricultural Training Institutes (HLAI). This system has not been able to meet the demands of Tunisia's expanding agricultural sector. The large increase in the demand for skilled agricultural manpower and trained specialists during the 1970s is expected to continue for the next two decades, as a result of the diversification of Tunisia's agricultural production and crop specialization, and the growing sophistication of farming methods and techniques. In 1981/1982 the MOA institutions could meet only 43 percent of the demand for specialized and refresher courses in new crop techniques, emanating mainly from local farmers and agricultural technicians. Meanwhile, shortages of middle and higher level technicians are affecting public agricultural services. The lack of sufficient specialists in such key areas as agriculture mechanics, rural engineering and irrigation works, irrigated crop farming and animal husbandry, and shortages in field supervisory personnel (Chief Engineers and Public Works Engineers), as well as serious deficiencies in instructor training methods and curricula, and in farm equipment represent major constraints affecting the growth of the agricultural sector, a top priority of the Sixth Plan. 35. The adjustment of the capacity of the agricultural training system to manpower demand faces serious difficulties due to inadequate labor force and manpower data. As most of the graduates of the formal agricultural secondary and tertiary institutions are employed in public agencies, the MOA assessment of technical manpower needs is based on the Government employment capacity as reflected in the annual "Loi des Cadres", which fixes the maximum size of public agencies. At present, the education and training system can meet about 80 percent of the demand. A more precise estimate of public sector demand will result from manpower studies to be financed under the proposed project and feasibility studies financed under the recently approved Technical Assistance loan (No. 2197-TUN of October 29, 1982). In the meantime, a recent survey of public sector agencies reveals a need for about 5,500 agricultural technicians during the Sixth Plan period, while only about 3,260 could be accommodated under the "Loi des Cadres". Also, the Sixth Plan's agricultural policy will stimulate private sector demands for technical manpower, and will include an important expansion of extension activities, which should further increase the demand for extension workers, technicians and supervisors. The demand for high-level technicians may require an expansion of the MOA institutions' physical capacity, which the Government envisages to initiate during the Sixth Plan period. In the meantime, the MOA will give priority attention to the serious qualitative deficiencies of the system, as identified in a 1980 Bank/UNESCO subsector study of agricultural education and training. These deficiencies are evident at all levels: pedagogically unqualified instructors; lack of linkages between agricultural research and extension, and the farming communities; and the failure to adjust training to changing needs due to the lack of manpower assessment and education planning capacity. 36. Constraints and Policies. In spite of considerable achievements, the Tunisian education and training system has been dominated during the last two  - 10 - decades by the key issues of planning and management deficiencies, and by two major problems of low internal and external efficiency. Substantial and consistent Government efforts, in terms of both financial inputs and policy reforms have not yet begun to bear the expected results. Internal inefficiency is reflected in high drop-out and repeater rates, particularly at the primary level where they reached 27 percent and 50 percent, respectively, in grade 6 during 1981. Over 100,000 students (of which 80 percent at the primary level) leave the system every year without formal qualifications. Education policies at the primary level have focussed on retaining a higher proportion of students in the system, and on improving the schooling environment through reducing class size, and introducing quasi-automatic grade promotion. However, these measures did not improve drop-out and repeater rates, and led to a high concentration of repeaters in the last (sixth) grade. It is expected that, in the context of promising strategies, to be tested under the first phase of the Sixth Plan's education reform (para. 38), vital complementary measures aimed at improved teaching methods and better didactic materials will be gradually introduced. The quality of teaching has been identified as a major shortcoming. Expanding demand, and the rigidity of formal primary teacher training have resulted in an ever-increasing reliance on untrained substitute teachers, recruited from among secondary school leavers, which include unsuccessful diploma candidates, lacking commitment and skills to ensure continuity or quality of service. The Government has initiated a policy consisting of intensive pedagogical training of secondary education graduates (Baccalaureat holders), and the introduction of one full year of in-service practice training, as well as short-term practical courses tailored to meet specific training needs. These flexible and better targeted training policies have been initiated by MOE under a transition plan, agreed with the Bank, to meet the anticipated shortage of about 10,000 grade 1 to 6 primary school teachers during 1982-1986, which cannot be accommodated in the existing institutions. In line with the Sixth Plan's decentralization policy favoring disadvantaged regions, primary teachers would be recruited within these regions, thus ensuring a greater commitment, and the improvement of the school children's learning process in these areas. The proposed project would support these policies. 37. The external efficiency of the education and training system is at the centre of the Government constant preoccupation with high unemployment rates. Education policies during the seventies aimed at making the system more relevant to the needs of the economy through the introduction by MOE, in the primary school cycle, of practical subjects in grades 5 and 6, and the extension of this cycle to grades 7 and 8 to provide school leavers with vocational exposure and preparation. They have also sought to direct secondary school enrollments towards vocational and technical training, and university enrollments towards science and technology. While these measures have been implemented successfully, they have failed to reduce the persistent high-levels of youth unemployment and underemployment. Unemployed persons with primary and first cycle secondary school credentials increased from about 55 percent to over 63 percent of all unemployed between 1975 and 1980, and youngsters aged 15-24 represented about 59 percent of all unemployed in 1980. There is also evidence of distortions in manpower supply, with surplus at the lower level and deficits at the middle and higher-levels of qualifications, and of inter-regional imbalances, revealing a misr,aatch between the manpower  - 11 - needs of the economy, and the output of the education and training systema. The major constraints, common to the systems under both MOE and MOA, appear to be the lack of contact with employers, an incomplete knowledge of labor market needs, too rigid and over-specialized curricula, and the lack of sufficient general education base and maturity of trainees. 38. The Sixth Plan's education and training strategy seeks to reduce drop-out and repeater rates; it endorses the policies and objectives of increasing enrollment ratios and female participation rates, improving higher education, and redressing regional disparities in both quantitative and qualitative terms. The Plan also endorses the generalization, under MOE, of pre-vocational courses in the extended post-primary grades 7 and 8; it further emphasizes in all sectors the vocational and technical programs in secondary schools, and science and technology in university. In addition, the Plan introduces a major structural reform which will combine the lower secondary (grades 7 to 9) with the primary cycle (grades 1 to 6) into a nine-year system of basic education: the "Ecole de Base", under MOE. All upper level secondary programs, including those under MOA, would be restructured into a parallel system of academic, technical and scientific "collages". The reform will be introduced as of the academic year 1984/1985, starting with the primary fourth grade, and will be implemented gradually upwards during the 1980s, to cover the whole nine-year system by 1989/1990. All "Ecole de Base" drop-outs and school leavers would be eligible for skill training. All primary and secondary school leavers would receive diplomas, and the flow from primary to the three types of secondary colleges, planned at 45 percent of primary graduates, would be controlled through competition, and would be adjusted to manpower needs. Admission to university, now automatic for all Baccalaureat holders, will be similarly competitive, and adjusted to manpower requirements. 39. By retaining in schools, for an additional three years of study, a projected average of 33,000 pupils, who would otherwise leave the system every year, the "Ecole de Base" is expected to improve internal efficiency, provide a better base and orientation for employment, or further education and training; it would go a long way towards adjusting the system to the needs of the economy. However, the planning and development of the structure and curricula of the new 7 to 9 grades, and the changes in the quality, quantity and mix of inputs, including teaching materials for students and teachers, for the secondary "collages", will have to be well orchestrated. Also the institutional, management, administrative and financial implications of the reform are all matters for further study. Furthermore, appropriate strategies for post-secondary technician training, and for the training and upgrading of skilled manpower in all sectors will have to be designed. This is the objective of the studies to be financed under the proposed project. With regard to the agricultural sector, the Sixth Plan's investments (20 percent of total investments as compared to 13 percent under the Fifth Plan) aim at the introduction and dissemination of modern and innovative technologies in the production process, more intensive cultivation of higher yield crops, and the expansion of livestock production. Investments have also been directed towards expanded and more intensive research efforts oriented to the specific needs of local farmers. Private initiative will be encouraged through the distribution of state land, and the provision of credit and technical  - 12 - assistance to graduates of agricultural secondary schools and training centers to establish themselves as independent farmers. This strategy will largely depend on the availability of well trained skilled and technical manpower, particularly of senior technicians. The implications of this strategy for the agricultural education and training system are addressed by the Sixth Plan's education reform. The MOA will focus on improving curricula, upgrading the teaching staff, and improving the operation of school farms through better management and the provision of farming and didactic equipment. The proposed project would address these issues,and finance manpower planning studies to match the supply of agricultural manpower resources with the sector's demand. 