Tunisia - Export Industries Project

Document of The World Bank FOR OMCIAL USE ONLY Report No. 12665 PROJECT COMPLETION REPORT TUNISIA EXPORT INDUSTRIES PROJECT (LOAN 2522-TU) JANUARY 6, 1994 Industry and Energy Division Maghreb Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  List of Abbreviations API Agence de Promotion des Investissements BDET Banque de Developpement Economique de Tunisie BTKD Banque Tuniso-Koweitienne de Developpement CEPEX Center for Export Promotion COTUNACE Compagnie Tunisienne d'Assurance de Commerce Exterieur EMI Electro-Mechanical Industries ERR Economic Rate of Return FOPRODEX Export Promotion Fund FRR Financial Rate of Return MEN Ministere de 1'Economie Nationale PDB Participating Development Bank SSI Small-Scale Industries STUSID Societe Tuniso-Seoudienne d'Investissements et de D6veloppement UTICA Union Tunisienne de l'Industrie, du Commerce et de l'Artisanat (Chamber of Commerce) Currency Equivalent At Project Appraisal (August 1983) TD .73 = US $ 1 March 1993 TD 1.0 = US $ 1  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation January 6, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Tunisia - Export Industries Proiect (Loan 2522-TUN) Attached is the Project Completion Report on Tunisia - Export Industries Project (Loan 2522-TUN) prepared by the Middle East and North Africa Regional Office. The Borrower did not prepare a Part II. The PCR (containing only Parts I and III) is of satisfactory quality. It deals very candidly with the problems that marred the full achievements of the project's objectives. The slow utilization of the line of credit was the result of the general downturn in the Tunisian economy in the early stages of implementation as well as the availability of lower cost financing from some European sources and the complexity of administrative regulations which were faced by the entrepreneurs in creating export-oriented industries. Despite the cancellation of nearly half of the loan ($24.2 million), some 27 subprojects were implemented and the export promotion agencies (Cotunace for export insurance and Cepex administering the Export Promotion Fund) rendered useful assistance to the export activities. The outcome is rated as satisfactory and the project has had partial institutional impact. Given the fact that the export of manufactured goods from Tunisia has grown at an average rate of 21% between 1985 and 1991 (from US$877 million to US$2.8 billion), sustainability is rated as likely. An audit of the project is planned. In addition to looking into the actual export performance of the sub-borrowers, the audit should probe the reasons for low loan utilization as well as the performance of two export promotion agencies. Attachment This document has a restricted distribution and may be used by recipients onlv in the performance of their official duties. Its contenu may not otherwise be disclosed without World Bank authorization.   FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT LOAN 2522-TUN TUNISIA: EXPORT INDUSTRIES CONTENTS PREFACE ....................................... EVALUATION SUMMARY. ii PART I: REPORT OF THE BANK . . . . . . . . . . . . . . . . . . . . . . . . 1 1. Project Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2. Background . .... 2 3. Project Design, Preparation and Organization . . . . . . . . . . . . . . 5 4. Project Objectives and Description ..9 5. Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . . 11 6. Project Results . . . . . . . . . . . 14 7. Performance of the Borrower and Participating Banks . .16 8. Performance of the Bank. 118 9. Sustainability of Project Achievements. 20 10. Lessons Learned ..21 PART II: REPORT OF THE BORROWER . . . . . . . . . .24 PART III: STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . . . 26 1. Related Bank Loans.. . . . . . . . 27 2. Project Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3. Cumulative Estimated and Actual Disbursements . . . . . . . . . . . . . 28 4. Project Implementation Indicators . . . . . . . . . . . . . . . . . . . 29 5. Project Costs and Financing . . . . . . . . . . . . . . . . . . . . . . 29 6. Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 7. Status of Project Covenants . . . . . . . . . . . . . . . . . . . . . . 32 8. Use of Bank Resources ..37 9. Use of Staff Resources ..38 This document has a restricted distribution and may be used by recipients only in the performance I of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN NO: 2522-TUN PREFACE This is the Project Completion Report (PCR) for Tunisia: Export Industries Proiect, for which the Bank approved a loan of US$ 50 million in April 1985. The loan became effective June 4, 1986, and closed on June 30, 1992, with total disbursements of US$ 25.7 million, about half the original loan amount. The remaining US$ 24.3 million was cancelled. The Industry and Energy Division of the Middle East and North Africa Department I prepared Part I and Part III. As stipulated in the Loan Agreement (Section 3.05), the Borrower for the loan, the Government of Tunisia, in conjunction with the Compagnie Tunisienne d'Assurance du Commerce Exterieur (COTUNACE), is responsible for preparing Part II, relating to Parts B and C of the Project. Part B of the Project