Tunisia - Fourth Agricultural Credit Project

The World 8an'k iOR OPpjuL UsE ONrLY RepottN0 10968 PROJ_CT CT02PLETIV REpoR REPUBLIC OF TUNISIA FOJRI - ACRICUTUL CREDIA (LOAN 2865-CRUD) T pR~OJECT JULtY 28, 1992 MICROFICHE COPY Report No: 10968 Type(PCR) Cov.F FOURTH AGRICULTURAL CREDIT PROJECT RICE, E.B./ X31755 / T90oE q/ OEDD1 Date Ent. : 19920724 E;y: MAA Agriculture pera tOn Dvtlo outrYdDePRartmen t I L~ Mldde Eat an Norh Af icaRgin douent -~~~~fii1d eWtddsduinadmIVb  CURRENCY EQUIVALENTS Currency Unit = Tunisian Dinar (TD) At Appraisal (Nov./Dec. 1986) US$1 = TD 0.87fTD I = US$1.15 Implementation Average (19&8-1991) US$1 = TD 0.88/TD 1 = US$1.14 GLOSSARY OF ABBREVIATIONS ASAL - Pret 6 I'Ajustement du secteur agricole (Agricultural Sector Adjustment Loan) BCT - Banque centrale de Tunisie (Central Bank of Tunisia) BNA - Banque nationale agricole (National Bank of Agriculture) BNDA - Banque nationale de d6veloppement agricole (National Bank for Agricultural Development) BNT - Banque nationale de Tunisie (National Bank of Tunisia) CSA - Cooperative de service agricole (Service Cooperative) EEC/EIB - Communaut6 6conomique europeenne/Banque europdenne d'investissement (European Economic Community/European Investment Bank) FIDA/IFAD - Fonds international de ddveloppement agricole (International Fund for Agricultural Development) FNG - Fonds national de garantie (National Guarantee Fund) FOSDA - Fonds spdcial de d6veloppement agricole (Special Fund for Agricultural Development) FOSEP - Fonds special d'encouragement de la p6che (Special Fund for Fisheries Development) MOA - Ministare de l'agriculture (Ministry of Agriculture) MOF - Ministbre des finances (Ministry of Finance) MOPDR - Minist6re du plan et du d6veloppement r6gional (Ministry of Planning and Regional Development) OMV - Office de mise en valeur (Irrigation Development Agency) ONP - Office national des peches (National Fisheries Agency) SCMA - Soci!td de caution mutuelle agricole (Agricultural Mutual Guarantee Society) WEIGHTS AND MEASURES Metric System FISCAL YEAR OF BORROWER January 1 - December 31  FOR OFFKXAL USE ONLY THE WORLD BANK Wasnghh D.CQ 2o433 U.SA Office of Director-General Operations Evaluation July 28, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on TUNISIA - Fourth Agricultural Credit Proiect (Loan 2865-TUN) Attached, for information, is a copy of a report entitled "Project Completion Report on Tunisia: Fourth Agricultural Credit Project (Loan 2865-TUN)" prepared by the Middle East and North Africa Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment I Tbb document ha * restreited dbsdb*uton ad may be and by rtdpanb on I. the perfenmum of teir | Om dulle&Its contets may not otberw be disoused without World Bak authorUen. |  FOR OMFCL USE ONLY PROJECT COMPLETION REPORT REPUBLIC OF TUNISIt FOURTH AGRICULTURAL CREDIT PROJECT (LOAN 2865-TUN) TABLE OF CONTENTS Paae No. Preface S . . . . . . . . . . . . . . . . . . . . . . . . i Evaluation Summary l PART I PROJECT REVIEW FROM BANK'S PERSPECTIVE . . . . . . . . . 1 1 Project Identity . . . . . . . . . . . . . . . . . . 1 2. Project Background . . . . . . . . . . . . . . . . . 1 3. Project Objectives and Description . . . . . . . . . 2 4. Project Design and Organization . . . . . . . . . . . 3 Design . . &* 3 Preparation, Appraisal and Negotiations . . . . . . 4 5. Project Implementation . . . . . . . . . . . . . . . 5 Loan Effectiveness and Project Start-Up . . . . . . 5 Project Risks . . . . . . . . . . . . . . . . . . . 5 Implementation .................. 5 On-Lending Component . . . . . . . . . . . . . . . 5 Institutional Component . . . . . . . . . . . . . . 6 Project Costs and Disbursements . . . . . . . . . . 7 6. Project Results . . . . . . . . . . . . . . . . . . . 7 Progress on Agricultural Credit Policy and Institutional Reforms . . . . . . . . . . . . ... . 8 Financial Performance o . . . . . . . . . . . . . . 10 Loan Recovery . o . . . . . . . . o . . . . . . . . 11 7. Project Sustainability . . . . . . . . . . . . . . . 11 8. Const.lting Services . . . . . . . . . o o . . . . o . 12 9. Project Documentation and Data o . . . . . . . . . . 12 10. Bank Performance . . o . . . . . . . . . . . . . . . 12 11. Borrower and Guarantor's Performance . o o . . . a . 12 12. Project Relationship . . . . o o . . . a . . . o . . 13 13. Lessons Learned.................. 13 PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE . . . . . . . 15 1. Overview of the Project o 6.. . . . . . . . . . . . . 16 2. Project Development and Implementation . . . . . . . 17 3. World Bank Performance during the Project . . . . . . 25 4* Conclusion . . . . . . . o o . o . . . . . . a 27 This document has a restricted distribution and may be used by recipients only in the perfor'mance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  Paae No. ANNEXES: I. Project Cost . . . . . . . . . . . . . . . . . . . . . . 28 II. Lending by Year . .. .......... ... .... 29 III. Disbursement by Year . . . . . . . . . . . . . . . . . . 30 Disbursement by Category .o. . . * .. . . .. .. .o. 30 IV. BRA Training Budget . . . . . a . . . . . . . . * . . . . 31 V. Agricultural Credit Recovery . . . . . . . . . . . . . 32 VI. Recovery Rates by Year . . . . . . . . . . . . . . . . . 33 PART III STATISTICAL INFORMATION (tables) . . . . . . . . . . . . 34 1. Related Bank Loans and/or Credits . . . . . . . . . . . . 34 2. Project Timetable . . . . . . . . . . . . . . . . . . . . 34 3. Loan Disbursements: Cumulative Estimated and Actual Disbursements . . . . 35 3(a)o Comparison between Appraisal and Actual Disbursements by Category of Disbursements . . . . . . 36 3(b). BRA's Project Related Subloans Commitments . . . . . . 37 BNA's Project Related Subloans Disbursements . . . . . 37 3(c). BNA's Project Related Subloans at Year-end and Cumulative . . . . . . . . . . . a . . . . . . . . . . 38 3(d). Project Lending Program: Medium- and Long-Term Credit . . . . . . . . . . . . . 38 4(a). Project Implementation - Key Performance Indicators: BNA's Loan Recovery 1987-91 for Agricultural Lending and Risk Assumed . . . . . . . . . . . . . . . . . . . 39 4(b). Financial Ratios . . . . . . . . . . . . . . . . .. . . 39 5(a). Project Costs and Financing . . . . . . . . . . . . . . . 40 5(b). Project Financing . . . . . . . . . . . . . . . . . . . . 40 6. Status of Covenants . . . . . . . . . . . . . . .. .. . 41 7(a). Use of Bank Resources: A. Staff Inputs . . . . . . . . 42 7(b). Use of Bank Resources: B. Missions . . . . . . . . . . . 43 8(a). BRA's Financial Position, Summary of Balance Sheet 1987-1991 as of December 31 . . . . . . . . . . . . 44 8(b). BRA's Financial Position, Income Statements, 1987-1991 as of December 31 . . . . . . . . . . . . . . . . . . 45 Map IBRD 149211  PROJECT COMPLETION REPORT REPUBLIC OF TUNISIA FOURTH AGRICULTURAL CREDIT PROJECT (LOAN 2865-TUN) PREFACE This is the Project Completion Report for the Fourth Agricultural Credit Project (Loan 2865-TUN) for which a loan equivalent to US$30 million to the National Bank of Tunisia-/ (BNT, the Borrower) with the guarantee of the Republic of Tunisia, was approved on July 7, 1987. The legal documents were signed on July 22, 1987 and the loan became effective on January 22, 1988. The original closing date was December 31, 1991. The loan was fully disbursed and closed on November 19, 1991, six weeks ahead of schedule. The Project Completion Report was jointly prepared by the Agricultural Operations Division for the Maghreb of the Middle East and North Africa Regional Office (Preface, Evaluation Summary, Parts I and III) and the Borrower (Part II). Preparation of this PCR was started following a mission to Tunisia in February 1992. Parts I and III were prepared on the basis of information available in the Division's and the Bank's central files. The main sources of information were: the appraisal report No. 6622-TUN, dated June 1, 1987; the Loan Agreement; supervision reports; correspondence between the Bank and the borrower; internal Bank memoranda; and consultation with implementation officials and staff during the completion mlssion. This report was also based on the borrower's Project Completion Report dated February 20, 1992 (Part II). In October 1989, BNT (Bauque nationale de Tunslie - the borrower), which Is a major commercal bank, merged with BNDA (Banque nationale de ddveloppement agricole - a development bank with no branch network, which benefitted from the support of the EEC and EIB) and became Banque nationale agricole (BRA). In this text, BNT and BNA. are used interchangeably, referring to BUT before merger in 1989 and BRA after the merger.  - iii - PROJECT COMPLETION REPORT REPUBLIC OF TUNISIA FOURTH AGRICULTURAL CREDIT PROJECT (LOAN 2865-TUN) EVALUATION SUMMARY Obiectives 1. The main objectives of the Fourth Agricultural Credit Project in Tunisia were to promote development of a financially sound rural credit system and to finance credit to the agriculture sector in response to market demand and in support of the Government's medium-term adjustment program (1987-1991) formulated in connection with the Agricultural Sector Adjustment Loan (ASAL - Loan 2754-TUN). The Project aimed to: (a) encourage the Banque nationale de Tunisie (BNT) and the banking sector to increase their roles in mobilizing resources and in financing agricultural activities by addressing sectoral issues such as on-lending interest rates; (b) restructure the complex institutional and credit systems; (c) improve the financial viability of agricultural credit operations and harmonize credit terms and conditions; (d) assist Government and BNT in their efforts to develop private investment in the sector; and (e) promote savings schemes tied to eligibility for credit (3.01). lmglementation Experience 2. During implementation, good progress was made on both BRA's (BNT: see Preface, footnote -1) credit program and the policy and institutional reforms to which the Government and BRA had agreed. The project started off well with the creation of the agricultural credit reform committee immediately after loan effectiveness, and the loan was fully disbursed on a timely basis. The loan was closed on November 19, 1991, six weeks ahead of the original closing date (paras. 5.01 and 5.03). 3. Except for a reduced pace of lending in 1988 and 1989 due to two consecutive droughts, BNA's lending to farmers was on appraisal targets throughout the life of the project, and the number of small-scale farmers reached exceeded appraisal estimates by 76 percent (increased demand for small loans after the drought, and reduced Government funding from other programs). For cooperatives and agro-industries the disbursements remained on target throughout the project's duration, and for fisheries, demand exceeded appraisal estimates (para. 5.04).  - iv - 4. The implementation of the institutional component was difficult due to the political sensitivity attached to agricultural credit interest rates in Tunisia, the complexity of existing credit systems, the merging of BNT/BNDA in October 1989, and the negative impact of drought on loan recoveries. At the' time of the merger, BNA was faced with three important tasks: reorganization of the new bank on a decentralized basisl/ to reach more efficiently a large numbbr of farmers and rural clients, integration and harmonization of the activitie, and accounts of the two banks, and preparation of a new lending program for the future. A major step was taken in July 1990 when an agreement was reached between the Government, BRA, and international donors on the responsibility of the banking sector (and not the Government) for granting credit to farmers and managing risk. This resulted in a gradual shift in the decision-making process for Government-supported agricultural credit for small-scale farmers froim the Ministry of Agriculture (MOA) to BRA, which in turn opened the door to a complete restructuring and reorganization of the merged bank. However, this consolidation work is far from completed. The merger itself is not sufficient to permit the new BNA to fully assume, in an accountable manner (i.e., free from Government intervention), its lead role as the rural bank in a gradually liberalized financial sector (paras. 5.05 and 5.06). 5. Training activities progressed well during project implementation but need to be actively pursued in the future and to be conceptually sharpened, using a long-term global approach and a strategic plan. Improvements in the computerization of BHA activities and its management information system (MIS) started well and made overall good progress. With the current reorganization of BNA, these will need further improvements (para. 5.07). Results 6. The overall results of the Project, in terms of achieving its main policy reforms and investment objectives, :e satisfactory, particularly if compared to the previous three credit operations in Tunisia. Still, some of the reform objectives, for example, greater fungibility of funds, including harmonization of terms and conditions, recovery performance, and BRA reorganization have not been fully achieved during the short implementation period. Physical targets envisaged at appraisal were largely achieved: namely, disbursement for on-lending, the installation of computer facilities at headquarters and in regional offices and branch networks, a computerized MIS with an improved accounting system, and staff training. Regarding policy reforms, the two major achievements are: (a) bringing interest rates charged to farmers closer to market rates by gradually narrowing the gap between the prevailing rates on agricultural loans and market rates; and (b) reducing the budgetary allocations to the Government-supported credit fund (FOSDA)l' beyond project objectives as covenanted in the Loan Agreement. Despite the results achieved on interest rate 1/ In 1987 BNT had 91 branches, and by the end of 1991 BNA baa 126 branches. 21 Special Fund for Agricultural Development, created in 1963 and funded through Government budget allocations.  v - reforms, however, scope remains for further improvements to make agricultural credit in Tunisia a financially viable activity. As expected initially, the fungibility of funds and harmonization of terms and conditions were not fully achieved during the project period due to the Government's reluctance to make a clear-cut decision to transfer to BRA the responsibility for managing all credit programs, whatever their source of funds (paras. 6.01 to 6.06). The recovery performance (average rate of 78 percent) is mixed at BNA. After two consecutive droughts, accumulated arrears remain a problem including for the IBRD credit programs. Recent measures have been taken to improve the situation (paras. 6.08 to 6.10). 7. BRA's overall operating results remain positive, though the bank's profitability and financial performance continue to be adversely affected by losses on agricultural credit activities. These losses are fully covered by BNA's overall profits on other activities. This means that BRA continues to cross-subsidize its farm credit activities but the project had a limited negative impact on cross-subsidization as resources used under Loan 2865-TUN represent only 3 percent of BRA total outstanding portfolio. After a deteriorating trend between 1987-1990, the overall financial results and structure of BNA have shown an improvement since 1991 (para. 6.08). Sustainability 8. The benefits of the project from the investments at BNA's client level (farmers, agro-industries, fishermen) are good except in the rain-fed farming areas badly stricken by the drought. Institutional and financial improvements at the BNA level through increased interest rates, recovery discipline (a good trend), and BHA reorganization on a decentralized basis will better ensure the long-term sustainability of BNA as a profitable institution in a gradually liberalized financial sector. Agricultural credit operations, however, are still not a profitable activity and are financially sustainable only because they are handled by a well diversified, deposit-based commercial bank. Financing small- scale farmers is a high-risk, high-cost activity which needs further productivity improvements and some Government support, for climatic risks in particular, to make it a more sustainable activity in the future. Findings and Lessons Learned 9. The Project has helped promote development of a financially sounder rural credit system which needs to be further incorporated into a gradually liberalized financial sector. The institutional changes initiated under the project are still fragile. In particular, there is scope for (a) consolidating and expanding the agricultural credit and rural savings systems in Tunisia; (b) developing further the institutional capability of BRA to respond to market demand in a competitive environment; and (c) diversifying credit operations into private rural non-farm activities. Consequently, there is a need to deepen the institutional reforms and to strengthen BNA's capacity to assume its enhanced role.  - vi - 10. The main lessons learned from this project can be summarized as followos (a) the importance of addressing the issue of crop insurance/calamity fund schemes to secure the banking system and farmers when serious droughts or other natural disasters occur, as one did during project implementation. It is esaential to include such schemes as priority components in the design of rural finance projects in a country like Tunisia where climatic conditions pose major risksJ (b) the rural bank (RNA) should be made fully responsible for all credit decisions, without Government interference, and should assume 100 percent of the banking risk on all of its agricultural loans to its clientele, including small-scale farmers, whatever the source of funds (funds are fungible). This would improve resource mobilization and recovery discipline and make the bank's operations more viable and sustainable. In Tunisia, such accountability by the rural bank would also help to better integrate the formal rural financial system with competitive banking activities, including harmonization of lending terms and conditions and enhanced financial discipline; and (c) the need for more time to fully implement major policy and institutional reforms such as those underway for rural finance in Tunisia because of the long-term nature of institution-building objectives. Cross-conditionality on credit and interest rate reforms, encompassing this project and two ASALs as well as continuity of dialogue between the Borrower/Guarantor and the Bank on these sensitive issues, has been helpful in achieving major progress. 11. These lessons have already been used to make further progress on interest rate reforms and financial liberalization under the Economic and Financial Reforms Support Loan approved by the Bank at the end of 1991. The lessons will also be used to consolidate current progress on financial intermediation and to deepen the institutional reforms of BNA, the lead bank for agriculture in Tunisia. Reforms include BRA's on-going reorganization and decentralization, especially in its agricultural credit department, staff training programs, fungible credit schemes for small-scale farmers under simplified terms and conditions and linked to savings mobilization, clientele diversification actions (including women), and the development of a viable crop insurance/calamity fund scheme. Plans for further progress along these lines are incorporated in the proposed National Rural Finance Project under preparation.  PROJECT COMPLETION REPORT REPUBLIC OF TUNISIA FOURTH AGRICULTURAL CREDIT PROJECT (LOAN 2865-TUN) PART Is PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Proiect Identity Name : Fourth Agricultural Credit Project Loan Number : 2865-TIJN RVP Unit : MENA Region Country : Republic of Tunisia Sector : Agriculture Sub-sector : Agricultural Credit Borrower : National Bank of Tunisia'/ Guarantor s Republic of Tunisia 2. Project Background 2.01 During the past decade, the major objectives of the Tunisian Government in the agricultural sector, as expressed in the Seventh Development Plan (1987- 91), were to treat agriculture as a priority sector and to emphasize greater .&nvolvement of private sector financing in agriculture. To achieve these objectives, the Government, with the Bank's assistance, developed an Agricultural Sector Adjustment Program (1987-91) to support the implementation of the Seventh Plan. The overall objective of the sector adjustment program was to maintain the growth rate in agriculture in order to reduce the sector's trade deficit while staying within overall macroeconomic constraints on public spending. To achieve this objective, the program provided for short- and medium-term actions tot (a) improve the prices and incentives framework; (b) re-orient the public investment program in agriculture toward low-cost, high-priority projects; (c) strengthen agricultural support services and transfer some of them to the private sector; (d) improve the management of land, forests, and fisheries; and (e) build up institutional capacity for sector-performance monitoring and policy analysis. The First Agricultural Sector Adjustment Loan (ASAL-I - Loan "754-TUN) was made to support this medium-term program. The key medium-term agricultural-credit objective for the Government was to encourage the banking sector to increase its role in mobilizing resources, including savings/deposits; in providing credit to farmers, particularly small- and medium-scale farmers; and in ensuring the financial viability of credit operations. It was within this context that the Fourth Agricultural Credit Project was formulated. The Project was designed to address these objectives by providing credit and supporting the 1987-91 agricultural credit reform programs in harmony with ASAL-I (and, eventually, ASAL-II). AI BNT before merger with BNDA in 1989 and BNA after the merger.  -2- 2.02 Since 1967, the Bank has supported lending in Tunisia for agricu1ltural development through four loans and a credit (prior to Loan 2865-TUN) to the Banque nationale de Tunisie (BNT). The Fourth Agricultural Credit Project was the Bank's fourth lending operation in Tunisia to assist the country's agricultural development by providing credit to farmers, cooperatives, agro- industries, and fishermen. The first two projects aimed at addressing specific credit needs of farmers, with no explicit pursuit of either sectoral or broad- based institutional objectives. The Third Project (Loan 1885-TUN) aimed at increasing agricultural production and incomes of small- and medium-scale farmers as well as improving the system of agricultural credit distribution by strengthening the agricultural credit operations of the borrower, BNT. Although the Third Agricultural Credit project focused on improving credit operations and loan recovery performance, much remained to be done to strengthen BNT's financial and institutional viability. The previous projects suffered from a number of institutional and policy constraints that made on-lending Bank funds by BNT inefficient and cumbersome. In particular, competition from other credit programs, inadequate interest spreads, arrears, and varying terms and conditions of various credit programs were still a problem. In the first three projects, disbursements were slower than expected due to competition from more attractive credit programs. For small- and medium- scale farmers, the principal beneficiaries of the Bank-financed subloans, the Government also had a program of credit - FOSDA/FOSEPI' - which had interest rates more attractive than those for Bank subloans. Similarly, there was a proliferation of different credit programs with varying terms and conditions as well as different levels of risk to be borne by BNT. This, in turn, affected the recovery performance of these loans.3' The Fourth Project specifically addressed these problems. 