40. Management and Finance. While proceeding through a piecemeal approach to expanding infrastructure and improving efficiency, Government policies have resulted in a complex education and training system, with some serious overlapping and functional gaps, and inadequate communication between and within education and training agencies. There is a pressing need for the introduction of more effective modern management and administrative techniques and procedures at all levels. This would be essential for the implementation of the contemplated reform, a complex task requiring a strong institutional framework, and high calibre managers and administrators. As a result of its dialogue with the Bank, the Government is preparing a plan of action supported by studies to be financed under the proposed project for institutional development and improved cost-effectiveness. With the expected 4.6 percent increase per annum of total enrollments during 1982-1991, as compared to 2 percent per annum during the 1970s, and the increases in teachers' salaries under pressure from the unions, the education and training share of GDP could reach 8 percent by 1986 (6 percent in 1979), exceeding 20 percent of total Government expenditures (17 percent in 1979). This would be a heavy burden on the Government budget. Also, the education reform, particularly with its objective of achieving regional equity of education opportunity and quality, will impose additional costs which have yet to be accurately estimated. The measures envisaged by the Government to reduce education expenditures include: improved school planning and utilization, reduction of unit construction costs, the introduction of school fees based on affordability, and a reduction in the number of university scholarships, currently granted to 80 percent of university students. With regard to agricultural education and training, these measures would include improving the management of the farms attached to the agricultural secondary schools, and streamlining and increasing the capacity utilization of these schools and agricultural training centers (ATC) through the expansion of short., intensive, demand-oriented courses. This is expected to bring capacity utilization, in secondary schools, from the current 70 percent to 80 percent by 1990 and to full utilization of ATC capacity by that date. The proposed project is designed to support these objectives. Bank Group Assistance 41. Since 1962, Bank Group lending to Tunisia has supported the development of primary and secondary education and training through two credits and two loans. It has consistently supported manpower development, with special emphasis on raising the quality of education and training. The  - 13 - first two credits ($5 million in 1962, and $13 million in 1966) financed 13 new secondary schools, expanded seven, and equipped 27 existing secondary schools, and extended a secondary teacher training college. Physical implementation of both projects was satisfactory. A technical assistance component under the second credit to strengthen the planning capacity of the Ministry of Education was less successful, for lack of agreement on the terms of reference of the team of specialists, and the unsatisfactory calibre of these specialists. The Project Performance Audit Report (Report No. 2226 dated September 29, 1978) on the Second Education Project found that it was in line with Tunisia's education priorities, but that an increased emphasis on vocational training was needed. The Third Education Project (Loan 1155-TUN, $8.9 million in 1975) introduced practical work in primary grades 5 and 6, with the related teacher training requirements, and an experimental grade 7 and 8 program. The project was amended in 1979 to conform with the Government's revised policy to extend this post-primary scheme to the entire system, rather than limit it to an experimental phase. The revised project provided workshops for 325 primary schools, and the expansion and/or equipping of seven primary teacher training colleges. A technical assistance program financed planning studies on the development of the "Ecole de Base", and on the adjustment of education and training to the labor market. Overall, implementation has been satisfactory. The project will be completed as scheduled. The loan is now fully committed. Its closing date is March 31, 1983. 42. The Fourth Education Project (Loan 1961-TUN for $26 million in 1981) focuses on the formal and non-formal trade and skill-training system under the Office of Employment and Training of the Ministry of Social Affairs. It finances the construction of seven new vocational training centers, and a new apprentice center, the expansion and/or equipping of 17 existing vocational training centers, and three existing apprentice centers. It includes technical assistance supporting the planning and coordination activities of the Office. Implementation is proceeding satisfactorily. The proposed project, which focuses on the agricultural education and training sector, and on primary teacher training, would also finance planning studies. The emphasis on improving education planning runs through all the projects since 1966. While the second project has strengthened the Planning Unit of MOE, studies under the third project have contributed to the preparation of the education reform. They will be complemented by studies to be financed under the proposed project on middle and higher level technician training in the agricultural, industrial and services sectors. These studies reinforce the Government's capability to achieve the Sixth Plan's priority objectives of increasing productivity in industry and agriculture. The Government is well aware that adjustments in the education sector alone will not resolve the problem of unemployment, the most serious challenge it will have to face during the 1980s. Rising expectations, encouraged by extended family support, food subsidies, increasing minimum wages and social benefits, result in costly extended unemployment periods, due to reservations on the part of job seekers who do not accept available jobs. Also, employers tend to attribute more value to seniority and informal on-the-job experience, and have mixed feelings about the value of skill qualifications acquired in school. Policies related to a cluster of employment problems including income and wage policies, incentives and personnel and management practices, are part of the economic dialogue between the Government and the Bank, and would be addressed in an employment study to be launched in the later part of fiscal year 1983.  - 14 - PART IV - THE PROJECT 43. The proposed project would contribute to the implementation of the education and training development strategies of the Sixth Plan (1982-1986), and is consistent with the Bank lending program for Tunisia. It was identified in February 1981. Preparation work started in June 1981, and the project was appraised in March 1982. Technical discussions and negotiations were held in Washington from November 18 to 24, 1982. The Tunisian Delegation was headed by Mr. Abdelkrim Jaoua, Assistant Director at the Ministry of Planning and Finance (MOPF), and included representatives from the Ministries of Agriculture (MOA) and Education (MOE). The Staff Appraisal Report (No. 4153-TUN, dated November 29, 1982) is being circulated separately. The main features of the project are listed in the Loan and Project Summary at the beginning of this report, and in Annex III. A map showing the location of project institutions is also attached. 44. Objectives and Description. The proposed project would (i) strengthen the planning and management capacity of MOA, assist this Ministry in the restructuring and quality improvement of its agricultural education and training system at all levels, and strengthen and develop its programs for the dissemination of technical knowledge and skills among local farming communities; it would thus contribute to meeting the manpower requirements of the Sixth Plan in the top priority agricultural sector; (ii) assist MOE in meeting the demand for qualified primary school teachers by the expansion and quality improvement of primary teacher training; and (iii) improve Governmaent manpower assessment and planning capability, as well as its training capacity with regard to technicians in the industrial, commercial and services sectors. The project would consist of: (i) equipping and providing technical assistance to the recently established Bureau of Agricultural Education Studies and Planning of MOA; (ii) providing didactic and farming equipment to six higher level institutions: the Tunis National Institute of Agronomy, five higher level agricultural institutes, four Agricultural Secondary Schools, and fifteen Agricultural Training Centers, and equipment and technical assistance to the National Agricultural Instructor Training Center; (iii) constructing and equipping of four new Primary School Teacher Training Colleges under MOE; and (iv) financing studies, to be carried out jointly by MOE and MOPF for the assessment of the country's needs for middle and higher-level technicians in the industrial and services sectors, and in the design of appropriate methods and systems for their training. 45. The Bureau of Agricultural Education Studies and Planning was established within the Directorate of Education, Research and Extension (Direction de l'Education, de la Recherche et de la Vulgarisasion-DERV) of MOA to improve the link between research, education, extension, and skill training in the agricultural sector. Its main responsibilities are to determine, in coordination with the Directorate of Planning in MOA, the quantitative and qualitative needs for technical agricultural personnel, adjust resources to manpower training needs, and improve the quality content of curricula in the education and training institutions under MOA. The terms of reference of the Bureau, as well as its work program under the project, are consistent with, and will contribute to the design of the national program of agricultural research and extension supported by the Bank-financed Technical Assistance  - 15 - Project (para. 35). The proposed project would provide the Bureau with equipment, furniture and expert services to enable it to carry out its planning studies including: an analysis of the current stock of, and future requirements for agricultural technicians; the evaluation of school farms operations; a precise inventory of on-farm practical training opportunities, and the development of new monitoring and evaluation procedures; and feasibility studies for the improvement of the the school farms' management methods and administrative procedures, and for introducing pedagogy courses and extension techniques in the secondary and higher agricultural schools. The Bureau is adequately staffed, and is being further strengthened by the secondment of two professionals from the MOA Directorate of Planning to ensure proper liaison and coordination. 