covers provision of funds to exporters for export promotion and Part C concerns the institutional strengthening of COTUNACE. In addition, the Banque de Developpement de Tunisie (BDET), the Banque Tuniso-Koweitienne de Developpement (BTKD), and the Soci6t6 Tuniso-Seoudienne d'Investissement et de Developpement (STUSID) are responsible for preparing Part II, relating to Part A of the Project. Part A covers the execution and initial operation of the investment projects financed under the Loan'. Preparation of this PCR is based, inter alia, on the Staff Appraisal Report, the Report and Recommendations of the President of the Bank to the Executive Directors; the Loan Agreement, the Project Agreement; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda. 1/ BDET had provided comments on its operations during 1987-1991 and information on subprojects financed under the Project. STUSID had provided information on subprojects financed under the Project.   - ii - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN NO: 2522-TUN EVALUATION SUMMARY Background i. The macroeconomic context of the Export Industries Project was the Government of Tunisia's Sixth Development Plan (1982-86) which emphasized diversification of exports to offset declining revenues from petroleum and to alleviate related financial constraints and the balance of payments deficit. After a decade of industrial development, based on domestic production as a substitute for imported goods, the Government, beginning in the early 1970s, shifted its development policy to export promotion, as it realized the growth limitations of a domestic market. In support of the new outward-oriented policy, the Government enacted laws which gave important tax customs and foreign exchange incentives to companies producing entirely for the export market. However, there were a number of constraints to exports that remained, including the lack of a specific export policy, complicated administrative procedures, insufficient institutional support, and the need for increased financial resources. In order to meet the Sixth Plan objectives for export encouragement and expansion of financial resources, the Government believed a special development project focussing on export industries was necessary. Paras. 2.1-2.9 provide further details on the macroeconomic context, the export sector, the financial sector, and the institutional framework. Bank involvement in the Project was a logical next step in its long-standing involvement in policy dialogue and financial support directed toward the development of efficient, labor-intensive industries. The project was also consistent with sector work in the areas of employment, industrial policy and financial sector policy. Details on project preparation are given in paras. 3.1-3.16. Project Objectives and Description ii. The Project had two main objectives. The first was the promotion of the efficient development of export industries by providing funds to three Participating Development Banks (PDBs) for investment projects to establish, expand or modernize enterprises engaged in exports. The second objective was to improve the institutional environment for exporters by (a) providing Government's funds to exporters for marketing support through the Export Promotion Fund (FOPRODEX), (b) assisting the Export Credit Insurance Agency (COTUNACE) with the proper formulation and execution of a technical assistance program, and (c) helping to improve administrative procedures related to exports, particularly in the areas of customs formalities, foreign exchange controls and import regulations. The Project supported the first objective with a US$ 50 million loan to three PDBs for financing industrial export projects. The three PDBs were: the Banque de D6veloppement de Tunisie (BDET), the Banque Tuniso-Koweitienne de Developpement (BTKD), and the Socift6 Tuniso-Seoudienne d'Investissement et de Developpement (STUSID). Paras. 4.3-  - iii - 4.8 provide a detailed description of the onlending of Loan proceeds and criteria for investment subproject evaluation. No Bank's funding were allocated to the institutional aspect of the Project but the Bank considered its achievement crucial to the promotion of the export sector, and therefore had stipulated their execution through covenants in the Loan Agreement. Project Implementation Experience iii. There were three major aspects to the implementation of this Project. The first was the slow disbursement and low utilization of loan funds (para 5.3-5.8), due to: (a) a downturn in the economy during the initial phase of the project (1985-86); (b) the availability to BDET of French, Italian and Belgian subsidized lines of credit, at a lower interest rate than Bank funds; (c) preferential credit policies available to export industries (at 7.5%, raised to 8.5% in 1990); (d) uncertainty surrounding the export policy environment; (e) difficulty of the PDBs in appraising projects because of an inadequate data base on the industrial sector and export markets; and (f) the complex administrative regulations which entrepreneurs faced in creating an export-oriented enterprise. The second aspect was the preparation of a Foreign Exchange Risk Study, which was a covenant in the Loan Agreement. The results of the Study were instrumental in defining a foreign exchange risk scheme under the Structural Adjustment Loan I, approved by the Board in 1988. The third facet of the Project was the strengthening of the institutional support to encourage the promotion of exports. In this area, the Project helped the Government make considerable progress institutionally. Results of studies carried out by Bank consultants had indicated areas where further progress could be achieved. Part I, paras. 