3. Prolect Objectives and Description 3.01 The main objectives of the Fourth Agricultural Credit Project were to promote development of a financially sound rural credit system and to finance credit to agriculture in support of the Government's Medium-Term Adjustment Program (1987-91) formulated in connection with the ASAL-I. This was to be achieved by improving agricultural credit policy, effecting institutionst adjustments, and increasing the finauLcial viability of agricultural credit operations. Through provision of investment credit to private farmers, the project was to contribute to increased agricultural production and rural employment. Through major policy and institutional reforms, the project was to support the Government's medium-term adjustment effort to establish a policy and institutional framework within which to promote development of a financially sound rural credit system. In particular, the project aimed to: 21 Special Fund for Agricultural Development and Special Fund for Fisheries Development. These were Government funds administered by BNT, providing loans at subsidized rates and grants. 31 For esample, on loans from its own resources for which BNT bore 100 percent of the risk, repayment was 90X between 1985-87, uhile FOSDA loans, on which BNT was not responsible for granting credit and did not bear any risk, had a repayment rate of only 48 percent.  - 3 - (a) address sectoral issues related to on-lending interest rates designed to support BNT and the banking sector in increasing their role in mobilizing resources and in financing agriculture; (b) restructure the complex institutional system by which agricultural credit is made available and improve small- and medium-scale farmers' access to credit; (c) introduce new approaches to harmonize credit terms and conditions and to improve the financial viability of agricultural credit operations; (d) give more emphasis to private investment in the agricultural sector to meet the Government's objective of raising investment in the sector; and (e) promote savings schemes tied to eligibility for credit. 3.02 Proiect Description. To achieve the above objectives, the Project supported a three-year time slice of BNT's activities in the areas of agricultur- al credit operations and institutional development. The Project, as agreed upon at negotiations, comprised the following credit and institutional components: (a) BNT Credit Proeram. The credit component was to finance (i) on-farm investments by small-, medium- and large-scale private farmers with special focus on increasing the resources lent to the first two groups; (ii) investments by production and service cooperatives; (iii) agricultural and agro-industry investments carried out by small- and medium-scale enterprises; and (iv) investments in equipment and major repairs by credit-worthy fishermen who already had fishing boats and good repayment records. (b) Institutional Development Component. This included: (i) Management Information System (MIS) software, equipment and training needed to modernize and strengthen, on a decentralized basis, BNT's organizational structure, planning process, management control, accounting systems, and loan monitoring system; and (ii) the :trengthening of agricultural credit policy coordination among the Ministries of Planning and of Finance; the Ministry of Agriculture/ Agricultural Production; the Central Bank (BCT); and, in particular, BNT and BNDA. About twelve man-months of consultancy services were provided to help set up the computerized systems and assist BNT's qualified trainers to implement the training programs. 4. Proiect Design and Organization 4.01 Design. The Fourth Agricultural Credit Project was developed, to a large extent, in light of the implementation problems experienced in the then- ongoing Third Agricultural Credit Project (Loan 1885-TUN) and the previous credit lines (para. 2.02). The Project was prepared at a critical time (the Government's medium-term adjustment program for the agricultural sector was being designed, and the Third Agricultural Credit Project was coming to completion) and was  -4- expected to play an important role in furthering sectoral policy objectives. The Project was designed to be fully consistent with the Government's medium-term program, already agreed upon by the Bank and the Government under the ASAL-I. The Bank's involvement was seen as catalytic in achieving project objectives more rapidly. As a result, one important risk identified by the Bank - the Government's possible lack of commitment to going ahead with the proposed reforms - was greatly reduced. Both the Project concept and the design were thus appropriate and .imely and were acceptable to all parties involved. 4.02 Preparation. A22raisal and Negotiations. The Project was identified jointly by BNT and the Bank in 1985. It was prepared by BNT and the Government from October 1985 to July 1986 in consultation with other commercial banks and with the assistance of consultants for certain technical aspects. The Bank assisted in the preparation effort through its supervision missions of the Third Agricultural Credit Project and appraisal of the ASAL-I. The main issues that surfaced during preparation and that were discussed during appraisal were: (a) insufficient intermediation spreads on agricultural credit operations that discouraged banks from financing agricultural activities and prevented many farmers from gaining access to credit; (b) the negative effect of subsidized credit programs (FOSDA and other special funds) on resource mobilization, sub- loan recoveries, financial viability of agricultural credit operations, and the Government budget; and (c) the proliferation of agricultural credit programs, each applying different conditions, using different appraisal criteria, and requiring costly and complex lending procedures. 4.03 The negotiation process did not pose any difficulty because sensitive policy reform issues were approached realistically. Four main conditions of Board presentation - namely, revision of interest rates charged to farmers, reduction in Government budgetary allocations to the credit part of FOSDA subsidized credit programs, fungibility of funds, and the Government's policy letter on these issues - were discussed and negotiated, and agreement was reached on all of these conditions. The Government confirmed in writing its agreement to the long-term objective of fully covering the financial costs and reasonable operating and risk costs of agricultural lending by 1991 and agreed to increase agricultural interest rates by not less than 0.5 percent for medium-term and 0.25 percent for short-term rates by August 30, 1987, which the Bank found acceptable. As a safeguard, this was stipulated as a condition of loan effectiveness. The Government was also to revise agricultural interest rates between 1988 and 1991 to bring them in line with market rates by 1991. 4.04 The Government also agreed to the Bank's proposal to reduce its budgetary allocations to FOSDA credit by 15 percent in 1989 and 1990 and to achieve fungibility of funds by the end of 1989. An important condition of the Board presentation was to incorporate proposals on all project-related issues in a Government policy letter on agricultural credit which would address project proposals on interest rates, spreads, FOSDA, recoveries, fungibility of funds, risks, guarantees, and bad debt provision. This condition was met when the Government sent to the Bank in Nay 1987 a satisfactory policy letter on agricultural credit incorporating the specific proposals on the policy reforms to be executed by BNT under the Project and confirming that terms, conditions,  and methods of credit delivery would be fully harmonized by December 31, 1989, with all future ENT agricultural credit programs merged into a single fund managed by BNT. 5. Project Implementation 5.01 Loan Effectiveness and Proiect Start-Up. Although Loan 2865-TUN was approved on July 7, 1987 and signed on July 22, 1987, it did not become effective until January 22, 1988. Nonetheless, implementation of the project started immediately after loan effectiveness. The original date of effectiveness was October 22, 1987. However, the Government requested a three-month extension to allow sufficient time for the Parliament to ratify the legal documents and to prepare and transmit the legal opinion. The only major condition of effectiveness, namely, that agricultural interest rates be raised to 7 percent on short-term loans and 7.5 percent on medium-term loans, was met on August 31, 1987. The Project was fully disbursed and closed on November 19, 1991, six weeks ahead of the original closing date. For the first time, an agricultural credit project in Tunisia was closed within the stipulated time. The previous three credit projects had had problems and delays in implementation and had closed from almost two-and-a-half to three years after the original closing date, although none of them had included a policy reform package. 5.02 Prolect Risks. Of all the potential risks, such as weather and lack of commitment, that were identified by the appraisal mission, only the severe droughts during 1988 and 1989 proved to be a significant factor impacting on the Project. 5.03 ImRlementation. The Project started off well with the creation of the Agricultural Credit Reforms Committee, which was in charge of reviewing, among other things, the harmonization of terms and conditions of agricultural credit and progress on eliminating the subsidy system. The implementation of the on- lending component, however, slowed down in 1988 and 1989 due to the droughts. The two consecutive droughts reduced demand for agricultural investments and services; affected agricultural and livestock production throughout the country; and, as a result, lowered capacity utilization and farmers' incomeq. These drought effects had serious repercussions on loan collection, necessitating Government action to substantially reschedule farmers' debt payments. The implementation' of the institutional component was difficult due to the political sensitivity attached to agricultural interest rates in Tunisia, the complexity of the existing credit system, and the merger of BNT/BNDA (not covenanted in the Loan Agreement, though suggested in the Staff Appraisal Report) in October 1989. The disbursements were on schedule as of March 1988, went down to 68 percent of appraisal estimates in June 1989, then improved to 74 percent of estimates in December 1989, and were on target at 100 percent at the time of loan closing in November 1991 (Part III, Table 3). 