46. A National Agricultural Instructor Training Center would be established under the project in existing adequate premises at Sidi Thabet north of Tunis, to improve the quality of the pedagogical and technical training of agricultural instructors. Trainees would come from both the agricultural secondary schools (para. 48) and the ATC (para. 49). The Center has boarding facilities for 70 trainees, and would have an annual output of 325, of which 10 percent would be women. It would offer a large choice of in-service training, including short courses of 4 to 8 weeks of theoretical and applied training, and of up to one week refresher courses on new technical or technological developments; a one-year pre-service training course for assistant technicians, assistant engineers, field engineers and chief engineers, with emphasis on extension work; training and upgrading courses in research and extension methodologies, and other courses, on demand, which would include such new topics as farm budgeting, crop techniques, and project evaluation. In addition to its training functions, the Center would be responsible for the supervision of instructors in the agricultural secondary schools and training centers; the development and evaluation of education and training programs to meet identified needs; and the design, testing and production of didactic materials. Assurances were obtained during negotiations that the Director of the Center would be appointed by June 1, 1983 (Loan Agreement, Section 4.04). The Center would receive expert support, and its staff of 26 instructors would be trained either under an on-going French bilateral agreement, or under the proposed project's technical assistance program. 47. The proposed project would provide equipment, material and furniture to help introduce new, improved, practice-oriented instruction in the six major Higher-Level Agricultural Institutions (HLAI): (i) the Tunis National Institute of Agronomy, which provides a six-year training course for chief engineers; (ii) the two higher-level institutes of Medjez el-Bab (irrigation and rural works, agricultural machinery and related disciplines), and Chott Mariem (horticulture), which offer four-year post-secondary programs for Agricultural Field Engineers; and (iii) the three higher level institutes of Mateur (animal husbandry), Le Kef (major crops), and Tunis (food industries), which provide two and four-year post-secondary programs for agricultural technicians. New courses will be introduced (extension technologies, hydraulics, irrigation and drainage, extensive crop cultivation techniques), and the quality of current training would be improved. Total enrollments would be about 760 students, with a total yearly output of about 260, of which  - 16 - 180 chief and field engineers, and 80 assistant engineers. The teaching staff required for the newly introduced and reinforced existing programs would be provided through a redeployment of teachers, and through the assignment of 35 out of the 75 post-graduates now being trained under a United States Agency for International Development program, and due to return during 1983-85. 48. The four Agricultural Secondary Schools included in the project would be equipped and refurnished to help improve the content of training and upgrading programs for middle level technicians. These schools are located in the North Central region (Soukra); the Northeast region (Boucherik); the Northwest region (Thibar), and the Central West region (Sidi Bouzid). One of these schools (Soukra) is for girls. About 50 percent of the 450 students who complete the basic four-year course (grades 10-13) qualifying them as Assistant Technicians join the labor market. About 45 percent proceed to the HLAI (para. 47) for the two-year course (grades 14-15) to qualify as Assistant Engineers. These schools' annual output of about 196 graduates, of which about 16 percent are women, would meet 83 percent of the average annual public sector requirement for Assistant Technicians during 1982-1991. Students receive practical training in farms or agricultural firms during school vacations. Assurances were obtained during negotiations that the firms and farms which would receive secondary school students would be appraised and selected by MOA on the basis of criteria satisfactory to the Bank; that by September 30, 1983, a staff member, satisfactory to the Bank, would be appointed in each school to supervise these training programs; and that the students would be visited and evaluated during their off-campus training (Loan Agreement, Section 3.06). In addition to producing middle level technicians, these schools have initiated refresher and upgrading courses, in response to the local farming communities' demand for on-the-job training. It is expected that 1,340 trainees will benefit from these courses in the initial years, and that this number will gradually increase through 1990. Based on full-time equivalency this number is expected to rise from 9.5 percent to 60 percent of the clientele served between 1982 and 1990. The proposed project will provide didactic, and farming and agricultural machinery and equipment to support and strengthen these programs. The available teaching staff covers 70 percent of the required 54 teachers and instructors. It is expected that the remainder will come from the private sector (20 percent), and from specialized public institutions (10 percent). Special arrangements have been made and agreed with the Government to ensure that 18 to 20 percent of the teaching staff will be upgraded each year at the National Agricultural Instructor Training Center (NAITC). 49. The fifteen Agricultural Training Centers (ATC), which offer three-year courses producing certified skilled workers, are located in Tunisia's disadvantaged rural areas in the Northwest (four), the Northeast (six), and the South (five). In line with the Government's policy to promote self-employment, greater employability, and the upgrading of existing agricultural personnel, the rigid formal three-year courses offered in these centers have been, and will further be reduced, and replaced by short-term flexible programs designed to meet specific local and regional training and upgrading needs. About 7,000 trainees would benefit each year from these ad hoc courses; between 1982 and 1990 their number is expected to increase from 50 percent to 60 percent of the clientele served by the ATC, reaching an  - 17 - average of 14,500 per annum, while the current 830 graduates of the regular three-year course will average 550 per annum by the end of the decade. No additional training staff is required; however, to ensure the required teacher upgrading, the Government has agreed to make the necessary arrangements for 18 percent of these Centers' staff to be upgraded each year at the NAITC. 50. Four Primary Teacher Training Colleges would be constructed, equipped and furnished under the proposed project, two in the Northwest (Jendouba and Mateur), and two in the Central West (Kasserine and Sidi Bouzid), to meet the urgent quantitative needs for primary school teachers, and remedy serious deficiencies in the quality of primary school teaching in these regions. Training programs will remain flexible and responsive to the needs of the local communities. They would consist of: (i) a new one-year post-secondary course in pedagogy (grade 14); (ii) a four-year program for lower-level secondary school graduates, plus a one-year course in pedagogy (grades 10-14); and (iii) a short-term in-service program. Each of these colleges would designate one of its instructors to be responsible for planning and organizing these in-service courses. In addition, 12 instructors would be recruited from among experienced local teachers and regional inspectors of primary education, to operate the in-service upgrading programs. No difficulty is expected in the appointment of the 130 teaching staff required for these colleges. Well qualified teacher trainees are available, and MOE is committed to the success of these colleges in view of their crucial role in the achievement of the overall policy of decentralization and balanced regional development. 51. Studies on Technicians' Education and Training Systems. The proposed project would support the preparation of a coherent plan for the training of technicians at all levels for industrial, commercial and services sectors' activities. These studies would (i) identify the profiles and levels of qualifications required by the economy; (ii) assess the existing training system capacity in terms of infrastructure, personnel and programs; (iii) evaluate investment alternatives for meeting training needs, and identify projects that would be eligible for future Bank lending. The Government has agreed that these studies would be carried out jointly by MOE and MOPF, and that, by June 30, 1983, a coordinator for these studies satisfactory to the Bank would be nominated and an inter-ministerial committee to monitor work progress, would be established in consultation with the Bank (Loan Agreement, Section 3.04). The timetable and terms of reference of these studies, and the profiles of the required specialists have been reviewed and agreed with the Bank. 52. The proposed technical assistance program under the project would provide a total of 109 man/months of advisory services and 90 rman/months of fellowships to the MOA as follows: (i) the Bureau of Agricultural Education Studies and Planning would receive about 52 man/months of expert services in manpower and education planning, extension techniques, and survey and evaluation methodology; and 30 man/months of fellowship training for five professionals of this Bureau in manpower and education planning, curriculum development, and extension techniques; and (ii) the National Agricultural Instructor Training Center would receive about 57 man/months of expert services in agro-pedagogy, rural communications, extension techniques, training evaluation, and curriculum development; and about 60 man/months of  - 18 - fellowship training in curriculum development, rural communication techniques, and production of audio-visual aids. About 10 man/months of expert services would be provided by the Tunisian National Center for Agricultural Studies or consulting firms. About 72 man/months of consultants and specialists are provided under the project to assist MOE and MOPF in the preparation of the studies on technician training (para. 51), half of whom would be Tunisian specialists from consulting firms and universities; the project would also provide for 6 man/months of fellowships including travel expenses for the preparation and supervision work related to this study. Assurances were obtained during negotiations that the terms of references, the profiles and conditions of employment of all consultants would be reviewed by the Bank to its satisfaction (Loan Agreement, Section 3.03). Assurances were also obtained during negotiations that the list of candidates for fellowships, the appointment of fellows, and the details of their training programs would be submitted to the Bank for review and approval by December 31, 1984 (Loan Agreement, Section 3.05). 53. Project Cost and Financing. The total cost of the project is estimated at $40.3 million, of which $26.6 million (or 66.3 percent) is foreign exchange. Education projects in Tunisia are exempt from taxes and duties. Physical contingencies are calculated at 10 percent for all categories except technical assistance, for which it is estimated at 5 percent. For local costs, price escalation is estimated at 9 percent for 1983, and 8 percent for 1984-1987; for foreign costs at 8 percent for 1983, 7.5 percent for 1984, 7 percent for 1985, and 6 percent for 1986-1987. Aggregated price contingencies for local and foreign costs are estimated at about 16 percent of baseline costs plus physical contingencies; total contingencies are about 27 percent of baseline costs. Cost estimates assume that all civil works, and 85 percent of furniture contracts, will be awarded to local firms and suppliers, and that, except for some simple didactic material, all equipment will be foreign and 90 percent directly imported. In line with recent experience in Tunisia, estimated technical assistance costs are based on average costs per man/month of $8,640 for experts, and $2,280 per man/month for fellowships. The proposed Bank loan of $27 million would cover the full foreign exchange cost, as well as the $0.4 million front-end fee, the balance being provided by the Government. 