6.1-6.7, outlines the detailed results of the Project. The performance of the Government, the Participating Banks and the Bank in executing the project is discussed in paras. 7.1-8.10. Sustainability of Project Achievements iv. The Project's main achievements were (a) the reinforcement of COTUNACE and the Export Promotion Fund managed by CEPEX, (b) some improvements in the investment project appraisal and supervision capability of the PDBs and (c) some reduction in the arrears of BDET. The evaluation of the export sector which the Bank did in the context of this project indicated that further growth and diversification of Tunisia's exports would depend mainly on the ability of exporters to improve the competitiveness of their products, not only based on their price but especially on their quality and adaptability to the needs of the market. In this context, exporters faced three main obstacles: (a) inadequate marketing ability due to lack of sufficient market awareness and updated sales techniques; (b) insufficient attention to the qualitative fit between exported products and the demand of foreign consumers, especially in the areas of product specifications and quality standards; and (c) lack of adequate flexibility to diversify production and take full advantage of market opportunities. On the other hand, development banks needed to improve their data base and analysis of the industrial sector and export markets to evaluate expected benefits from investments. Thus, the Government of Tunisia needed to elaborate a well-defined export sector strategy, integrating the participation of representatives from the private sector, the development banks and government agencies responsible for export  - iv - administration. The Bank could assist the Government in developing such a strategy, first by analyzing export performance and then by delineating the strategic components required to meet export sector objectives. Subsequently, the Bank could help to define mechanisms for export promotion agencies to achieve stated goals. v. In terms of increasing exports, all subprojects had at least contributed 30Z of their production to exports. A few subprojects were entirely export- oriented. Although there are no available data to assess the actual contribution of the subprojects' export earnings, general data for Tunisia show that between 1985 and 1991, exports from the manufacturing sector increased rapidly from US$ 877 million to US$ 2.8 billion. Regarding the benefit of employment creation, results were satisfactory. Based on information reported by BDET and STUSID, subproject investments generated 3,535 jobs on a total amount disbursed of US$ 15.3 million while 10,000 jobs were estimated to be created on an initial loan amount of US$ 50 million. The textile subsector and the electrical and mechanical industries subsector were the main sources of employment, contributing 73% and 11%, respectively. Lessons Learned and Recommendations vi. The lessons learned through the implementation and results of this project are the following: (a) Design and maintain policy conditionality as an integral component of sector strategy. The Bank did not insist strongly enough on maintaining conditionality in the early stages of the Project. This affected two aspects of the Project's design and implementation. Firstly, the Bank may have encouraged the Government to establish and operate the foreign exchange risk fund earlier and thereby mitigated BDET's accumulation of arrears, if the Bank had insisted on making Government payment to BDET for losses on foreign transactions a condition of negotiations. Secondly, the Bank dropped some support for the clarification of administrative regulations for exporters and, more generally, the export sector, when it dropped the Supplemental Letter on Industrial Policy and the conditionality for developing a brochure clearly outlining administrative regulations for exporters. (b) Maintain sector linkage with the project throughout the project cycle. The Bank, during project preparation, intended to first establish an industrial and financial sector framework for the project supported by related project conditionality. However, the Bank abandoned the conditionality when the timing of the studies supporting a new policy did not conform to the timetable set for loan processing. After the Bank financed the Project, neither the industrial sector nor the financial sector received much attention until problems emerged with the utilization of the credit line. Industrial sector work that occurred late in the project cycle provided some insight into the performance of the project, but subsequent supervision missions did not link the findings to specific problems in the portfolio of subprojects. Also, changes in the financial sector, such as the availability of competing credits on more attractive financial terms, had an impact on the credit line utilization as well.  - v - (c) The PDBs should have flexibility in setting interest rates. A cause of low utilization of the proceeds of the loan was that the interest rate on subloans under the Project were not competitive with other credits available to exporters. This is attributable to two factors. First, preferential credits from the Central Bank and credits at low interest rates from bilateral agencies were available to exporters, and these funds were not blended with the Bank's funds. Second, the PDBs did not have the flexibility in setting attractive interest rates on subloans, as a consequence of terms stated in the Project Agreement between the Bank and the PDBs. According to the Agreement, the rate on subloans could be set no lower than 11%. In future operations participating banks should have the discretion to set interest rates on subloans such that the margins are satisfactory based on their respective average cost of funds and operating expenses. (d) Eligibility criteria for participating banks which include financial performance targets agreed upon at appraisal and followed-up during supervision. The Bank had detected the deterioration of the financial performance of the PDBs and had agreed with the PDBs that they should take measures to improve their performance. However, the Bank and the PDBs did not establish a well-defined set of performance criteria which would have provided the Bank with a clear basis for evaluating the financial performance of the PDBs. For future operations, the Bank should agree with participating financial institutions on minimum objective standards of financial performance to be maintained throughout project implementation, and should monitor, through project supervision, that these standards are met. Failure to meet acceptable financial standards should be cause for eligibility suspension by a given financial institution. (e) Bank's supervision efforts need to be regularly planned and better implemented. The Bank had identified (i) the deterioration of BDET's and BTKD's portfolio and (ii) the capacity of the three PDBs to appraise and supervise investments. To address the first problem, the Bank made recommendations on ways to improve the two institutions. Specifically, the Bank agreed with BDET that it should furnish the Bank monthly progress reports with the intention of reducing its arrears (para 3.12). Concerning the level and quality of supervision of the PDBs, the Bank agreed with the PDBs on supervision plans (para 3.11). However, in both cases, the Bank did not follow-up on its recommendations and did not ensure that corrective measures were taken which would produce ultimate results. The Bank should have taken a more critical stance on these issues. Supervision also suffered from a lack of continuity and regularity. Most of the supervision reports are "time slices", often focussing intensively on a single aspect of the project without sufficient backward and forward linkages. Only one report was comprehensive in that it integrated industrial and financial sector issues, institutional issues, use of the credit line and the financial condition of the participating banks. Only two supervision missions (1986 and 1991) produced full supervision reports using the standardized, comprehensive format which the Bank provides (Form 590) and only one mission (1991) included a review of the status of all major project covenants. (f) Create a useful data base for monitoring and evaluating subprojects. There was no comprehensive data base containing subproject descriptions and  - vi - expected achievements. A number of evaluation reports were missing; and the quality of the reports sent to the Bank for review varied from each PDB. The lack of a data base may have caused some inefficiency in the monitoring and approval of subprojects, making it necessary to search through various documents to reference essential information instead of accessing a one-page information summary. The reviewer of the subproject appraisal report should record the essential project information on a standard form in a computerized data base for reference and update it throughout the project cycle.   - 1- PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES LOAN 2522-TUN PART I: REPORT OF THE BANK  - 2 - PROJECT COMPLETION REPORT LOAN 2522-TUN TUNISIA: EXPORT INDUSTRIES I. PROJECT IDENTITY ICountry IF Tunisia Project Name Export Industries | Loan Number 2522-TUN Project Code [CPAO72 Regional Vice ]f Middle East and North Africa Presidency ] Supervising Industry and Energy (MN1IE) Division 2. BACKGROUND The Macroeconomic Setting 2.1 The Tunisia Export Industries Project (hereafter known as "the Project") originated in the context of Tunisia's Sixth Development Plan (1982-86). The general objectives of this plan were to ease the country's unemployment problem, reduce income disparities among the various regions and maintain social stability and creditworthiness. However, a major problem in achieving these objectives was the growing balance of payments deficit and financial constraints due to decreases in petroleum exports. 