5.04 On-Lending Component. The BNT credit component proceeded well overall and was fully disbursed on a timely basis. Most sub-lending for the on-farm investments proceeded at a reasonable rate and was on appraisal targets, despite some slowdown during 1988-89 due to the two consecutive droughts. Because of  these droughts, the borrower was more active in the agro-industry and fishery sectors. The fisheries sub-component did quite well, exceeding estimates by 82 percent, due to: (a) a boom in fishing boat construction in Sfax; (b) the privatization of "Office national des p8ches" (ONP); and (c) the need for increasing major repairs to be done on the old fishing fleet. Table 3a, Part III shows amount of loans disbursed as compared to those estimated at appraisal in each category. The main activities financed were agricultural and irrigation equipment for small-, medium-, and large-scale farmers and cooperatives; olive oil-refineries; refrigeration for agro-industries; and fishing equipment, trawlers, and repairs for fishermen. Under the fishery sub-component, the Bank agreed to finance trawlers not envisaged at appraisal to help privatization of the ONP. The project reached, through BNA, 7,290 beneficiaries, including 6,010 small- and medium-scale farmers. By the time the loan was closed in November 1991, the follo'ding numbers of beneficiaries had been reached, as compared to those estimated at appraisal: Table 1: Number of Beneficiaries Actual Appraisal Actual Estimates as a Z of estimate Small & medium-size farms 6010 3400 176 Large farms 843 615 137 Production & service Cooperatives 209 160 130 Agro-industries 36 25 144 Fisheries 192 640 30 TOTAL 7290 4840 150 5.05 Institutional Component. As mentioned in para. 5.03, the implementation of the institutional component went well in spite of the political sensitivity attached to agricultural credit interest rates in Tunisia, the complexity of existing credit systems, and the negative impact of two droughts on credit demand and loan recoveries. Also, BNT and BNDA merged in October 1989, during the project implementation. This led to a change of top management twice in a period of six months. One of the difficulties associated with the merger was the integration of BNDA activities into the new bank since BNDA had no branch network and suffered from non-performing loans. 5.06 The MIS sub-component of the Project started on time, and BNA established its computer managing committee in September 1987, as stipulated in the Loan Agreement. The purchase of micro-computers to fully equip BNT branches was approved in May 1988. The procurement of mainframe computer equipment for BNT headquarters was delayed by the merger of BNT and BNDA and by the late transfer of the merged bank to the new headquarters, built by BNT (not financed under the Project), which finally took place in April 1990. A computerized system to link the branches to the headquarters' mainframe was installed and became partially operational in 1991. BNA improved its accessibility to its clientele by increasing its network from 91 branches in 1987 to 126 by the end  of 1991 and its staff from 2137 to 2522 during the same period. BNA has also started to decentralize its operations by creating 13 "Directions r6gionales" to which authority has been delegated for loan approval up to TD 120,000 (equivalent to US$123,600). This decentralization process will speed up BNA's credit operations at branch network level. Improvements in the computerization of BNT activities and MIS made overall good progress throughout the project'. life, but with the current reorganization of BNA, further improvements are needed. 5.07 Training programs were prepared in 1988 and revised every year. The training activities made good progress during project implementation but need to be actively pursued and conceptually sharpened using a long-term global approach and a strategic plan. The new areas for priority training include strategic planning, branch network management, clientele development, marketing, and financial management and control. 5.08 Project Costs and Disbursements. Total project costs were estimated at US$59.0 million equivalent, of which IBRD was to contribute US$30.0 million equivalent, or approximately 51 percent. The equivalent to US$12.0 million, or 20 percent, was to come from the sub-borrowers; and the equivalent to US$12.7 million, or 22 percent, was to come from BNT's own resources, augmented by Government special resources (US$4.3 million equivalent, or 7 percent). Actual costs incurred were US$59.0 million equivalent, 100 percent of estimates. Disbursements against IBRD loan proceeds amounted to US$30.0 million equivalent, 100 percent of the loan amount. The actual costs included US$2.2 million equivalent financed by an EEC grant after the BNT/BNDA merger, which had not been envisaged at appraisal. The estimated and actual costs of the Project are given in Table 5a in Part III. The actual costs in each category were mostly the same as had been estimated at the time of appraisal. The Project did not suffer from any major cost overrun either in local currency or foreign exchange. 6. Prolect Results 6.01 The overall results of the project, in terms of achieving its main policy reforms and investment objectives, are satisfactory, particularly if compared to the previous three credit operations in Tunisia. Physical targets envisaged at appraisal were largely achieved - namely, disbursement for on- lending, the installation of computer facilities at headquarters and regional branches, and training of BNA staff. Similarly, a computerized management information system (MIS) with an improved accounting system was designed, hardware was purchased, and the system was made operational. BNA branches were linked to the regions and the headquarters. By category of beneficiaries, performance has been very good. The project anticipated an equivalent of US$8.0 million of the total credits to be channeled to 3400 small- and medium-scale farmers. The actual allocation resulted in US$8.1 million equivalent (i.e., 101 percent of estimates) being channeled to this group. The number of small-scale farmers reached, however, exceeded appraisal estimates by 76 percent, a substantial achievement in improving these farmers' access to credit. BNA's success with small-scale farmers was partly due to farmers' increased needs for small loans after two difficult years of drought and low income and partly due to the phasing out of Government resources to finance these needs.  6.02 Progress on Agricultural Credit Policy and Institutional Reforms. The Fourth Agricultural Credit Project incorporated important elements of policy and institutional conditionality. On policy reforms, this included interest rate adjustment to market rates, phasing out Government subsidized and directed credit (FOSDA), and achieving fungibility of funds to finance agricultural credit needs for a better response to market demand. On the institutional side, the project incorporated the establishment of an efficient organization and MIS for BNT; the full-fledged adoption of effective computerization at the branch network, regional office, and headquarters levels; reform of the credit decision process by phasing out Government interference in credit decisions for loans to small- scale farmers and by transferring the risk to BNT; and training of staff. In addition, as a result of the merger of BNT/BNDA, BRA had to tackle the difficult task of complete reorganization of the merged bank while at the same time moving to its new headquarters in 1990. 6.03 The progress made on interest rates is commendable, considering the high political sensitivity attached to agricultural credit interest rates in Tunisia. According to the Loan and Guarantee Agreements, the Guarantor and the Borrower had to adjust interest rates so that, in 1991, the Borrower would charge agricultural credit interest rates equal to market rates. The interest rates were increased by 0.5 percent for medium-term and 0.25 percent for short-term rates in August 1987, as a condition of loan effectiveness. These rates were further adjusted by 1 percent for medium- (8.5 percent) and short-term (8 percent) rates in August 1990. No upward adjustment of interest rates was done in 1988 and 1989 due to the two consecutive droughts as well as to the downward trend of the average money market rate from 10.5 percent at the end of 1987 to 8.7 percent by the end of 1988. The Bank agreed to this decision of the Government, keeping in view the bad weather and overall interest rate situation. The Government increased interest rates further by 1 percent for small-, medium- and large-scale farmers in December 1991. The following Table 2 shows the progress made on preferential interest rates since 1987: Table 2: Interest Rates (in percentages) Before August Negotiations 1987 1988 1989 1990 1991 Market Rates 10.5 10.5 8.7 9.5 11.4 11.7 PreferentialAgricultural Credit Rates'! Short-term 6.75 7 7 7 8 9 Medium-term 7 7.5 7.5 7.5 8 9 Long-term 7 8 8 8 8.5 9.5 Differential 3.5 2.5 0.7 1.5 2.9 2.2 Between Market to to to to to to Rates and Average 4.25 3.5 1.7 2.5 3.4 2.7 Preferential Rates /1 Essentially for credit to small- and medium-scale farmers, although many commercial farmers manage to have access to these low rates under the Government subsidized schemes, which are presently being phased out. These rates do not apply to agro-industries, for which market rate is applicable and other banks compete with BNR.  -9 6.04 Having reached a minimum of 9.0 percent, preferential interest rates in Tunisia are positive in real terms. BHA average cost of resources for agricultural credit (less than 62) remained stable during the project period, which means that return on resources used increased. However, the margin is not yet sufficient to cover operating costs and risks associated with the agricultural lending. There still is room for improvement and a need to reduce the gap between the market interest rates and rates charged for agricultural credit. Interest rate reforms and financial liberalization issues are now addressed under the Economic and Financial Reforms Support Loan (3424-TUN) approved by the Bank at the end of 1991. Action agreed under this Support Loan include minimizing administrative constraints on interest rates, and an additional two point increase on the rates of preferential credits. 6.05 Major progress was also made in phasing out Government subsidized FOSDA credit allocations, which were reduced by 15 percent in 1988 and another 15 percent in 1989 as agreed under the project in a consistent manner with ASAL-I and ASAL-II policy frameworks. Since 1990, the budget allocations to the credit part of FOSDA have been eliminated. The achievement on this has been beyond project objectives, though with fragile results. The financing of agricultural lending operations will depend on BHA's ability to mobilize resources. 