54. Recurrent costs, at full project operation in 1986, are expected to be about TD 8 million, or about 1.5 percent of both MOA and MOE projected recurrent expenditures in that year, and would remain at this same percentage through 1991. These expenditures remain within a reasonable margin and are expected to be fully met in view of the high priority given by the Government to the project. However, education expenditures represent a heavy burden on the Government budget and recurrent costs of agricultural education have tended to be particularly high due to the operating expenses of school farnLs. The project would support Government measures aimed at reducing recurrent costs of agricultural education and training, particularly through improving the management methods of the school farms, and reviewing existing complex budgetary regulations and administrative procedures which preclude the use of their revenues to cover part of their operating costs.  - 19 - 55. Project Implementation. The construction, furnishing and equipping of all project institutions are scheduled for completion by June 1987, and the technical assistance by December 1985. Implementation schedules for the four primary teacher training colleges, the agriculture component operations , and technical assistance program will be reviewed and agreed during negotiations. Also the sources and timely provision of the required agricultural teaching staff would be agreed during negotiations. All sites for the four teacher training colleges have been acquired; preliminary designs will be reviewed and agreed during negotiations. Extension of shelters for the agricultural equipment and small maintenance shops will be executed according to specifications and a schedule agreed with the Bank. Preliminary lists of agricultural equipment have been completed and reviewed by the Bank; final lists will be reviewed and agreed during negotiations. In MOE, the project implementation unit of the Third Education Project and its experienced and competent staff will be retained, and will be responsible for the execution of the primary teacher training colleges. In order to coordinate the implementation of the various project operations under MOA, a Project Implementation Unit has been established within DERV, in MOA, and will be maintained with a staff including a full-time director, an administrator and an accountant, and with work program satisfactory to the Bank. Assurances to this effect were obtained during negotiations (Loan Agreement, Section 3.02). 56. Procurement and Disbursement. Civil works for the four primary teacher training colleges, amounting to about $3.2 million each, including contingencies, will be awarded through international competitive bidding (ICB). Contracts for civil works equivalent to $50,000 or less may be awarded through competitive bidding advertised locally following procedures satisfactory to the Bank provided their aggregate amount does not exceed $400,000 equivalent. Civil works in remote areas estimated to cost $50,000 equivalent or less may, after approval by the Bank, be carried out by MOA force account in accordance with procedures satisfactory to the Bank. Furniture and equipment items, totalling $23 million would be grouped in large packages to allow bulk procurement. Contracts in excess of $200,000 would be awarded through ICB. Small items costing less than $200,000, or specific items for which ICB would not be practical would be procured locally under normal Government procedures which are satisfactory to the Bank, and would include quotations from at least three manufacturers or suppliers. The aggregate value of furniture and equipment so procured would not exceed $2 million, or about 8.7 percent of estimated total furniture and equipment costs. The proposed loan would be disbursed against: 30 percent of total expenditures for civil works; 100 percent of foreign expenditures for directly imported and 100 percent of ex-factory costs for locally manufactured equipment and furniture; 85 percent of expenditures for locally procured but foreign-manufactured equipment and furniture; 100 percent of foreign expenditures, and 80 percent of local expenditures for consultant services; and 100 percent of foreign expenditures for fellowships. 57. Records and Audits. The three Ministries involved in the proposed project (MOA, MOE and MOPF) would maintain separate accounts for budgets and expenditures under the project, which would be audited by the Directorate of Financial Control at MOPF, whose procedures are satisfactory to the Bank. Assurances were obtained during negotiations that these accounts would be  - 20 - audited annually, and that certified copies of these accounts, together with audit reports, would be forwarded to the Bank not later than six months after the end of the Government fiscal year (Loan Agreement, Section 4.02 (c) and (d)). 58. Benefits and Risks. The proposed project would: (i) provide the agricultural sector education and training institutions with an increased number of better qualified teaching staff, and the public and private agencies of the sector with a higher calibre of middle and higher level technicians and specialists, including extension agents; (ii) ensure the efficient dissemination of modern technical knowledge and skills to local farming communities; (iii) strengthen the institutional capacity of DERV, particularly with regard to planning and policy formulation for human resources development in the agricultural sector; (iv) assist the Government with formulation and design of an investment strategy and projects for improvement of the education and training of technicians in the industrial and related commercial sectors; (v) expand the infrastructure and quality content of primary teachers training; and (vi) reduce recurrent costs in the agricultural education and training system. The only risk that the project may face is related to the inexperience of DERV in implementing a project of such magnitude. The Director of the Project Implementation Unit within MOA has a solid experience in similar development projectsl this Unit is adequately staffed, and priority attention will be given to the proper financial management of the project by the more experienced planning and administrative and financial divisions of MOA, thus minimizing this risk. PART V - LEGAL INSTRUMENTS AND AUTHORITY 59. The draft Loan Agreement between the Republic of Tunisia and the Bank, 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. Special features of the draft Loan Agreement are referred to in the text, and listed in Section III of Annex III. 60. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATIONS 61. I recommend that the Executive Directors approve the proposed loan. A. W. Clausen President by E. Stern Attachments November 30, 1982 Washington, D.C.  ANNEX I Page 1 of 6 TABLE 3A TUNISIA - SOCIAL INDICATORS DATA SHEET TUNISIA REFERENCE GROUPS (WEIGHTED AVERAGES AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)'8 TOTAL 163.6 MIDDLE INCOME AGRICULTURAL 75.2 MOST RECENT NORTH AFRICA MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b MIDDLE EAST LATIN AMERICA S CARIBBEAN GNP PER CAPITA (USS) 230.0 380.0 1310.0 1253.6 1902.0 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 165.2 289.7 589.9 713.5 1259.9 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUSANDS) 4221.0 5127.0 6354.0 URBAN POPULATION (PERCENT OF TOTAL) 36.0 43.5 51.7 47.3 65.7 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 10.1 STATIONARY POPULATION (MILLIONS) 17.8 YEAR STATIONARY POPULATION IS REACHED 2080 POPULATION DENSITY PER SQ. KM. 25.8 31.3 37.9 35.8 35.2 PER SQ. KM. AGRICULTURAL LAND 60.7 72.9 82.4 420.9 92.5 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 43.4 46.2 41.4 44.3 39.7 15-64 YRS. 52.5 50.0 54.9 52.4 56.1 65 YRS. AND ABOVE 4.2 3.8 3.7 3.3 4.2 POPULATION GROWTH RATE (PERCENT) TOTAL 1.8 /c 1.9/c 2.1 2.8 2.4 URBAN 3.2 3.8 3.9 4.6 3.8 CRUDE BIRTH RATE (PER THOUSAND) 48.9 41.8 34.9 41.2 31.4 CRUDE DEATH RATE (PER THOUSAND) 21.0 14.6 9.2 12.2 8.4 GROSS REPRODUCTION RATE 3.4 3.2 2.6 2.9 2.1 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 29.2 180.9 USERS (PERCENT OF MARRIED WOMEN) .. 10.0 21.3 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 97.0 96.0 132.0 100.4 110.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 83.2 88.2 115.1/d 108.5 108.4 PROTEINS (GRAMS PER DAY) 51.8 56.6 75.17d 71.9 66.0 OF WHICH ANIMAL AND PULSE 12.9 13.5 22.771 18.0 34.0 CHILD (AGES 1-4) MORTALITY RATE 36.1 24.5 9.8 15.1 5.6 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 48.1 54.2 60.2 56.9 64.2 INFANT MORTALITY RATE (PER THOUSAND) 158.9 131.3 90.0 104.3 64.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 49.0 70.0/e 59.1 65.6 URBAN .. .. 63.071 83.1 78.9 RURAL .. .. 77.07;i 39.8 43.9 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 62.0 .. .. 59.3 URBAN .. 100.0 .. .. 75.3 RURAL .. 34.0 60.0/e .. 30.0 POPULATION PER PHYSICIAN 10026.1 5934.0 3576.2 4015.5 1617.3 POPULATION PER NURSING PERSON .. 727.5 1167.8 1802.2 1063.5 POPULATION PER HOSPITAL RED TOTAL 405.2 409.1 463.7 641.7 477.4 URBAN 277.3/f 302.8 340.7/e 538.3 679.8 RURAL 1040.97? 1269.3 1275.871 2403.3 1903.4 ADMISSIONS PER HOSPITAL BED .. 24.1 25.0/e 25.5 27.3 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. 5.1 URBAN .. 5.1 * RURAL 5 .1 g AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. 3.2 /S URBAN .. 2.77 . RURAL .. 3.67 . ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. 24.0 /g .. URBAN .. .. .. RURAL .. .. ..  - 22 - ANNEX I Page 2 of 6 TABLE 3A TUNISIA - SOCIAL INDICATORS DATA SHEET TUNISIA REFERENCE GROUPS (WEIGHTED AVERAGES - MOST RECENT ESTIMATE)- MIDDLE INCOME MOST RECENT NORTH AFRICA & MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b MIDDLE EAST LATIN AMERICA & CARIBBEAN EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 66.0 100.0 102.0 88.7 104.3 MALE 88.0 121.0 119.0 104.5 106.4 FEMALE 43.0 80.0 85.0 72.5 103.3 SECONDARY: TOTAL 12.0 23.0 25.0 39.7 41.3 MALE 19.0 33.0 31.0 49.3 40.4 FEMALE 5.0 13.0 19.0 29.0 41.8 VOCATIONAL ENROL. (X OF SECONDARY) 23.5 11.1 35.0 10.1 33.7 PUPIL-TEACHER RATIO PRIMARY 61.1 47.5 39.2 34.1 29.9 SECONDARY '-.8 27.8 20.4 23.7 16.7 ADULT LITERACY RATE (PERCENT) 15.5 24.0/ 62.0 43.3 79.1 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 10.5 13.0 18.3/ 17.8 42.8 RADIO RECEIVERS PER THOUSAND POPULATION 40.3 75.7 94.8 131.3 270.5 TV RECEIVERS PER THOUSAND POPULATION 0.1 14.1 44.1 107.7 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 19.0 16.0 43.8 31.5 63.7 CINEMA ANNUAL ATTENDANCE PER CAPITA 2.0 .. 1.5/d 1.7 2.7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 1137.9 1214.8 1631.1 FEMALE (PERCENT) 6.0 7.7 8.3 10.6 24.4 AGRICULTURE (PERCENT) 56.0 50.0 34.0 42.4 31.3 INDUSTRY (PERCENT) 18.0 21.0 33.0 27.8 23.9 PARTICIPATION RATE (PERCENT) TOTAL 27.0 23.7 25.7 26.0 33.6 MALE 50.2 44.2 46.5 46.2 50.4 FEMALE 3.3 3.6 4.3 5.6 16.8 ECONOMIC DEPENDENCY RATIO 1.8 2.1 1.8 1.9 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. 17.0/h HIGHEST 20 PERCENT OF HOUSEHOLDS .. .. 42.07.. LOWEST 20 PERCENT OF HOUSEHOLDS .. .. 6.07. LOWEST 40 PERCENT OF HOUSEHOLDS .. .. 