2.2 Just prior to the Project's appraisal (1983-84), the country had experienced drought-related declines in agricultural output, as well as a slowdown in external demand for exports and tourism which exacerbated the deteriorating financial situation identified in the Sixth Development Plan. In order to achieve the Plan objectives, Tunisia developed a strategy which consisted of slowing down private consumption, reducing the high investment rate financed by external borrowings, and promoting labor-intensive manufactured exports. 2.3 Tunisia's export strategy had two main features. First, there was an emphasis on labor-intensive industries, which would help meet, concurrently,  - 3 - employment and balance of payment objectives. Second, the Government realized that there were limits to growth in traditional exports such as phosphate- based chemicals and agricultural products, and thus emphasized the growth of non-traditional manufactured exports to stimulate growth and reduce the balance of payments deficit. The Manufacturing Sector 2.4 In 1983, during the initial phase of Project preparation, Tunisia's GDP was TD 3.4 billion with the manufacturing sector accounting for about 15Z compared to about 9% in the early 1970s. At the same time, investments in manufacturing industries had risen from TD 131 million in 1980 to TD 232 million in 1983, increasing the sector's share in total investment during the period from 13% to nearly 20%. However, many of the manufacturing industries had developed with import restrictions, price controls, investment licensing and direct subsidies. These supports, which were initially justified for infant industry protection, eventually developed into a system which did not encourage efficiency, productivity and optimal use of productive capacity. For example, the results of a Bank-financed study on effective protection in the electrical and mechanical industries sector showed that industries producing for the protected domestic market had a low economic rate of return on their investments --only 3.5Z compared to 21.4Z for industries exporting all of their output. The Export Sector 2.5 In the 1960s, Tunisia had concentrated its industrial development on developing import substitution industries and most of the related investments took place in the public sector. However, given a small domestic market of only about six million people, the Government, in the early 1970s, shifted its policy to promoting export-oriented industries and put greater emphasis on the private sector. In support of these policies, the Government enacted Law 72- 38, which gave important tax, customs and foreign exchange incentives to exports. The law encouraged the establishment of "off-shore" companies in Tunisia. These policy changes undoubtedly had an impact on the growth of manufactured exports, which increased at an average rate of 14% during 1971- 81, with the share of manufacturing exports in total exports rising dramatically, from 32% to 75%. 2.6 In spite of this growth, there was little integration between the domestic and export sectors. As a result of foreign exchange regulations concerning "resident" and "non-resident" companies 2/, many exporters failed to use local suppliers extensively. In order to foster greater integration of these two sectors in 1981, the Government passed a second law, Law 81-56, which gave important advantages to companies that export only part of their V "Non-resident companies," those with ownership above two thirds by non- residents are essentially exempt from all foreign exchange controls but have to execute all their local transactions with dinars bought with foreign exchange while "resident" companies have to repatriate all their foreign exchange earnings.  - 4 - production and are certified by API. The main advantages to such exporters were the following: (a) a reduced corporate tax of 20 Z on the portion of production exported, (b) exemption from sales taxes on goods and services bought on the local market and used in the production of exports, and (c) access to simpler formalities for imports required in the production of exports. 2.7 During the early 1980s, the Government introduced a series of improvements in export finance. (a) Prefinancing of intermediate goods of exporters. Prefinancing imported raw materials and intermediate inputs was increased from 1OZ to at least 20% of annual imports. (b) Discounting Claims. The duration for discounting claims was lengthened from 90 days to 180 days (and 360 days for exceptional situations), which permitted exporters to offer more attractive payment terms to their clients. (d) Foreign Exchange Controls. The Government had allowed Tunisian exporters to keep only 3% of their foreign exchange earnings in convertible dinars, leaving many exporters with insufficient funds for marketing and promotion efforts. The share was increased to 4% and exporters were allowed an additional TD 6,000 per year for travel expenditures. The amount was still not large enough for many exporters to explore new markets and to market their products abroad. Institutional Framework 2.8 The main institutional support in the export sector had been provided by the Center for the Promotion of Exports (CEPEX), which