6.06 Some of the long-term reform objectives, such as the fungibility of funds, harmonization of terms and conditions, recovery performance, and BNA's reorganization, are far from being fully achieved. Full realization of these reforms will require more time than the short project implementation period. In particular, the Goveranent needs to make a decision on merging all Government- supported agricultural credit programs into a single fund at BNA. There were about 45 special credit programs with different appraisal criteria and lending procedures at the start of project. These multiple funding sources, each with its own particular conditions, make the management of agricultural credit difficult and have created confusion among borrowers. Many of these special programs are currently being phased out or gradually transferred to BHA, but some are still managed by the Government, essentially by the Ministry of Agriculture (MOA), and are administered by BNA for disbursement and recovery purposes only. Consolidation of all these special programs into a single agricultural fund remains an important prerequisite for future development of the agricultural credit system. This will allow BNA to properly allocate credit funds in response to the demand for credit and in line with its institutional objectives and its credit guidelines and harmonized terms and conditions. The July 1990 agreement rea^hed between the Government, BRA, and international donors has reinstated the need to harmonize the terms and conditions for agricultural credit under the full responsibility (without Government interference) of BNA and other banks. BHA should assume 100 percent of the banking risk on all of its agricultural loans to its clientele, including small-scale farmers, whatever the source of funds (funds are fungible). This would improve resource mobilization and recovery discipline and make the bank's operations more viable and sustainable. In Tunisia, such full risk assumption by BRA would also help to better integrate the formal rural financial system with competitive banking activities, including harmonization of lending terms and conditions.  - 10 - 6.07 Similarly, with regard to BNA's reorganization, progress has been slow. At the time of the merger, BNA was faced with three important tasks: (i) reorganization of the new bank on a decentralized basis to reach more efficiently a large number of farmers and rural clients; (ii) integration and harmonization of the activities and accounts of the two banks; and (iii) preparation of a new lending program for the future. With the assistance of management consultants, a reorganization plan of all BNA departments was prepared and submitted to the Bank. Following the merger, and after the July 1990 agreement, the role of BNA was considerably enhanced. These developments resulted in a gradual shift in the decision-making process for Government-supported agricultural credit for small- scale farmers from the MOA to BNA. This consolidation work is far from being completed, however, and the BNA reorganization plan has not become operational yet. Completion of this consolidation and reorganization will be one of the main institutional objectives of the follow-up Rural Finance project. 6.08 Financial Performance. The financial results and structure of BNA, after a deteriorating trend between 1987-1990, have slightly improved since 1991. BNA's overall operating results remain positive, though the bank's profitability and financial performance continue to be adversely affected by losses on agricultural credit activities. The profits earned on BNA's commercial transactions fully cover these losses on its agricultural operations. This means that BNA, despite increases on interest rates charged to farmers, has not yet been able to break even on farm credit activities and continues to cross- subsidize them.4/ BNA's financial performance is also affected by: (a) the consequences of the BNT/BNDA merger - non-performing loans of BNDA; (b) the negative impact of two consecutive droughts on recoveries; (c) increased competition in the banking sector for access to market resources and savings resulting in an increase of the average cost of funds; and (d) overall portfolio quality. To reverse this trend, measures have been taken in addition to a new increase in preferential interest rates at the end of 1991. These measures are: (a) BNA's decision, in January 1992, to launch a program to improve recoveries by creating decentralized recovery teams with adequate incentives; (b) the strengthening of BNA's equity base through a new capital increase, from TD 33 million to TD 55 million at the end of 1991, which became effective March 1, 1992, a move to improve BNA financial structure as measured by the ratio of total equity to risk-weighted assets from 5.5 percent to about 6 percent, but still not a satisfactory level accordiig to the standards (8 percent) of the Basel Committee of Banking Supervision5/; (c) an improved policy for provisioning since 1991; and (d) a systematic policy for maximizing profits through increased fees charged to clients, in addition to interest rates, to cover operating costs. 41 Resources used under Loan 2865-TUN represent only 3 percent of BNA total outstanding portfolio (short- and medium-term) at the end of 1991. Corresponding credit operations have consequently a limited negative impact on the overall profitability of BNA. The project, however, although small compared to BNA overall activities, had a strong positive impact on interest rate reforms. I/ In 1987, after the doubling of its capital in 1986, BNT had a solid 9.8X Cooke ratio. After two years of drought and accumulated arrears, and a merger, BNA needs to improve its equity to risk assets ratio.  - 11 - 6.09 Loan Recovery. When droughts had a negative impact on recoveries, the Government decided to take substantial measures urging BHA to reschedule farmers' debt. This, together with previous rescheduling, almost doubled BNT's outstanding portfolio to agriculture. Though recovery performance was closely monitored during 1988-89, the overall situation did not improve except artificially through debt rescheduling. BNT had to mobilize new resources in the financial markets to cushion the impact of the drought on its liquidity since the existing Calamity Fund in Tunisia is totally inoperational. In addition, the National Guarantee Fund, established in 1981 to cover outstanding principal in the loan portfolio of banks lending to small-scale agriculture, is inadequately funded and in any case does not cover banks for default resulting from natural calamities. The Bank prepared a p-eliminary report issued in March 1991 on how to set up a viable calamity fund as part of a major study on Small Farmers' Potential and Prospects: A Technical Studs (Report No. 9323-TUN). During its various supervision missions, the Bank also recommended reorganization of the National Guarantee Fund by merging it with the existing Calamity Fund with a view to developing a sound insurance scheme to cover climatic risk. According to the proposed scheme, the premium payments would be shared by the sub-borrowers, the banks, and the Government. This scheme is not yet established. 6.10 The recovery performance is linked directly to the risk borne by BRA as shown in Table 4(a) in Part III of this report. The recovery performance of the loans made by BRA under its sole responsibility was 92 percent during the project period, whereas the overall recovery rate for all agricultural lines combined was 78 percent."' The accumulated arrears, which were TD 20 million in 1986, reached TD 135 million by June 1991. The Bank has consistently asked BNA and the Government to improve the recovery rate. The recovery analysis clearly demonstrates that when BRA is given sole responsibility for credit decisions (approvals and recoveries) without Government interference, and when BNA assumes 100 percent of the banking risk, recovery performance is good. One of the conclusions of the Project, thus, is that unless BRA is made responsible for all credit decisions and assumes full responsibility for credit distribution and risk, this chronic problem of recovery will not be solved. 7. Prolect Sustainabilitv 7.01 The benefits of the project from the investments at the BNA client level (farmers, agro-industries, fishermen) are evident except in the rain-fed farming areas badly stricken by the drought. Institutional and financial improvements at the BRA level through increased interest rates, recovery discipline (a good trend), and BRA reorganization on a decentralized basis will better ensure the long-term sustainability of BRA as a profitable institution in a gradually liberalizing financial sector. Agricultural credit operations, 6/ Recovery on IBRD credit programs (past loans and Loan 2865-TUN) is in the range of 66 to 74Z over the life of this project with no clearly improving trend yet. This issue will be addressed under the follow-up project. To enable BNA to take 1OOZ of the banking risk on all its farm clients, Tunisia needs to develop a sound insurance scheme to cover climatic risk. This is particularly important when BNA is financing small-scale rain-fed farming as this was the case under all IBRD loans to BNT/BNA. Recovery on government subsidized credit programs is 50S, which is unsatisfactory.  - 12 - however, are still not a profitable activity and are financially sustainable only because they are handled by a well diversified, deposit-based commercial bank. Financing small-scale farmers is a high-risk and high-cost activity on account of the collateral issue, a poor land tenure system, drought, etc. Further productivity improvements and some government support for climatic risko, in particular, are required if small-scale farmer financing is to become a more sustainable activity in the future. 8. Consulting Services 8.01 Consultant services were hired for computerization activities at the beginning of the Project period. However, the remaining funds allocated for these services were not used since grant money of US$200,000 was received from EEC in 1990/91 to hire consultants to carry out a study on the reorganization of the BNA. The performance of the consultants was satisfactory. The BNA, howaver, has not yet adopted the consultants' recommendations on reorganization (para. 6.07). 9. Proiect Documentation and Data 9.01 The Staff Appraisal Report, Loan Agreement and Guarantee Agreement, and the Government Policy letter were important reference documents which proved useful both to the borrower and to the Bank supervision missions, and all of these documents were helpful in the writing of this report. The quality of the project data submitted by the borrower was good overall but deteriorated after the BNT/BNDA merger which resulted in some good BNT staff in charge of project monitoring and evaluation/reporting being redeployed to other functions. BRA regularly sent quarterly and annual reports to the Bank which included data on numbers and types of beneficiaries, amount of investment, and lending trends. BNA also submitted audit reports to the Bank, maintaining a good track record with regard to timeliness, quality of reports, and minimal audit qualifications. 10. Bank Performance 10.01 The Bank closely monitored the preparation phase of the project, and the appraisal mission took place in November 1986. The Bank's supervision effort was adequate, and good staff continuity persisted between missions, helping to maintain a constructive dialogue with the Government and BHA and to resolve problems. Timely assistance was provided to the Government in the formulation of new credit policies at the time of merger of BNT/BNDA. The Bank acted flexibly in 1988-89 in accepting the Government's decision to postpone increasing interest rates, keeping in view the bad weather and the fact that market rates went down during this period. 