15.07. POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 204.0/d 279.2 RURAL .. .. 97.O7T 178.6 184.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 193.0jd 403.6 518.0 RURAL .. .. 193.O7T 285.6 371.1 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 20.0/d 22.1 RURAL .. .. 15. d7 30.9 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. 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 1978 and 1980. /c Due to emigration population growth rate is lower than rate of natural increase; /d 1977; /e 1976; /f 1962; /j 1966; /h 1975. May, 1982  ANNEX I DEFINIIONS F SOC INDICTUItSPage 3 of 6 dan;cIhctIt Iata ate draws Em. court.. deosra -1 odged the m-tatnttct and reliable, it should ale- oe noted tht heynatxheIer nainll opaal because of the a- of etendardia-d definitions end --ncpts aced by difinnt countries in collectig the data. IThedaa renne tha... ..stc tode-tnit o-dar of nt..idate-red., ond oh-r-ctatt certai eajnr dfftnfnrane troseenctutttrcaa Th. eferncegrooa ae (1 th teecocary roopof t nufec coutryaid (2) a c-uan group nith taseeftt hIgt.h- reitoete the conty grcup the nub Ito country eacept fo "High Incme iii Exprters groP s.tar 'Middit Inco forth, Afric an:.d riddl fast is . aoci-nuiurallfiociee. It checeferac.grop data the - . toeragne at pausno eighidaihmtcmn fnreah indicato and sh.e ony be cne too i--asn is- amen the coutry sd re .fernce gr.,Pe.. AkAd(i.ih-os.od sql).. lponlut ton rer Ifetitd- total.rtn aid natal - Popalar on(toal Total - T irfc re opising land arts sad inlandears 1979 data. ora, n rrl) i ditOd by ri orpcct -aber us hospital nde Artuli- ro- Ef- Et ac of tiucta ae Iad temporaily orpateanaiy -nalabslot pubicand PriLe_ Ietit p.cialiasd hna:pdrl elndi re- for croPs, pastre, -mnie ano kitchen gsroea on to lie fa11on; 1979 data. hailitarn etr.d ia atar entahlluheat. pemaet i tae b'y a.las oephystolen. Eistbllxhe-r prooiding Principeliycs' "tP PER CA1071 (Ut)) - OgP per tipita e-tisre attret-o1rprt a- dIel tar ar nns loludad. Ocrl hsita.coee,Iluehlt ciltied ty ae oterio sthnd as World ln ta i7-.0hif;1960. an eia errtn emnnl tfedb hscs ht hy a 1970 .an 1980 dat. dnlessas ue,mdie eo. htxfrI-u atacs atlon sad pen-ida aIliited -sge f rad-ica fn -isre m stasi- ENEHGY CONSUMfPTION yPE CAPITA - -.-Ia to -iPtiot ai --riul enegy (tool t"' ayse na oPitals include oHae priint Ip/ge.....l hnsplr-la, -inc Ito infilgs of coleqlaeoIe.cpt;.9I 17.an 99 centers I-. Oella-ld hoepirals are L Icldnoony1udrttl date. nila -n e Inaricof ted - IneaI ot.bte noam iont or dtec arg-c from hnaplsolm dioldad by tha toe f beds. rOPULITIogOtt AN ITAL. STATEISTICS Total P-nulslon Kid-fear (thboaaads( - Iaf July 1; 19960, 1970. and 1960 HOUSINGf Ira nnlco - stntf oa) - datto of arbas to total poultn Ibtabadcosit of adroa of itdRilul a'ba sha litLng q-aror differet dfiIto o uha a"a may aftet onm.a.saility of data n rhair manmse are nlde a rryotb niddIn amngcootia;1960. l97. and 1961 date, th des id fr sisici puroe. yP.,., nI ya 20 - Carret popnlatlou projection are base.d on 1900 bar of parseepar inn in all1_1t .rba. and4 trur occupiedcotelai totalpopatrn by age end -a aa cheap motality.andbfsmLIiiyr-ses. deeluug.111 respeetiely. HexiLage ecrlude o-enaet tutures andd Irnel and femal life especcary etbifining at 77.5 yrar. Thpro C,neriamai dsello n.'itheecrciyA lining quartar ecentage ma ferb frnti1iny rate also he H hthre len-le -aaing danlinai ftnl ea,adros dneIllingerePsi.i.eLy frtiInacorit to incoe lotel and p-a family planai.g peeomna itc contr iucha aaignd na f cesanfx cobinciae f rartulity IIAlf and Intility Inads fn pno)eciao puocees. Adfoetd tor lilant aatios tIbn bitr rate La eq.al so hb. death rte,. and also the age ar-ct-p n- Ino n f all a gee at ha primary le-e as pen-etagse orePaco Iaia .. n..tan. Trhia is tbisoed only oftee fetilIty rsces decILns to primay_sno-age~& ,pnplmtin-; normall -itclou tild.en dgad A-li necirsed on the basic of the prnJettrd chaprcer.iecios of the popuanio itac e-n ppcl ore beln or abort the official a-hnL age. to th. year 2000. sad te rsts If daclie of fertility rate f ttrplan- etandarn school - nrl. rain ai female Compotad as.6. an ..l.seonday Ynarutat lonay tonolotaa I. ermahd - The ynar nh-n saionary popalantot prondeegnrl ottoa.o tf. r Etot-ing ns ucLan Ion papit. ~~i.. i1i b. --hd. ... ~~~~~~~~~~sully of 12 no 1 y.aun of-ae-orepndnecors ar gnra Potclaiion De..aito _nnideo. Pennt Ie.-Hld-ynr- cncnPsrmnar tl--et(lHOhetar If toc-titnl... tmetratenfa.....darn V-ntoio...t -tnsirc-... Itota orna 196d. 1970 and 1079 deta. itilade ebncl -t.indnni o tter ptgrams nhich opertet tedaped- P.r so e. seiotvlland - CoWnnsd se abon fnI aniu Ianl sd enl ra satet fsnnaylattios only 100, 970aud1979 deta. .t-erbes -M . Prisaty, sad e-nodary- Total std- asnr oledi PonlatonAgeisrnnre neren) -ibtdrs 1-lAyer.) nabig-ae l-primay aid aeodury lanale divided by rae. fteb-r n t ha yeore. and rtfi red (At year and II as perteatotgus of mid-y.ar pop.- corepodiglewIs. lattn; 160. 970.ama 080data, Adult Litsraay rts (nprc..r I - Li terre adults (abla ic read aad erite PoouIceIroat rat Ieret) - tat-l - dAnai- gro,th rtes. of s-ta mid- asaPercentage of total edult popalation aged 15 yetaadoe PtnolattIn Ir-et Rate (perostl9- oban - Ox9aai gr-en r-ies of te1,a popa- ClftONtPTIOfI otIons fcr 1950-60. 1960-70, and 1970-00. Cssre ars (par thoosand papulation) - Poe..tg. car - omt ia mtor Crde 3li at ohnad - conual lice births Par thoucand of mid-year oars seatiglee tban eid .gbt pereone; e..nltdae asb.lan , hearses andd Pny,aIoo2 196. 170. d190 daahiiar eals IC-oc leash ine (nor tho..ss.o) - Anoos deaths per rhoosad of mid-yase Hadie Ot-irere (ertosnd -nnlason - All cyp-s ofrnrer for duoc ppacn;1960, 1970,an 190 dsra. brnsdcamn. agaanst. paIl ptr thoceand of popalatian; nclude at- Rrpstaprdacnion B,cr-An-rsg numbe ro amughntrsa na s1Ii bea In licataadrenerse in nusiaaddi ar rbnrglonrat in of radio cer orel cprauttne erid if she.tefne reetaeeel cer ses naIe sahtrcntMyer.raynthbopa-bir inos ciityIortw .ulptt-ncanse stOma Lc C960. 1970, i 90 os onre blas lic-neIn.g FlmIly P)annnl -ltetreA- us rolad I -Aotoua tttor of acce~p tor Tb.1. Oscnirsr (rtbo-esd rrlrof TV r.i.iiers cotorndnott famil ,pla T:lo Isae(acr f xsrnied Pn-n) - eceta If marie in -naariae and toyar abe rai.r. lo of TO esta as. tt affect. errn iRotild-batga 1.1 er)nnaabirrb-c..oRimnl -vt meicetoOpernr iclsin tribohmad ro iainol - tiers the anrge ci- all na,rrand anaa in nsaag group. olairf"daiydrri ntetHsre",dfine sea eridic pu ..aic dnted primerly to reniggeea tens.... It it tonsid.... FOOD AttD NOTITIdrN to ha "detlyt if i pmr atiot ontmea.a Indo. fF. dPrdcno ner int(1A-iOi-loeofencrsanul Cen uaAttendance see artia ne year - ..aad on the nasba of praxdotlon of all fond -t"d icee Prcdnciarelda ssedan feca and rc.t.. solid dirigis 0.Year. iarludiag adisions.. to drio-in cinm.- Is.o c-ladap Year "_ ..... T irrec.e ...s~ gede (e.g. -ug.nna.e add ab ila units. insedd. nat hc r dIbead c-nsanact=enta (a..g. caff.. add te unto ldd).Aggagcspndctn nf each counry it bae .. n dLAdn foIfE cattnl neeg yndge 'rcs-igt;961A-A5. 1970. and 1900 data. TtlLnryrefhuad)-tcoolal ciaproa old Par~ iafat snrni o,fcnee(nere- f..enolrnmate - Compat..d from are force, and anepleyed hiseoldnghuticro, atdant. etc.. enegy equitalet of or (and nPpllee Ia-iloble in neucery par n.pita cnaidg papalatlen of siLme.tfiniine In. -uro- -euetr are prr day. nA-ilabls euppyl ie -oariasdmsrcpedo n isrta. lees tot -reasrbla;L1960, IOP and 1990 'da'ta. nno .ad1 changs. in stork. Hnt e-ppltas snoode anma teed. eeede, Fe.aIs (earn-t)-.Pes aorfacea pscetags of totl labar f-.ra. Qlniia ed to Ladprawug endtosa in di ..ribatina.Pqisaa- Anri-lular lpernete) - Lbefote i farmig. ferety, hanging and a nra nere necimed by PAO bemed orpbyetIlaIcal. nedstr tota anihlaig as psraefsgs of tecai labar fares; 1060. 1970 and 1900 data. city and health cons.idering enrneltsmPe..ruar.d bady esgte, .gs Indoe-y (meSn) - fabe ferns is dIng a-nntte srfcten haneebaldfen; i- 190sd1977dat. 1960., l190 and 1980 dana Pe iooh ..I,l of snoenit (nm erdy) - Protin ...nent of part .pita Parsiccetin bate.. oe)-ttl l,an eaaPriinlno tet spply of food par daV. 9 aupply of fond ie defined e aba-n. I.- actinityrsrsssrsc-wansd a total, male, and tamale lbo fern..w -nranafo l,cI treetaalis1ieo by Oi prooids f-er - - .. .iimpra .ae of -tota sale ad, female ~ popuatio of alt sger... rnsy r "~~~~~~~alcens f~0graofintal: prten s day sed 2ll gra o aI L-xn 1960, 1970. and 199 data--. Tie -r ba...d en Ids. psetic ipaia rstee roles prnnain. of aiinh 13 gras coid he soi-IPreen_ hes stnd rfletiung age-snetrantur f tbe ptpnoaien a. d Ind t ime tred, A ard are ea than thne. of 75 grm of tonal pntwiL aid 20 Sre-n of fet eiae ats from inEra sans ansa pni a aanrga I, fcr , the 1 nl..proposed by PAO in thThird Ecno tcflrsdea Ratio - nao apoeteune ad tadae OrdPe. are;llA. 1970 and lP snt the total Lala f-c.. Perc,It, prattle tatyfop nsladn aPoansly y'nl fend dn _od fc_ metals and Pule ngssprday;1901At 1970 aId 1907 dats. INCOfME DISTRIgnTION Child (agne 1-49 loth tt (re .abnead)_- oucl deaths Per thnue..ad It eraa of Prin-sa Ino- Ebob Ln ..eb add k ind) - Rec.ined hy richest agegrop I. yars toctlire in rhia 8 age .t.P,fo -nt evlo -gcc- 5 P-rcant riches 20 P...e.. pooes 20 Peren, and po-e- 40 peren cries date dented fon life tlad 1960, 1970 and 198f data, of ho:ae.lda. ciA.hiT POoERTY TARGET GROUPS ~ifs foPeorcY or Birth (tas nrage tudar of yanre oi lIfe -ranring fTh. fo1lloeugnnnm te r eY aPpr"' "mas tesreofp ryeea at tirtb;196, 19(0 19 190 ao.anneud elaeprertd th-needarabls atin Icfor onLlty Rat tar ituo...nd) - Aetul ow...h. of Infants underta pn- Eaisetd Ab-l Pvet Inn.- iLne1 (00 pa capita) -urn- and rut_I od a Pef chocadnd lire hirtha; It960. 1970 end 1900 data ..a..e par, inc-m bowl is that tnm leelhlos suc1h' a -nma Acuruct aft ater(rereni f roulacont-otti, uranL aiddcra Our tattlion_ly adaqant diet plus ... asetlal ._i co-ed cqlrsi sct na-erepply (locluIdairtt-ed surf-ac naer or~ un .trea abat onPesoae amoe aaiaPnrn nonlni(t aia -ubnand -ur1 -as-rach as cht Erie protece o ee,uene n aiar al)a ia eaiapneyindm aa aoenbrdo nrg e apt percntafe ofccerreeeciie poulaion. InaL rbantraaapublic pn-cnl iLcoa of the cnnr urban lan.I is deemed fro the r-rl f..urtan cr nand.paiLoctdco Iethan 200 rater Ir h.u.. say he Iroe aith adjostant for higher noat of liotginuba raa otnaid-red ua inn smuth rasnbicce of- that tones. In roralurt lEctra-d Pnnosonticeohn Poverty an-n Lec.l (nercent(- urban reaststlaccee .oId lmply thtteh-erf rasb ftehueod ad rcrl-7reta tuain(nhsadrrl t r 'ohuolu- do cot cane to toenoaccsyrtrotrtonata part o~~f bs oap in fetching the poor aideateeserbyoospbanesyioe r ha ues of pit pntaad ita- ycrusein rr PysiIan- ypnoilo dittded by vuee of p-aciaing physt- Economic and Social lass Dtiniond cae qoa2i!ified from ssdoa echno at ni-erelcy lsnel. =onmooay-i add PaJet-inne hapart-a Ptuain e-aaigPro -= Pnuindinided hy oue of P..ctiaing May 1902 malend femal grdnaauea.asitn nar-s. prmtical Iaree and  - 24 - ANNEX I Page 4 of 6 TUNISIA - ECONOMIC INDICATORS Population; 6.5 million (mid-1981) GNP per Capita: 31,420 (1981) Annual Growth Rates Amount (at 1980 prices) (million US3 Actual Projected Indicator at current prices) 1981 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 NATIONAL ACCOU'NTS Gross domestic product /1 8,224.0 5.3 7.1 7.1 6.0 5.0 3.8 7.3 6.0 5.8 5.6 5.3 Agriculture 1,111.2 -10.2 4.5 -4.8 6.1 9.0 -4.3 11.5 4.0 3.9 3.7 3.5 Industry 2,663.6 9.8 9.0 11.9 9.9 2.1 3.9 7.5 7.3 7.0 6.7 6.4 Services 3,329.3 5.6 7.4 8.7 3.9 6.4 6.5 6.3 6.1 