conducted market surveys, provided marketing advice, disseminated commercial information, participated in trade fairs and helped the Government with trade policy formulation. Institutional improvements were introduced by two new laws which were passed in 1984. The first law established the Export-Credit Insurance Company (COTUNACE) to cover the majority of losses incurred by exporters due to non-payment by foreign buyers. Such insurance had encouraged banks to provide loans to exporters with limited collateral. The second law encouraged the creation of the Export Trading Companies to market Tunisian products abroad, especially those of small and medium-scale industries (SMIs). To encourage the emergence of these trading companies the Government provided substantial tax breaks, customs duty and foreign exchange facilities. Financial Sector Framework 2.9 A Financial Sector Study (FSS), with Bank assistance, was underway around the time of Project appraisal. Its preliminary conclusions indicated that the financial sector was basically efficient but required some improvements in resource mobilization and efficiency of intermediation. Interest rates on term deposits and savings accounts had been either negative or barely positive in real terms, and there was a large discrepancy in the cost of funds and lending rates between the commercial banks and the  - 5 - development banks. The relatively low interest rates on commercial bank deposits had kept the average cost of funds for these banks at about 6%. Development banks, on the other hand, could not accept sight deposits and had to depend on raising resources from international development institutions, and the international and domestic bond markets at higher rates. At the time of the SAR, the average cost of borrowing from this market was about 8.4%. This had a significant impact on BDET's performance. Although commercial and development banks were both making medium-term loans to industry at a rate of about 10%, the net interest margin of commercial banks was 4% while BDET's was about 2%. This situation was undesirable and the Study proposed an overall upward adjustment of the interest rate structure, for both deposit and lending rates. It was also proposing a more flexible adjustment system to allow for more frequent adjustment of rates in response to liquidity changes, the domestic inflation rate and interest rates abroad. Another issue which the Study identified was the question of foreign exchange risk coverage. At the time, the Government had been carrying the foreign exchange risk on the foreign borrowings of BDET; but this issue became more important as the new development banks would need to borrow a significant part of their resource requirements abroad, therefore an appropriate foreign exchange coverage scheme was needed. 3. PROJECT DESIGN, PREPARATION AND ORGANIZATION Project Origins 3.1 In 1983, a Bank consultant prepared a report on export incentives in Tunisia. In the preparation of this report, the consultant interviewed exporters, who were concerned that the Government's lack of a specific export policy, the quantitative restriction on imports, price controls, etc., provided little incentive for exports. The report recommended a program to improve the investment climate for exports, covering administrative procedures for exports, the availability of financing, access to foreign exchange, the creation of special export trading companies, etc. Based on these findings, the Bank sent a mission, in October/November of 1983, to identify a Project for Bank financing to help expand the availability of funds for export investment projects and improve the institutional support system for exporters. Project Justification and Design 3.2 Importance of the Project. The need for a special export industries project was threefold. First, revenues from oil, the major export commodity, were declining and there was a critical need to diversify the country's export base. Second, financial resources and institutional support were necessary to encourage diversification and expansion of export industries. Third, export industries not only would help meet the Sixth Plan's objective to improve the balance of payments by increasing foreign exchange earnings but also would create employment, since many of the existing industries were labor-intensive. 3.3 Rationale for Bank Involvement. The Project continued to support Tunisia's industrial development. It built up on the important measures that the Tunisian Government had undertaken to strengthen fiscal and financial  - 6 - incentives to exporters, to simplify administrative procedures, and to set up an institutional environment conducive to export growth. Through the credit lines on-lent to financial institutions, it also promoted export generating investments which were in line with the priority accorded to export of the Government's Sixth Development Plan. 3.4 BDET. BDET was created in 1959 and reorganized, with the assistance of the Bank in 1966. IFC is a shareholder in BDET since 1966 and has a representative on its Board. BDET's share capital was TD 20 million at Project appraisal and its debt-equity ratio was 5:1, well below the maximum of 8:1 stipulated under previous loan agreements. BDET had been the Bank's major channel for funding industrial investment projects, through eight lending operations, totalling US$ 129 million (net of cancellations). About 70% of BDET's loans were in the industrial sector. Project Completion Reports on some of these loans had noted considerable improvement in institution-building and management performance of the institution. Specifically, these loans had contributed to a change in BDET's role from being a supplier of equity funds for public enterprises to that of advisor and cofinancier to private investors. The Bank Staff Appraisal report (SAR) found the institution to be relatively well-managed by a competent staff. 