11. Borrower and Guarantor Performance 11.1 The overall performance of the borrower and guarantor was good. The project was implemented smoothly and with commitment to project objectives. Important institutional changes occurred during project implementation, such as the merger of BNT and BNDA into BRA. Although overall a positive step, this merger led to two consecutive changes in top management and staff re-deployment  - 13 - that delayed the implementation of some on-going institutional reforms (HIS, headquarters computerization, fungibility of funds, monitoring and evaluation). This delay could have been avoided had the merger been prepared in greater technical detail by the local authorities. The merger, which was decided at the highest Government level, showed clearly that BNDA was not financially viable for the long term. BNA now has the potential to improve its management leadership and needs to adequately train staff to perform its new functions. Adequate incentives still need to be provided to the staff for loan collection and savings mobilization. The Agricultural Credit Department of BRA needs to be reorganized and strengthened at the headquarters and branch network levels. 11.02 The compliance with covenants was mostly good (Part III, Table 6). On interest rates, both the Guarantor (decision making) and the Borrower (implementation) made substantial progress in complying with legal covenants. The borrower also complied with audit covenants and submitted an annual analysis of its credit operations, as expected. Covenants on MIS, establishing a computer managing committee, and preparing an annual training program were also fulfilled. BHA followed Bank's procurement guidelines as stipulated in the Loan Agreement. The Bank guidelines were followed for the computer equipment for the branch network and headquarters except that, at the last minute, the Bank was informed that the headquarters equipment would be procured and financed under EEC grant money made available to BRA after the merger, a decision the Bank accepted. Thus far, however, the Government has not been fully successful in achieving all the reforms incorporated in the Policy Letter (para. 6.06). The Government achieved, well beyond project objectives, the reduction of budget allocations to FOSDA credit, but it did not achieve fully the objective of increased fungibility of funds, starting with the harmonization of credit terms and conditions. 12. Proiect Relationship 12.01 The relationship between the Bank and the Borrower (and the Guarantor) was excellent and remained cordial throughout the life of the Project. The continuity of dialogue from appraisal to completion (including during the supervision process) between the Bank and the Tunisians has been instrumental in building trust and in achieving major progress. 13. Lessons Learned 13.01 The key lessons of the project, for both the Bank and the Borrower, can be summarized as follows. (a) It is important to address the issue of crop insurance/calamity fund schemes to secure the banking system and farmers when serious droughts or other natural disasters occur, as happened during project implementation. It is therefore essential to include such schemes as priority components in the design of rural finance projects in countries like Tunisia where climatic conditions pose major risks. (b) Tunisia needs a rural bank (BRA) to be made fully responsible for all credit decisions without Government interference and to assume 100 percent of the banking risk on all of its agricultural loans to its  - 14 - clientele, including small-scale farmers, whatever the source of funds (funds are fungible). This would improve resource mobilization and recovery discipline and make the bank's operations more viable and sustainable. A fully responsible rural bank would also help to better integrate the formal rural financial system with competitive banking activities, including harmonization of lending terms and conditions and enhanced financial discipline. (c) There is a need for more time to fully implement such major policy and institutional reforms as those underway for rural finance in Tunisia because of the long-term nature of institution building objectives. Cross-conditionality on credit- and interest-rate reforms between'this project and two ASALs as well as continuity of dialogue between the borrower and the Bank on these sensitive issues have been helpful in achieving major progreas. 13.02 These lessons have already been used to make further progress on interest-rate reforms and financial liberalization under the Economic and Financial Reforms Support Loan approved by the Bank at the end of 1991. The lessons will also be used to consolidate current progress on financial intermediation and to deepen the institutional reforms of BNA, the lead bank for agriculture in Tunisia. These reforms include BNA's on-going reorganization and decentralization, especially in its agricultural credit department, staff training programs, fungible credit schemes for small-scale farmers under simplified terms and conditions and linked to savings mobilization, clientele diversification actions (including women), and crop insurance/calamity fund schemes. Progress on financial intermediation and institutional reforms are objectives of the proposed National Rural Finance project under preparation.  - 15 - PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE (REPORT ROM sNA OF MARCH 2, 1992) BANQUE NATIONALE AGRICOLE Directorate General Tunis, March 2, 1992 Hr. Odin Knudsen Chief, Agriculture Operations Division Middle East & North Africa Regional Office The World Bank Washington, D.C. Reference: Loan No. 2865-TUN Subject: Proiect Completion Report Dear Sir: Following the closing of the above-referenced loan, we have the pleasure of sending you herewith the completion report. We would also take this opportunity to inform you that we gave two copies of the report to Mr. Dussert during his completion mission at BNA from February 17-20, 1992. Very truly yours, /a/ Mokhtar Atallah Deputy Director General  - 16 - 1. Overview of the Prolect A. T'troduction Following the completion of the Third Agricultural Credit Project in 1986, BNA and the Government of Tunisia requested the World Bank to assist in the financing of a Fourth Agricultural Credit Project under a medium-term adjustment program for the agriculture sector, in accordance with the objectives of the Seventh Plan covering the period of the project, i.e. from 1987 to 1991. That program aims essentially at according priority to private investment and encou:aging the banking sector to participate in financing of agricultural activities. B. The Project (a) PreDaration and ar2raisal The project was identified in 1985 jointly by BRA and the Bank. It was prepared in 1986 by BNA and the Government, with the assistance of consultants and the support of Bank supervision missions for the Third Agricultural Credit Project (Loan 1885-TUN). The project was appraised in November 1986 by the consultants and a Bank supervision mission. The Loan Agreement between BNA and the Bank was signed on July 22, 1987 for US$30 million. (b) Project objectives Following the previous credit lines and the sectoral adjustment program for medium-term agricultural credit agreed upon between the Government and the Bank, thn muain objectives of the project vere as follows: - Increase financial assistance to agriculture in order to enhance agricultural productivity and rural income; - Increase the mobilization of national resources; - Ensure the financial viability of credit operations. In addition, the project was to help BNA: - Restructure the institutional system for granting agricultural credit and facilitate access by small- and medium-scale farmers to credit; - Improve the situation of sources and uses of funds for financing agriculture; - Develop long-term plans to strengthen its agricultural portfolio and ensure that BNA continues to play the role of lead bank in the financing of agriculture; - Extend its decentralization efforts to its agricultural credit operations; - Promote savings schemes tied to eligibility for bank credit;  - 17 - - Strengthen and improve its management information and data processing system through the use of computers. (c) Proiect components In order to enable BNA to achieve its objectives and improve the financial performance of agricultural credit, two programs were planned under the project, namelys - A credit program to finance: * small- and medium-scale farmers * large-scale farmers * production and services cooperatives * small- and medium-size agro-industrial enterprises * equipment and major repairs for fishing boats - A credit program for institution building, including: * the establishment of a management information and a computerized data processing system * a personnel training program. 2. Proiect Development and Implementation A. Proiect Development In general, project performance was favorable relative to appraisal projections regarding: (a) Duration The completion dates for earlier agricultural credit lines experienced delays ranging between two and three years. The Fourth Ptoject is the only credit operation to be completed before the scheduled date cr.! December 31, 1991, despite a marked slowdown in lending activities in 1988 at&d 1989 due to the drought, although the project had gotten off to a good start. The credit proceeds were effectively depleted on September 30, 1991, i.e., three months early, and the last Bank disbursement was made on November ! 1991, i.e., six weeks ahead of the official closing date of the Bank loan. (b) Number of farms affected by the project Under Part A of the project, the number of farmers revalving financing far exceeded projections. Ultimately, there were 7,290 benefic-.arzies as against the projected 4,840, i.e., an increase of 51 percent, primarily in the category of small- and medium-scale farmers. (c) Volume of investments The project cost was appraised at TD 51.3 million (equivalent to US$59 million). The baseline estimates were expressed in 1987 prices, with foreign exchange representing some US$30 million. The final cost was about TD 51 million, which is consistent with initial projections.  - 18 - (d) Disbursements Despite a good start, but abruptly slowed by the drought, real disbursements were made over a period of less than four years, more than one year ahead of the five-year period suggested by experience under the previous agricultural projects. Broken down by year, disbursements in 1991 alone accounted for more than 45 percent of the total. This was due primarily to improved progress of the project in 1990 and 1991. During that period, subloans increased considerably under the five project components, primarily in the category of "fisheries." B. Proiect Implementation The project became effective on January 22, 1988, six months after the signature of the Loan and Guarantee Agreements and their ratification by Law No. 87-78 of November 26, 1987. Project start-up was followed by an abrupt slowdown in implemen-tation, particularly for several components, due essentially to problems of a short-term nature (1988 drought followed by a second in 1989). (a) Small- and medium-scale farmers This category, which had a rockier start-up than the others after the drought during the 1987/88 crop year, also suffered from the relatively long time it took the branch offices to process applications and shift responsibility for them to central offices. Only in 1988/89 did the number of subloans begin to rise steadily and at a faster pace, but the total processed each year could have been higher if the country had not been stricken once again by a drought in 1988/89. The number of beneficiaries under the project nevertheless totaled 6,010 farmers, as against the 3,400 projected, i.e., an increase of 77 percent, thanks to the good years in 1990 and 1991 and an upswing in demand in the wake of the drought. The number of loan applications to finance the purchase of irrigation equipment and well construction far exceeded projections, due to climatic vagaries that triggered heavy demand in that regard. Financing was also provided in response to 1,496 applications for loans to purchase minor agricultural equipment at relatively low cost. A comparison of costs by type of investment shows an increase over initial projections under three main headings involving infrastructure and irrigation equipment, cattle- and sheep-raising, and agricultural equipment. The amount allocated for this component was completely utilized.  - 19 _ (b) Large-scale farmers Regular sustained progress was made on this component from the start of the project. The number of farms covered by the project totaled 843, compared to the 615 initially projected, i.e., an increase of 37 percent, essentially in farm mechanization and irrigation, which covered 444 and 224 beneficiaries respectively, as compared to the 238 and 45 projected at appraisal. However, the volume of investments (TD 11.9 million) was below projections (TD 15 million), i.e., by 22.4 percent. This was due essentially to: - an overestimation of the average cost per operation calculated initially at TD 25,000, whereas the actual amount at the end of the project was only TD 14,100; - credit opportunities offered by BNDA prior to its merger with BNT, which had the effect of absorbing, at the expense of the project, several loan applications from large-scale farmers, especially for integrated projects. Investments by type fall primarily into three categories, namely, agricultural equipment, irrigation, and tree-planting, respectively representing 64Z, 18.7%, and 9.7% of investment costs under this component. (c) Cooperatives Implementation of the programs under the Agricultural Production Cooperatives (UCPs) was favorable at the start of the project, but flagged during the last years. Some loan applications were directed by the UCP Oversight Office (Bureau de Contr8le) to the former BNDA for the financing of integrated projects. For the Rural Development Associations (SCMVs) and service cooperatives, financing was very limited, as only four subloans were made under the project for a total of TD 278,000. Most applications were also channeled to the former BNDA for financing under the special funds available to them. However, despite these constraints, the results for the cooperative sector exceeded projections in number and volume. In fact, 209 subloans were made, for a total of TD 5.5 million, compared to the 160 projected, for a total of TD 4.8 million. Investments essentially involved agricultural equipment, for a total of TD 4.66 million, compared to TD 4.3 million initially projected. (d) ARro-industries The start-up of investments under this new category experienced difficulties due to a lack of new investment niches during the early years of the  - 20 - project. In fact, only three subloans were made during this period. It was not until 1990 and 1991 that investment climbed satisfactorily. Thirty-six subloans were made under this component for an overall investment of TD 6.2 million, compared to the projected 25 loans for TD 6.5 million. An analysis of investments by type shows a predominance of demand in the olive-growing sector and, to a lesser extent, in the cold-storage sector, representing respectively 53 percent and 17 percent of the total cost of investments. Demand related to olive-growing rose in response to the incentives and facilities granted by the Government for the modernization and expansion of old refineries that had become obsolete and no longer met the country's needs. (e) Fisheries Subloans under this heading were double the projections, despite a difficult start-up due essentially to problems with constituting guarantees, a lack of down payments, and the selection of beneficiaries who met the technical and financial criteria as well as the creditworthiness standards. BNDA's epecial involvement on a priority basis in this sector, however, reduced the participation of the commercial banking sector in the financing of fisheries during the project period. The cost* of investments was TD 11.1 million, compared to the TD 5.7 million projected, i.e., an increase of 95 percent. By contrast, the number of beneficiaries projected initially at 640 was overestimated and in reality totaled only 192. Performance with regard to the volume of investments was associated with two main operations carried out during the project and not planned at the time of appraisal, namely: (i) The privatization policy put into effect by ONP, resulting in the purchase of its trawlers by private parties. Estimated subloans of TD 4 million were made under the operation to 29 beneficiaries. (ii) The financing of new trawlers for private shipowners. To respond to the Government's priorities and objectives involving the modernization of the fishing fleet, which had become obsolete, at BNA's request, the World Bank also agreed to finance this operation. The investments totaled more than TD 4 million, involving 23 shipowners. C. Institutional and Financial Performance (a) Institutional Rerformance During project implementation, a number of measures were introduced on a national scale to improve the agricultural credit system and the financial viability of such operations.  - 21 - (i) Measures taken: The measures included: - The establishment of the Agricultural Credit Reform Committee in early 1988, as envisaged in the Guarantee Agreement, to make recommendations to the relevant authorities and to monitor the implementation of agricultural credit policy reforms; - Following the 1987/88 and 1988/89 droughts, the Council of Ministers on August 3, 1988 took the following measures: * the rescheduling over three years of short-term credit for rain-fed cereals production and olive plantations; * the postponing of maturities on medium- and long-term credit for rain-fed cereals, olive-growing, and stock- raising; * the implementation of a special government program to assist small-scale cereals producers. Additional measures were also taken by the Government in 1989: - Cancellation of debts contracted by farmers prior to 1987 for all credit with a principal of less than TD 1,000. This measure affected some 130,000 farmers; - Cancellation of debt vis-&-vis the "Societe tunisienne d'4lectricit6 et du gaz" (STEG) contracted prior to 1987 by farmers in joint interest associations (associations dWint6r8ts collectifs -- AICs) in the Rouvernorats in the south; - Price increases for the production of milk, fresh meat, cottonseed, and olive oil. (ii) Budget allocations The Government's commitment to reducing budget allocations was pursued regularly during the years of the project, in accordance with the loan agreement and the medium-term adjustment program for the agriculture sector. FOSDA (Special Fund for Agricultural Development) (credit and subsidies) allocations to BNA during that period were as follows: Year 1987 1988 198 19 1991 Amount (ID million) 18.86 17.84 18.50 17.00 13.00 (11/30191) The portion of the FOSDA allocations reserved for credit has been virtually eliminated since 1990, the bulk of the annual allocation being used for direct capital subsidies. These measures aim to make the banking sector more accountable in agricultural operations and to more effectively channel budget resources to non-bankable, low income beneficiaries.  - 22 - (iii) Funfibilitv of funds The objectives concerning the fungibility of funds in the Fourth Project essentially includes - harmonizing agricultural credit systems; - merging on a national scale all future BNA agricultural credit programs, as well as funds flowing through FOSDA/FOSEP (Special Fund for Fishery), into a single fund; - mobilization of new domestic and external bank resources. Although progress was made in this regard, the problems of multiple and competing lines of credit were not totally resolved, given the ambiguity and diversity of credit procedures. Nevertheless, through the intermediary of agricultural credit working groups, the Government is determined to give priority to these objectivee, for which efforts are well on their way but which require decision-making external to BNA if they are ultimately to become a reality. (iv) BNA training vrogram To upgrade its personnel, BNA offers training programs each year. Internships and seminars in Tunisia and abroad have been organized on various topics, including agricultural and commercial activity and diverse other banking operations. Technical personnel in the branch offices in charge of agricultural credit received training in 1988 and 1989 in the form of seminars on the evaluation of credit applications. DNA's training budgets have financed the following activities: - courses at the Professional Banking Training Center (Centre Professionel de Formation Bancaire -- CPFB) and the Technical Banking Institute (Institut Technique des Banques -- ITB), in addition to accounting courses; - seminars in Tunisia and abroad; - hosting of trainees; - training of new recruitG; - internships and refresher courses; - training of future middle managers (cadres d'exploltatlon); - internal competitive examinations for higher-level staff and agents; - introduction to computers for higher-level staff and agents; - training for senior managers.  - 23 - (v) Organization plan After its merger with the former BNDA in October 1989 and the measures taken by the Government in December 1989 to give new impetus to agricultural credit on a decentralized basis, BNA launched an organizational study enabling it to revitalize its offices and make them homogeneous and effective. A new organization chart was prepared and will probably be implemented in the first quarter of 1992. The network of BNA branch offices and personnel spread with the opening of 24 new branches between 1987 and 1991, for a total of 126 branches and offices as of December 31, 1991. Personnel were increased from 2,137 to 2,522 during the same period. In addition, with a view to strengthening the decentralization policy, BNA gradually expanded the authority of the regional directors, enabling them to grant agricultural loans up to a maximum of TD 120 million. (vi) BNA computer olan After having equipped its branches and central offices with computer hardware and software in accordance with project projections, BHA developed a computerization plan and began its implementation in the branches and regional offices and at headquarters. The main actions during the project can be summarized as follows: - installation of microcomputers for all branches, permitting the computerization of accounting operations (all operations are entered at the branch level and transmitted at the end of each day to headquarters); - acquisition of new computer hardware: two 9221 computers for headquarters and 13 AS 400 minicomputers for the regions. The two computers are already operational within the Computing Activities Department. Porting of existing applications on the 4331 was done as a first step. A study is now under way to rewrite certain applications and improve