5.9 5.7 5.5 Consumption 6,350.7 10.4 5.8 4.6 9.9 7.0 7.0 4.1 7.4 6.3 4.1 5.3 Crosn investment 2,539.5 6.9 12.9 3.9 5.8 9.2 -5.0 8.8 1.1 1.0 1.8 3.1 Exports of goods and NFS 3,475.1 5.5 8.2 23.3 0.7 2.0 4.4 8.3 6.9 8.0 13.4 9.2 Imports of goods and NFS 4,141.4 16.7 9.6 14.3 7.2 8.4 4.0 3.5 6.2 5.8 7.8 6.9 Gross national product 8,292.8 5.8 7.9 7.5 6.5 5.2 3.6 7.2 5.9 5.5 S.3 5.2 Gross national savings 1,942.1 -7.2 14.8 21.8 -7.2 -0.8 -19.4 17.8 -2.0 0.5 7.9 4.6 PRICES GDP deflator 76.0 80.1 88.3 100.0 109.7 Exchange rate 2.33 2.40 2.46 2.47 2.02 Share of GDP at market prices (Z) Average Annual Increase (Z) (at current prices) (at constant prices) 1971 1976 1981 1986 1987 1991 1971-76 1976-81 1981-86 1982-87 1986-91 Gross domestic product /1 100.0 100.0 100.0 100.0 100.0 100.0 8.8 6.1 5.7 6.0 4.9 Agriculture 18.8 18.1 13.5 13.0 12.7 12.1 8.2 0.7 3.6 5.3 /2 3.5 Industry 20.6 25.9 32.4 32.4 32.7 33.7 10.2 8.5 6.5 7.0 5.8 Services 47.7 42.9 40.5 41.6 41.7 41.9 8.3 6.4 6.1 5.9 5.1 Consumption 82.0 77.5 77.2 78.1 78.0 74.5 9.6 7.5 5.8 5.4 4.0 Gross investment 20.0 30.4 30.9 24.6 24.1 23.8 14.1 7.7 1.4 3.1 4.2 Exports of goods and NFS 23.8 29.1 42.3 44.1 45.3 46.5 5.6 7.6 8.2 9.0 6.1 Imports of goods and NFS 25.8 37.1 50.4 46.8 47.5 44.7 13.1 11.2 5.5 6.0 4.0 Gross national product 99.6 98.7 100.8 99.6 99.4 99.1 8.5 6.6 5.5 5.8 4.9 Net factor income -0.4 -1.3 0.8 -0.4 -0.6 -0.9 - - - - - Gross national savings 17.6 21.1 23.6 18.0 17.9 20.6 2.9 3.6 0.2 5.5 8.0 As Z of GDP (at current prices) 1971i 1976 1981 PUBLIC FINANCE Current revenue 21.4 24.2 30.0 Current expenditure 18.9 18.5 22.3 Surplus (+) or deficit (-) 2.5 5.7 7.8 Capital expenditure 6.9 11.4 10.6 Foreign financing 3.2 1.7 1.4 1971-76 1976-81 1981-86 1982-87 1986-91 OTHER INDICATORS GNP growth rate (%) 8.4 6.6 5.5 5.8 4.9 GNP per capita growth rate (2) 5.4 4.0 2.8 3.1 2.2 ICOR 2.7 5.5 5.2 4.8 5.3 Marginal savings rate 24.0 25.2 20.6 23.0 30.2 Import elasticity 1.51 1.84 0.96 1.0 0.82 /I GDP at market prices and components at factor cost. /2 This growth rate reflects the decline expected in 1982; a least square growth rate for the same period (1982-87) is 4.9, but the long-term projections for agriculture are better reflected in the growth rates for the individual years shown above. EMENA CP II-C July 1982  - 25 - ANNEX I Page 5 of 6 TUNISIA - EXTERNAL TRADE Population; 6.5 million (mid-1981) GNP per Capita: $1,420 (1981) Annual Growth Rates Amount (at 1980 Prices) (million US4 Actual Projected Indicator at current prices) 1981 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 EXTERNAL TRADE Merchandise exports 2,434.2 9.7 9.6 20.7 0.8 3.7 3.6 8.8 6.7 8.2 16.0 8.4 Crude oil 1,249.7 12.4 12.8 12.4 0.2 -5.0 1.1 2.7 -1.8 1.8 -0.1 3.7 Other primary 125.8 4.9 -15.7 25.1 -11.9 -3.3 11.6 8.7 8.8 9.0 8.9 7.7 Manufactures 1,058.7 6.8 10.4 33.3 3.6 16.3 5.3 14.9 14.3 13.2 28.1/2 11.0 Merchandise imports 3,801.5 14.1 10.7 15.7 7.7 9.5 3.7 3.0 6.0 5.6 7.8 7.1 Food 421.4 9.6 7.7 39.6 -6.8 9.4 2.9 1.1 2.7 5.3 5.0 -4.8 Petroleum 756.6 13.8 15.1 9.7 13.5 13.9 18.5 0.6 11.3 8.2 21.7/2 13.8 Machinery and equipment 979.5 5.5 15.4 -2.6 -4.4 32.9 -7.1 -1.0 -0.7 0.0 0.0 7.7 Others 1,644.0 21.6 6.5 24.9 15.3 -2.3 4.4 6.7 7.9 7.1 5.6 5.9 Price Index Price Index PRICES Export price index 54.8 58.7 75.5 100.0 118.6 117.4 122.5 131.6 141.8 152.0 163.5 Import price index 72.6 76.6 85.3 100.0 116.8 127.4 135.6 147.6 160.2 172.2 184.3 Terms of trade index 75.5 76.6 88.5 100.0 101.5 92.1 90.3 89.2 88.5 88.3 88.7 Composition of Merchandise Trade (%) Average Annual Increase (2) (at current prices) (nt constant prices) 1971 1976 1981 1986 1987 1991 1971-76 1976-81 1981-86 1982-87 1986-9 1 Exports 100.0 100.0 100.0 100.0 100.0 100.0 4.1 8.7 8.6 9.6 5.2 Crude oil 24.5 40.9 53.7 36.3 35.2 30.7 4.6 6.3 0.7 1.3 -0.1 Other primary 19.2 13.4 5.2 5.6 5.5 5.5 -5.4 -1.2 9.4 8.6 5.8 Manufactures 56.3 45.7 41.1 58.1 59.3 63.7 6.4 13.6 14.9 16.2 7.7 Imports 100.0 100.0 100.0 100.0 100.0 100.0 13.1 11.5 5.2 5.9 3.9 Food 21.2 12.3 11.1 11.0 9.8 6.8 0.6 10.9 3.4 1.8 -5.3 Petroleum 3.9 11.1 19.9 22.9 24.9 31.0 29.2 13.2 11.8 10.9 8.6 Machinery and Equipment 30.1 31.9 25.8 17.9 17.9 13.2 13.5 10.5 -1.8 1.2 -1.0 Others 44.8 44.7 43.2 48.2 47.4 49.0 10.6 12.9 6.3 6.6 4.8 Share of Trade with Share of Trade with Share of Trade with Industrial Countries (X) Developing Countries (x) Capital Surplus Oil Exporters (%) 1970 1975 1980 1970 1975 1980 1970 1975 1980 DIRECTION OF TRADE Exports 62.6 48.6 n.a. 23.4 41.4 n.a. 14.0 10.0 n.a. Imports 62.9 67.1 n.a. 33.7 25.7 n.a. 3.4 7.2 n.a. /1 Constant price data at 1980 prices. /2 Increase in refining capacity. EMENA CP 2C July 1982  - 26 - ANNEX I Page 6 of 6 BA*liCE OP PAYMENTS, EXTERNAL CAPITAL AND DEBT (million USS at current prices) Population: 6.5 million (id-1981) GNP per Capita: S1,420 (1981) Actual 11 Projected 1971 1976 1979 1980 1981 1982 1983 1986 1987 1991 BALANCE OP PAYMENTS Net exports of goods & services -57.4 -417.0 -356.0 -472.6 -607.5 -934.4 -893.3 -1,171.4 -1,265.7 -1,258.7 Exports of goods & services 469.4 1,479.5 3,137.5 3,912.3 3,902.4 4,120.5 4,680.2 7,403.0 8,546.4 13,632.1 Imports of goods & services 526.8 1,896.5 3,493.5 4,384.9 4,509.9 5,054.9 5,C73.5 8,574.4 9,812.1 14,890.8 Net transfers /2 52.0 52.7 61.0 100.0 36.4 32.4 32.4 24.3 24.0 24.0 Current account balance -5.4 -364.3 -295.0 -372.6 -571.1 -902.0 -860.9 -1,147.1 -1,241.7 -1,234.7 Direct private investment 27.6 102.6 50.9 236.0 354.6 400.0 300.0 400.0 400.0 500.0 MLT loans (net) 55.3 167.9 494.2 323.9 188.0 502.0 651.0 916.3 1,010.9 994.7 Official 59.2 130.4 198.5 270.9 262.2 434.4 416.1 423.6 476.1 690.0 Private -3.9 37.5 295.7 53.0 -74.2 67.6 234.9 492.7 534.8 304.7 Other capital 13.7 55.1 -126.2 -122.4 134.2 - - - - Change in reserves -91.2 38.7 -123.9 -64.9 -105.7 - -90.2 -169.2 -169.2 -260.0 International reserves 114.8 304.5 415.5 455.7 568.6 568.6 658.8 1,087.4 1,256.6 2,176.6 Reserves as months of imports 2.6 2.2 1.6 1.4 1.6 1.4 1.4 1.5 1.5 1.7 Actual /1 Pro jected 1971 1976 1979 1980 1981 1982 1983 1986 1987 1991 GROSS DISBURSEMENTS Official grants 35.5 50.2 50.7 41.5 26.3 32.4 32.4 24.3 24.0 24.0 Gross disbursements of MLT loans 105.2 229.5 643.8 535.1 514.9 842.9 1,048.4 1,485.1 1,689.7 2,247.1 Concessional 61.0 104.0 154.5 217.5 284.1 343.8 326.2 284.4 309.2 427.2 Bilateral 52.8 95.1 153.7 197.3 277.6 256.6 264.6 238.6 255.2 337.6 IDA 4.8 8.9 0.2 1.0 0.6 1.0 - - - - Other multilateral 3.4 0.0 0.6 19.2 5.9 86.2 61.6 45.7 54.0 89.6 Non-concessional 44.2 125.5 489.3 317.6 230.8 499.1 722.2 1,200.7 1,380.5 1,819.9 Private 28.8 60.1 377.6 191.4 117.3 294.2 475.6 801.5 918.7 1,080.7 Official export credits 3.2 9.9 42.6 52.5 36.3 76.2 96.3 214.5 268.5 522.3 IBRD 12.2 25.3 55.4 51.1 53.5 83.6 123.2 195.1 159.9 173.0 Other multilateral - 30.2 13.7 22.6 23.7 49.1 27.1 29.6 33.4 43.0 EXTERNAL DEBT Debt Outstanding and Disbursed 619.5 1,166.2 2,996.4 3,188.8 3,370.7 4,024.2 4,675.3 7,360.9 8,371.9 12,611.8 Official 440.0 971.6 1,830.7 2,024.0 2,280.3 2,769.0 3,185.2 4,423.2 4,899.3 7,422.2 IBRD 39.3 127.9 232.0 269.0 303.8 345.3 426.6 725.8 811.9 1,049.5 IDA 21.1 64.1 67.3 67.9 67.9 68.9 68.1 65.3 64.1 58.2 Other 379.6 779.6 1,531.4 1,687.1 1,908.6 2,352.8 2,690.5 3,632.1 4,023.3 6,314.5 Private 179.5 194.6 1,165.7 1,164.8 1,090.4 1,255.2 1,490.1 2,937.7 3,472.5 5,18Q.6 Undisbursed debt 352.5 1,109.5 1,694.6 1,685.5 1,170.6 1,539.9 1,515.1 1,851.4 2,143.4 3,036.9 DEBT SERVICE Total debt service payments 69.8 98.6 308.8 432.7 547.6 567.6 642.4 991.5 1,177.9 2,037.2 Interest 19.9 36.9 159.2 221.5 220.7 226.6 245.0 422.6 499.2 184.9 Payments as 1 exports 14.9 6.7 9.8 10.9 13.9 13.8 13.7 13.4 13.8 14.9 Paymeots as I GNP 4.1 2.2 4.3 5.1 6.6 6.1 5.9 6.1 6.3 6.8 Average interest rate of new Loans (X) 4.9 5.4 7.1 7.1 6.7 7.2 8.0 8.2 7.3 7.4 Official 4.6 4.3 5.6 6.2 - - - - - - Private 6.1 7.9 9.8 11.2 - - - - - - Average maturity of new Loans (years) 23.3 16.6 15.8 17.3 19.6 16.7 15.2 14.5 14.9 15.0 Official 26.2 20.4 19.4 19.1 - - - - - - Private 13.8 8.6 9.2 9.4 - As 7 of Debt Outstanding at End of Most Recent Year (1980) DEBT STRUCTURE Maturity structure of debt outstanding (2) Amortization due within 5 years 36.8 Amortization due within 10 years 64.9 Interest structure of debt outstanding (7. Interest due within first year 4.5 /L Preliminary estimates for 1981. /2 Including grants. EMENA CP 2C July 1992  ANNEX II Page 1 of 1i THE STATUS OF BANK GROUP OPERATIONS IN TUNISIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of September 30, 1982) 1/ US$ Million Loan or Amount kless Credit Cancellation) Number Year Borrower purpose Bank IDA c/ Undisbursed Thirty-one Loans and Credits Fully Disbursed 249.85 69.96 1068 1974 Republic of Tunisia Irrigation Rehabilitation 12.20 2.39 1088 1975 Republic of Tunisia Urban Sewerage 28.00 1.45 1155 1975 Republic of Tunisia Third Education 8.t0 4.14 1188 1975 Republic of Tunisia Second Highways 28.00 15.18 1340 1976 Banque Nationale de Tunisie Second Agricultural Credit 12.00 1.45 1431 1977 Republic of Tunisia Irrigation Development 42.00 12.27 1445 1977 SONEDE Fourth Water Supply 21.00 7.88 1504 1977 BDET Development Finance Company 30.00 2.81 1505 1977 Republic of Tunisia Small-Scale Industry Development 5.00 1.75 1601 1978 Republic of Tunisia Rural Roads (Third Highways) 32.00 23.47 1675 1979 Republic of Tunisia Second Urban Sewerage 26.50 21.21 1702 1979 SONEDE Fifth Water Supply 25.00 5.78 1705 1979 Republic of Tunisia Second Urban Development 19.00 16.00 1746 1979 Republic of Tunisia Second Fisheries 28.50 24.25 1796 1980 Republic of Tunisia Southern Irrigation 25.00 24.03 1797 1980 Office des Ports Nationaux Third Port 42.50 16.41 1841 1980 Republic of Tunisia Fourth Highways 36.5U 35.46 1864 1980 Societd Tunisienne de l'Electricitd et du Gaz Second Natural Gas Pipeline 37.00 26.84 1885 1980 Banque Nationale de Tunisie Third Agricultural Credit 30.00 28.i9 1961 1981 Republic of Tunisia Fourth Education 26.00 25.97 1969 1981 Republic of Tunisia Small-Scale Industry Development 30.00 30.00 1997 1981 Republic of Tunisia Northwest Rural Development 24.00 24.0U 2003 1981 Socidtd Tunisienne de l'Electrtcit4 et du Gaz Third Power 41.50 41.47 2005 1981 Republic of Tunisia Health and Population 12.50 12.5U 2012 1981 Republic of Tunisia Textile Rehabilitation 18.60 17.09 2052 1981 Republic of Tunisia Grain Distribution and Storage 42.00 42.00 2108 a! 1982 Republic of Tunisia Fifth Highway (Rural Roads) 35.50 35.5U 2113 a/ 1982 BDET Electrical and Mechanical Industries 30.5U 30.50 2134 1982 SONEDE Sixth Water Supply 30.50 30.50 2157 a/ 1982 Republic of Tunisia Irrigation Development 22.00 22.00 2197 b/ 1982 Republic of Tunisia Technical Assistance 4.50 4.50 TOTAL 1,056.25 69.96 587.05 Of which has been repaid 110.21 t.91 Total now outstanding 946.04 63.05 Amount Sold 14.33 of which has been repaid 13.18 1.15 Total now held by Bank and IDA c/ 944.89 63.05 Total Undisbursed 587.05 587.05 1/ A $25 million loan for a Third Urban Development Project is scheduled for Board presentation on December 16, 1982. a/ Not yet effective b/ Signed on October 29, 1982; not yet effective c/ Prior to exchange rate adjustement  - 28 - ANNEX II Page 2 of 11 STATEMENT OF IFC INVESTMENTS IN TUNISIA (as of September 30, 1982) a/ Amount in US$ Million Year Obligator Type of Business Loan Equity Total 1962 NPK Engrais Fertilizers 2.0 1.5 3.5 1966 Socidtd Nat. d'Invest. Dev. Finance Co. 0.6 0.6 (now BDET) 1969 COFIT (Tourism) Dev. Finance Co. 8.0 2.2 10.2 1970 Societe Nat. d'Invest. Dev. Finance Co. 0.6 0.6 (now BDET) 1973 Societe Touristique Tourism 1.6 0.3 1.9 et Hoteliere RYM SA 1975 Societe d'Etudes et Tourism 2.5 0.6 3.1 de Developpement de Sousse-Nord 1974 Industries Chimiques Chemicals 0.6 0.6 du Fluor 1978 BDET Dev. Finance Co. 1.2 1.2 Total Gross Commitments 14.1 7.6 21.7 Less Cancellations, 9.3 1.8 11.1 Terminations, Repayments, and Sales Total Commitments now 4.8 5.8 10.6 .held by IFC Total Undisbursed 0.0 0.0 0.0 a/ In addition, IFC approved on June 17, 1982 (but has not yet signed) a $38.3 million loan package to COFIT of which about $20 million equivalent is from IFC's own account.  - 29 - ANNEX II Page 3 of 11 C. PROJECTS IN EXECUTION 1/ Ln. 1068: Irrigation Rehabilitation Project; US$12.2 million loan of December 31, 1974; Date of Effectiveness: September 18, 1975; Closing Date: December 31, 1982. Irrigation rehabilitation works in the Medjerda area are complete. However, farmers are not fully using the available water resources due to limited distribution hours, lack of on-farm development, and poor water management. Land reform is progressing and is expected to be completed by the end of 1984. In the Nebhana area, rehabilitation investments have been satisfactorily completed. Credit demand for basins and storage facilities was less than originally expected, and a grading and packing station was not built because of lack of capacity on the part of the cooperative which was to construct and manage it. About $0.5 million of funds allocated for credit are expected not to be used and to be cancelled after the Closing Date. Land consolidation in Nebhana is expected to be completed by mid-1983. Production of off-season vegetables under greenhouses is encouraging. Ln. 1088: First Urban Sewerage Project: US$28 million loan of February 18, 1975; Date of Effectiveness: August 15, 1975; Closing Date: December 15, 1982. The project is now completed. Its major achievement is the cleaning up of the Lake of Tunis where, before the project, more than half of the sewage collected in Tunis was discharged with little or no treatment. Under this project, the sewer system in the central area of Tunis has been recalibrated, one existing treatment plant was rehabilitated and extended, and two additional treatment plants were erected. In addition, a canal along the northern bank of the Lake has been dug and collects today all stormwater and sewage which used to overflow under heavy rains. The major benefits of the project are the improvement of the environment and of the sanitary situation of Tunis, and the related release of land around the Lake which is now developed by a governmental agency. Ln. 1155: Third Education Project; US$8.9 million loan of August 13, 1975; Date of Effectiveness: March 1, 1976; Closing Date: March 31, 1983. Implementation of this project was delayed following a change in education priorities in Tunisia. The project was subsequently amended to reduce the number of ITM centers to be equipped under the project, increase 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems 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.  - 30 - ANNEX II Page 4 of 11 the facilities to train teachers for ITM, and increase technical assis- tance. As a result, the Bank loan was decreased by $0.3 million to $8.6 million, to cover the full foreign exchange cost of the amended project. Implementation of the project is proceeding satisfactorily according to the revised schedule, with a slight delay of about three months in construction works. Ln. 1188: Second Highways Project; US$28 million loan of January 26, 1976; Date of Effectiveness: June 16, 1976; Closing Date: December 31, 1982. Civil works on the Tunis-Bizerte highway and on the Hammamet-Korba road in Nabeul have been completed. The remaining construction works on other roads are well-advanced, although a short extension of the Closing Date will be required to complete works on Lot 5, whose contractors went bankrupt. Alternative arrangements for these works have been agreed. The Sfax by-pass under Lot 8 on which there is a difficult problem of expropriation will not be undertaken as part of the project. All studies under the project have been completed and their results are being implemented. A loan balance, due to appreciation of the dollar since loan approval, may be cancelled. Ln. 1340: Second Agricultural Credit Project; US$12 million loan of December 17, 1976; Date of Effectiveness; July 19, 1977; Closing Date: December 31, 1982. About 89 percent of the loan amount is disbursed. Subloans to commercial farmers and agro-industrial investors are fully disbursed. Subloans to small and medium farmers are fully committed and expected to be fully disbursed by the Loan's Closing Date. Disbursements for subloans to farmers' associations for the establishment of date palm plantations have begun. Construction of irrigation infrastructure is in progress and plantation is also progressing satisfactorily for three of the six associations. However, drilling of artesian wells for the remaining three associations is suffering some delays, and the category may not be fully disbursed before the Closing Date. Ln. 1431: Sidi Salem Multipurpose Project; US$42 million loan of July 5, 1977; Date of Effectiveness: July 31, 1978; Closing Date; June 30, 1984. For the project as a whole, progress in implementation continues to be satisfactory. The land reform and consolidation program is smoothly underway. The Sidi Salem dam is completed and in operation. The first  - 31 - ANNEX II Page 5 of 11 filling-up of the reservoir has progressed well. The power plant is expected to be in operation by mid-1983. After some initial delays, construction of the Medjerda-Cap Bon interconnection canal is proceeding more rapidly and completion by the end of 1983 seems possible. A 6 km section was commissioned in June 1981, and a second section of 34 additional km is expected to be commissioned in 1983, in time for the reinforcement in the water supply of the SONEDE grid during the peak consumption period. Works on the 1,400 ha Testour perimeter are ready, and irrigation is scheduled to start during the current cropping season. Works on the Medjez el Bab perimeter of 3,800 ha are now progressing satisfactorily, and are expected to be completed by the end of 1983. Contracts for works for the Safeguard of Citrus Plantations subproject in the Cap Bon area have all been awarded; the anticipated completion date is end-1983. The irrigation component is experiencing important cost overruns, but because of Government's willingness to take action, no financing difficulties are foreseen. Ln. 1445: Fourth Water Supply Project; US$21 million loan of July 5, 1977; Date of Effectiveness; January 30, 1978; Closing Date: December 31, 1983. Most of the project facilities are now completed and in operation. Disbursements including release of retention monies to contractors will be completed in 1983. Ln. 1504/1505; Industrial Finance Project consisting of a Seventh Loan to Banque de Developpement Economigue 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, 1982. Both loans are fully committed. 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. Under the SSI pilot project, the commercial banks' initial reluctance to utilize Bank funds for SSI financing has been overcome. Considerable progress has been made by the Tunisian authorities toward setting up a comprehensive program of Tunisian and foreign technical assistance experts, specifically catering to the needs of SSI, as agreed under the project. A new project approved by the Bank in May 1981 supports this program (see below Ln. 1969).  - 32 - ANNEX II Page 6 of 11 Ln. 1601: Rural Roads Project; US$32.0 million loan of July 24, 1978; Date of Effectiveness: April 30, 1979; Closing Date: June 30, 1984. Road construction is now underway in all the eight provinces. The complementary agricultural component, after an initial delay, is now progressing satisfactorily, with the exception of the use of credit for agro-industries. A Government request to expand the project to cover three additional provinces has been approved. Ln. 1675: Second Urban Sewerage Project; US$26.5 million loan of April 13, 1979; Date of Effectiveness: August 31, 1979; Closing Date: December 31, 1984. Works under construction are progressing according to schedule. Thirty-one contracts have been awarded for a total dollar equivalent of US$50.2 million. Bank's commitments amount to US$20.8 million. Tenders for civil works of the Choutrana Treatment Plant have been invited. Ln. 1702: Fifth Water Supply Project; US$25.0 million loan of May 31, 1979; Date of Effectiveness: October 19, 1979; Closing Date: December 31, 1983. The physical execution of the project is progressing well and should be completed in mid-1983. Most of the project facilities are already in operation. Ln. 1705. Second Urban Development Project; US$19.0 million loan of May 31, 1979; Date of Effectiveness: December 1, 1980; Closing Date: December 31, 1983. The civil works are advancing well in Sfax and less satifactorily in Tunis. Problems related to site acquisition were recently solved and efforts are being taken to reduce cost overruns in core housing construction. About 40% of the civil works are completed. The solid waste component is still at a standstill due to managerial problems at the District of Tunis. The technical assistance and studies are advancing well. Ln. 1746: Second Fisheries Project; US$28.5 million loan of July 20, 1979; Date of Effectiveness: May 14, 1980; Closing Date: June 30, 1985. Port infrastructure construction is well underway at all sites and general progress is satisfactory. Procurement of boat hulls is underway and bid awards for boat engines have been made. Cold storage and ice making plants for existing ports have been procured and bidding for civil works superstructure at three new ports is underway.  - 33 - ANNEX II Page 7 of 11 Ln. 1796: Southern Irrigation Project; US$25.0 million loan of February 8, 1980; Date of Effectiveness; September 30, 1980; Closing Date; June 30, 1986. After a slow start in 1980, the project has gradually developed momentum and is now progressing satisfactorily. However, delays already experienced will set back the completion date of civil works from 1983 to 1985. Work will be underway on 11 of the 16 project perimeters before the end of 1982. Ln. 1797: Third Port Project; US$42.5 million loan of February 8, 1980; Date of Effectiveness: June 25, 1980; Closing Date: June 30, 1985. Civil works at la Goulette are now progressing satisfactorily. Dredging operations are completed and the precasting of cellular caissons started early in 1982. Some delay was experienced in the settlement of the reclaimed area, but this should not affect the project's completion date of June 1984. Initial concrete casting problems at Sfax are now solved and the new quay is being erected. The area occupied by the Navy has not yet been vacated which might reduce slightly the length of the shallow-draft berth. Civil works there are about 5 months behind schedule and completion is expected by September 1983. Supervision is satisfactory in both ports. Implementation of training programs for port personnel has started, technical assistance being provided by UNCTAD. The study on workshops reorganization and maintenance procedures is conducted by a group of consultants (local and foreign) to which the contract was awarded. Ln. 1841: Fourth Highway Project; US$36.5 million loan of May 22, 1980; Date of Effectiveness: November 21, 1980; Closing Date: September 30, 1984. The rehabilitation program is progressing well. The 1982 action plan for maintenance is being implemented, and tenders have been awarded for civil works. Road maintenance equipment is being delivered. Ln. 1864: Second Natural Gas Pipeline Project; US$37 million loan of October 22, 1980 - amended on July 15, 1981; Date of Eftectiveness: December 9, 1981; Closing Date: December 31, 1985. The original project scope was modified because of uncertainties related to the purchase of gas from Algeria; the project has been redesigned to utilize royalty gas from the Algeria/Italy intercontinental pipeline as a substitute for premium liquid fuel products. The first branch pipeline to Tunis has been completed and other branches will be completed during 1982.  - 34 - ANNEX II Page 8 of 11 Ln. 1885: Third Agricultural Credit Project; US$30.0 million loan of August 6, 1980; Date of Effectiveness: June 24, 1981; Closing Date: December 31, 1983. The project will finance part of the agricultural three-year lending program of BNT (Banque Nationale de Tunisie) for medium and long-term credit to small and medium farmers, production and service cooperatives, commercial farmers and agro-industries. Disbursements have started for production cooperatives and commercial farmers. However, because Government funds are also available for similar purposes to farmers and agro-industries under other programs which, unlike the Bank-financed program, offer subsidies, disbursements are below the expected level. Ln. 1961: Fourth Education Project; US$26 million loan of May 18, 1981; Date of Effectiveness; November 18, 1981; Closing Date: December 31, 1986. The implementation of this project, which is entirely devoted to skilled worker training and apprenticeship, is proceeding satisfactorily. The first phase of construction has already been tendered. All the final lists of furniture and equipment have been completed and the programs reviewed, all but one package being retendered. The Government executing agency (OTTEEFP) has already reviewed proposals on the technical assistance to aid in reinforcing the management logistics and programs of the network of vocational centers, and has retained and approved one of the proposals. Ln. 1969: Small Scale Industry Development Project; US$30.0 million loan of May 15, 1981; Date of Effectiveness: July 21, 1982; Closing Date: December 31, 1986. The project supports the Government's comprehensive assistance program for small-scale industries through financial and technical assistance. $29.35 million is to be administered by the Central Bank of Tunisia and made available to small entrepreneurs through participating banks. The remainder of the loan ($0.65 million) would strengthen the appraisal and SSI technical assistance capacity of the Investment Promotion Agency responsible for screening eligible subprojects. No commitments to date. Ln. 1997: Northwest Rural Development Project; US$24.0 million loan of July 15, 1981; Date of Effectiveness: March 23, 1982; Closing Date: September 30, 1987. The project is designed to help finance a five-year time slice of the Government's 15 year development program for the Northwest Region through the establishment of institutions which could implement the program,  - 35 - ANNEX II Page 9 of 11 and the development of extension, research, credit, and livestock services. The project would also start up specific agricultural, soil conservation and forestry activities, together with productive infrastructure works. Ln. 2003: Third Power Project; US$41.5 million loan of July 15, 1981; Date of Effectiveness: April 21, 1982; Closing Date: December 31, 1985. The project will assist Tunisia in implementing the first three years of a five-year program for the development of rural electrification, and in rehabilitating the urban distribution systems by connecting about 990 villages in 15 Governorates to the national network, and improving the supply of electricity in about 60 towns. Ln. 2005. Health and Population Project; US$12.5 million loan of July 15, 1981; Date of Effectiveness: March 23, 1982; Closing Date: December 31, 1986. The project is designed to support Government efforts to extend basic health care to the whole population by 1990, through the provision of better and more cost-effective health, family planning and nutrition services to lower income groups in eight selected Governorates. It would strengthen the Ministry of Public Health's management capacity, improve and expand the basic health care delivery system and health education programs, upgrade the training system, and train health personnel. All project activities are well coordinated and project implementation is progressing satisfactorily and according to schedule. Ln. 2012; Textile Rehabilitation Project; US$18.6 million loan of October 27, 1981; Date of Effectiveness: May 7, 1982; Closing Date: December 31, 1984. Equipment procured under bilateral financing as well as major productive machines financed under Bank loan have recently been commissioned and are running on three shifts. Technical assistance is progressing satisfactorily. Financial performance of the primary beneficiary of the Bank loan (SOGITEX) continues to be satisfactory. Ln. 2052: Grain Distribution and Storage Project; US$42.0 million loan of October 27, 1981; Date of Effectiveness: April 2, 1982; Closing Date: December 31, 1986. The project is designed to strengthen grain storage capacity; reduce congestion, handling costs, demurrage charges and grain losses at the main Tunisian seaports, and the cost of transport and handling of grain; strengthen the technical capacity and financial management of the Office of  - 36 - ANNEX II Page 10 of 11 Cereals (OC); and lay the groundwork for further modernization of the system of collection, storage and transport of domestic grain. The invitation to bid for construction of silos has been delayed about a year and has not yet been issued as a result of OC's difficulties in recruiting consulting engineers. Procurement by SNCFT of rail hopper cars and materials for construction of silo railway sidings is underway. Consultants for technical assistance in management and finance have been recruited by OC. Ln. 2108: Fifth Highway Project; US$ 35.5 million loan of May 14, 1982; Planned Date of Effectiveness: December 13, 1982; Closing Date: December 31, 1987. The project will help the Government continue its efforts to provide farmers with improved roads, support services, and farm credit. Some 1,200 kilometers on about 100 road sections throughout the country will be improved, 55 extension centers will be constructed and equipped, and credit will be provided. Consultant services to assist the Highway Department and the Ministry of Agriculture will also be provided. Measures to create a Project Coordinating committee are being taken. Ln. 2113: Electrical and Mechanical Industries Project; US$ 30.5 million loan of May 14, 1982; Planned Date of Effectiveness: December 13, 1982; Closing Date: December 31, 1987. The Banque de Developpement Economique de Tunisie (BDET) will provide a $28 million credit line for supporting priority electrical and mechanical industries and for general purpose lending to industry in Tunisia. The remainder of this loan will be used by the Tunisian Government to provide technical assistance in setting up a Technical Center for Mechanical Industries, and a National Institute of Standardization and Quality Control for manufacturing industries, and in conducting a study on effective protection. Loan 2134: Sixth Water Supply Project; US$ 30.5 million loan of May 14, 1982; Date of Effectiveness: October 20, 1982; Closing Date: December 31, 1986. The project provides for the expansion and improvement of water supply systems in about 150 rural centers. It also includes the provision of credit facilities to help finance individual house connections and the installation of 80,000 meters for these connections. Thirteen subprojects that would be implemented in 30 rural centers and financed under the loan have already been selected by SONEDE and approved by the Bank. Civil works contracts for a total amount of US$1.24 million have been placed for three of the subprojects, and works on two of the contracts have started. Bidding for civil works for the remaining subprojects is under way.  - 37 - ANNEX II Page 11 of 11 Ln. 2157: Medjerda/Nebhana Irrigation Development Project; US$ 22.0 million loan of June 8, 1982; Planned Date of Effectiveness: January 6, 1983; Closing Date: December 31, 1988. The project will provide funds for a development project in which emphasis will be placed on improving irrigation works and marketing facilities in the regions of Medjerda near Tunis and Nebhana near Sousse. The implementing agencies for the $55.1 million project, the Medjerda Valley Development Agency and the Nebhana Development Agency, expect to increase the production of vegetables, fruit, forage, industrial crops, livestock and milk. Some 7,800 farmers from the two areas will benefit from the improvements to be made under the project. The project will also provide farm access roads, fruit and vegetable processing centers, cold stores and milk collection centers. Loan. 2197: Technical Assistance Pro ject; US$ 4.5 million loan of October 29, 1982; Planned Date of Effectiveness: January 28, 1983; Closing Date: December 31, 1986. The project will provide technical assistance in identifying and preparing investment projects and formulating policies for Tunisia's agriculture, industry and energy sectors. The capabilities of the institutions involved in these sectors will be improved, and assistance in the start-up of a new agricultural promotion agency will be provided.  - 38 - ANNEX III TUNISIA FIFTH EDUCATION PROJECT Supplementary Project Data Sheet Section I: Timetable of Key Events (a) Time taken by the country to prepare the project: 10 months (June 1981 to March 1982) (b) The agencies which prepared Ministry of Agriculture the project: Ministry of Education Ministry of Planning and Finance (c) Project first identified by the Bank. February 1981 (d) Date of Bank Appraisal Mission: March 1982 (e) Negotiations. November 1982 (f) Planned date of loan effectiveness; April 1983 Section II: Special Bank Implementation Actions None Section III: Special Conditions (a) The employment by June 1, 1983, of a Director for the National Agricultural Instructor Training Center, satisfactory to the Bank (para. 46). (b) The appraisal and approval by MOA of the firms and farms prior to their eligibility for receiving agricultural secondary school students for off-campus training (para. 48). (c) The appointment by September 30, 1983, in each agricultural secondary school, of a staff member satisfactory to the Bank, to supervise the on-the-job training programs (para. 48); (d) The designation, by June 30, 1983, of a Coordinator and the establishment of an Inter-Ministerial Committee to review progress in the implementation of the studies on technicians education and training systems (para. 51); and (e) The submission, for review by the Bank, of the list of fellowship candidates with the details of their training programs by December 31, 1984 (para. 52).  IERD 16786 9. oi ii' NOVEMBER 1982 TUNISIA FIFTH EDUCATION PROJECT/-,8tzerte A New Primary Teacher Training Colleges Equipment to Existing Agricultural Secondory Schools I1 -37 Mater 37'- l!i Equipment to Existing Higher Level Agricultural Institutes Fl Equipment to Existing Agricultural Training Center > - ' NlS1I2 A Equipment to Existing National Agric,lItural ,"-~ Instructor Training Center (SidiTaet Bejo bt - nzel Bouzelfr 7Mjez El Bob \A. a Prov,ncia' Capitals .. Bou S[lem