others, in addition to the study on new systems for the computerization of all bank operations. The AS 400s are assigned to certain central departments and regional offices. A team is now studying the installment of these minicomputers in the regional offices and preparing for the decentralization of certain publishing operations. Likewise, improvements were made to the branches' computer system: - computerization of the portfolio;  - 24 - - computerization of commitments by signature; - study on the decentralization of the agricultural credit process. (b) Financial performance (i) Recovery Despite the institutional development (described above), the recovery situation is still disturbing. A look at the situation over the last five years shows that the droughts that wracked the country in 1987188 and 1088/89 had serious repercussions on the repayment of agricultural credit. The average recovery rate on November 30, 1991 was 74 percent for all funds considered together, with a variation from 6 percent (IFAD-financed Sidi Bouzid project) to 91 percent (BRA), depending on the nature of the fund. Consequently, the recovery situation during the project did not improve, despite the decisions taken by the Government and the good crop during the 1990/91 season. In addition to the drought, the following also contributed to the lack of progress in recovery performance: - the accumulation of arrears from one year to another; - the plethora of lines of credit used with different selection criteria, choice of beneficiaries, and methods of assessing needs and covered risks; - the diversity of conditions imposed by certain donors and the inadequate monitoring and recovery system; - a confusion among credit beneficiaries between aid to agriculture and agricultural credit. In addition, the efforts made by BRA to improve the recovery rate were as follows: - delivery of new credit only upon the settlement of arrears; - withholding of arrears on all crop sales; - making farmers aware of the importance of paying their arrears in the appropriate crop year; - transmission of overall risk statements to the branches and regional offices for arrears monitoring; - transmission of notices and due date reminders to all debtors. Finally, beginning in 1992, following two good harvests in Tunisia, BNA decided to set up regional recovery teams with the necessary authority  - 25 - and incentives to strengthen recovery efforts with the support of government authorities at the highest level. (ii) Aaricultural interest rates The current preferential interest rates for agriculture still provide insufficient return to cover the average cost of funds (which is on the rise with the liberalization of the financial markets), operating costs, and BNA's banking risks. The objective in the Loan Agreement for the Fourth Project was to narrow the gap, by the end of 1991, between preferential rates for agricultural loans and the interest rate prevailing on the money market, which was 11.8 percent at that time. The agricultural interest rates, which before August 1987 were 6.75 percent for short-term loans and 7 percent for medium- and long-term loans, were raised on three occasions during the project, reaching 9 percent in January 1992 for short- and medium-term loans and 9.5 percent for long-term loans. The successive adjustments made to these rates slowed down in 1988 and 1989, following the droughts that wracked the country during that period, and were accompanied by a decline in the money market rate. The Tunisian authorities are determined to purs.,e the interest rate adjustment policy with a view to attaining Loan Agreement objectives and to bringing the policy into line with the current economic and financial reform program. 3. World Bank Performance During the Prolect In order to assist BRA in carrying out the project under good conditions, the Bank spared no effort in smoothing over certain difficulties that arose during the project. In this connection, various supervision missions were made to Tunisia by Bank officials involved in the project to make contact with BHA and the various ministries concerned to discuss and prepare action programs with BRA and the Government and to monitor the project. The following are among the main actions that can be credited to the project: (a) Better conditions for subloans Following the 1988 and 1989 droughts, and to assist project beneficiaries in overcoming obstacles, at the request of BRA the Bank agreed to improve the terms for agricultural loans to low-income small-scale farmers in southern Tunisia and to lower the down-payment percentage temporarily to 5 percent (instead of 10 percent). This operation involved 2,000 beneficiaries. In addition, the down-payment percentage required for the  - 26 - purchase of tractors and spare parts was brought into line with the generally accepted average of 20 percent, instead of 30 percent minimum. (b) Trawler financina As part of the privatization of ONP and modernization of the fishing fleet, the Bank agreed to the financing of these two operations not initially envisaged in the project as followss - the financing of ONP trawlers by private parties; - the financing of new trawlers, also by private parties; and - refinancing of nine agro-industrial projects. In order to encourage BRA in its efforts to identify, select, and evaluate bankable agro-industrial investments, which stagnated during the first years of the project, the Bank agreed to attribute nine large operations prefinanced by BHA to the project. (c) Institutional component The Bank missions worked closely with the Government and BNA during the project, making suggestions and recommendations concerning: - the vigorous pursuit of the agricultural credit policy reform program to attain the objectives of fungibility of funds for financing agriculture, simplification and harmonization of lending procedures, and computerization of BNA's lending process; - reorganization or elimination of the current concept of "FOSDA credit" in order to make BRA accountable for the entire credit process; - gradual adjustment of agricultural interest rates to the market rate in order to improve BRA's financial margin for agriculture; - establishment of a durable system for covering banking risks with the introduction of agricultural credit insurance and a review of the current calamity fund (much remains to be done in this regard); - encouragements of BRA by the Government to increase its role in mobilizing its resources and in financing agriculture; - preparation by BRA of the detailed 1992-96 agricultural credit program with technical assistance in methodology from the Bank; - inclusion of the broad orientations of the agricultural credit policy in the country's Eighth Economic and Social Development Plar.; - analysis of BNA's overall financial profitability, which has been improving since 1991, and its agricultural credit operations (still  - 27 - running in the red), as well as the monitoring and auditing during the agreed period of the project. 4. Conclusion In general, the project achieved a maximum of the objectives regarding investments, increases in production, and higher income for credit beneficiaries, despite two difficult years of drought. Naturally, much remains to be done to consolidate the results and improve BNA's efficiency in a financial market that has become competitive and that requires agricultural credit to have its own dynamism. Project performance is due essentially tot - ongoing and regular monitoring by BRA through its supervision and monitoring teams; - a major contribution by the Government following the decisions it made in a timely fashion and conducive to the success of the project (FOSDA, interest rates, support for institutional objectives, BNT/BNDA merger); - the decentralization policy for agricultural operations followed by BHA, as BRA continues to grow stronger year after year; - improvement in BNA structures through computerization of BNA operations and strengthening of its staff through adequate and continuing training programs. Moreover, in comparison to previous agricultural credit projects, the project is distinguished by: - its implementation on schedule without any extension; - the large volume of loans made beyond the project, i.e., TD 3.4 million on November 30, 1991, financed from BNA's own resources, following the depletion of funds and closing of the IBRD line. This situation caused an urgent need for financing of agricultural credit, prompting BRA to establish a detailed program to obtain the necessary financing under new agricultural credit lines.  - 28 - ANNEX I PROJECT COST Unit = TD 1,000 Number of subloans Cost Actual Projected Actual TD Projected TD I. Part A of the Proiect a- Small- and medlum -scale farmers 6.010 3.400 14. 15.400 - Agrioulture equipment 1,496 1,579 520 - Irrigation equipment 2,972 8,625 7,950 - Well/tanklmotor housing 696 2,481 4,720 - Stable 32 84 670 - Cattle 437 1,482 1,150 - Sheep 200 284 230 - Bee-raising 117 197 I Forage production 60 - Planting 60 114 100 b- Large-scale farmers 843 615 11,954 15.400 - Agricufture equipment 444 7,600 10,970 - Irrigation equipment 150 1,660 780 - WelVttankimctor housing 74 570 890 - Stable/hangar 17 78 990 - Cattle 19 93 1,430 - Sheep 36 309 240 - Forage production 1 2 100 - Bee-raising 3 15 . - Rabbit breeding 1 3 . - Planting 63 1,150 * - Integrated projects 35 474 * C . Cooperatives 209 160 5.496 4.800 - Agriculture equipment 162 4,570 4,300 - Irrigation equipment 22 313 . - WelVtanklmotor housing 3 17 . - Stable/hangar 3 5 500 - Cattle 3 116 . -Sheep 8 85 . - Planting 5 119 . - Integrated projects 3 271 d- Apro-industry 26 25 6.240 6.500 - Civil works 1,020 1,900 - Equipment 4,880 4,300 - Working capital 340 300 e - Fisheries 192 640 11.127 5.700 - Miscellaneous equipment for small-scae fishermen 105 1,157 } - Miscellaneous equipment } 5,700 for large-scale fishermen 35 1,960 - ONP trawlers 29 4,027 - New trawlers 23 3,983 TOTAL PART A OF THE PROJECT 7.290 4.40 49.663 47.800 II. Part B of the Proiect - Software _1.498 3.500 GRAND TOTAL 51,161 51,300  LENDING BY YEAR j.......1987 1988 1989 1990 | 1991 [ TOTAL CATEGORY | No. 1 Amount [No. [ Amount nt No Amount N Amou AoAmount Small- and medium- 56 95 1,506 1,737 1,744 2,619 1,525 3,048 1,179 2,338 6,010 9,837 scale farmers LIage-scale farmets 142 1,140 142 1,298 170 1,275 180 2,070 209 2,539 843 8,322 Cooperatives 79 932 56 1,127 17 160 22 625 35 1,114 209 3,958 Ago-industry 1 136 - 2 168 25 3,181 8 883 36 4,369 Fisheries - 9 228 31 1,128 80 1,696 72 4,797 192 7,849 TOTAL 278 2,303 1,713 4,390 1,964 5,350 1,832 10,620 1 503 11,671 I729 34,334a) (a) The amounts beyMd the project (ID 273 million, equivalent to US$30 million) wer financed using BNA's own resourcs M-  - 30 - ANNEX III DISBURSEMENTS BY YEAR Unit = US$'000 Year ~ Projected Actual | Yea Amount Cumulative % Amount Cumulative % | 1988 5,000 5,000 16.7% 6,039 6,039 20 % 1989 7,000 12,000 40 % 6,853 11892 39.6% 1990 8,000 20,000 66.6% 4,467 16,359 54.5% 1991 7,000 27,000 90 % 13,641 30,000 100 % 1992 3,000 30,000 100 % ' TOTAL 30C_00 30,000 DISBURSEMENTS BY CATEGORY Unit - US$'000 Category Projacted Actual % a - Small- and medium-scale 8,000 8,090 + 1% farmers b - Large-scale farmers 8,000 6,931 -13% o - Cooperatives 3,500 3,327 -5% d - Agro-industry 4,500 3,678 -18% e - Fisheries 3,500 6,370 +82% f Computer hardware 2,500 1,604 -36% TOTAL 30,000 30,000  BRA TRAIIING BUDGET Activity 1987 1988 1989 1990 1991 No. | Cost inTD No. Costin WM No.j Costin