3.5 Participation of Other Development Banks. The Government had requested that two relatively new development banks, established in 1981, participate in the Project along with BDET. These Banks were: the Banque Tuniso-Koweitienne de D6veloppement (BTKD) and the Societe Tuniso-S&oudienne d'Investissement et de D6veloppement (STUSID). Both the Government and the Bank saw their participation in the Project as an important institution-building step, providing them with a framework for establishing investment project appraisal and supervision standards. 3.6 BTKD. The broad objective of BTKD was to develop economic and financial relations between Tunisia, Kuwait, and other Arab and African countries. BTKD's operations were spread over all sectors in the economy, with a higher concentration in industry, and covered projects of TD 1 million or more. Its share capital of TD 100 million was and is still equally divided between Tunisia and Kuwait. The Bank found the financial, technical and market analysis of BTKD appraisals satisfactory although it had a tendency to rely on reports of other institutions for a comprehensive analysis of project economic returns. 3.7 STUSID. STUSID oriented its operations towards large projects with investments over TD 2 million for industrial projects and over TD 3 million for other projects. In particular, STUSID emphasized equity participations, providing financial assistance in the form of equity and loans in the ratio of 1:2. A special focus of its activities was projects that would have a favorable impact on the balance of payments and employment. STUSID had recently put in place satisfactory appraisal and supervision procedures and reporting methods emphasizing financial, economic and technical criteria. Its share capital of TD 100 million was and is still equally divided between Saudi Arabia and Tunisia.  -7- Major Issues in Prolect Preparation 3.8 Credit Line Amount and On lending Arrangements. The original lending operation was envisaged at US$30-35 million. But at Project negotiations, the Tunisian Government and the Bank agreed that US$50 million would be justified. The original design of the Project provided that the Bank would make the loan to the Government; however, at negotiations, the Tunisian delegation requested that the proceeds of the loan should be lent directly to each of the development banks involved, with the Government as Guarantor. Ultimately, the design of the Project remained as originally proposed, and consisted of one Loan Agreement with the Government, a Project Agreement with the three PDBs, and Subsidiary Financing Agreements entered between the Government and each PDB. This arrangement was considered more appropriate since two of the PDBs (STUSID and BTKD) were receiving Bank's funds for the first time. 3.9 Interest Rate Policy. Preliminary conclusions of a FSS indicated that there was a need to adjust interest rates structure (para 2.9) but the Bank and the Government had not yet reached agreement on the issue by the time of Project negotiations. Therefore, in the Project Agreement, the Bank stated that it would review annually, with the PDBs, their interest rates structure in light of their average cost of capital, administrative costs and the generally evolution of interest rates. After such reviews, the PDBs were to take all necessary measures to achieve a reasonable spread, allowing them to establish sufficient reserves and provisions and obtain a reasonable return on capital. As part of the Loan Agreement, the Government agreed to allow the PDBs to take measures to achieve these objectives. 3.10 Foreign Exchange Risk. Another important issue identified by the FSS was the foreign exchange risk coverage (para 2.9). During the Project's negotiations, it was agreed that the Government would complete the study for an appropriate foreign exchange coverage scheme, which would be discussed with the Bank by March 1986. Under the Project, the Government would continue to carry the foreign exchange risk until an alternative coverage scheme had been put in place. 3.11 Level and Quality of Supervision by Development Banks. There was concern in the Bank at the time of Project preparation, that BDET had neglected supervision activity because of the expense involved and an attempt to keep administrative and personnel costs at a minimum. There were also concerns about the supervision activities of BTKD and STUSID. BTKD had recently begun to organize its supervision activity and was in the process of formulating the necessary plans and procedures. For STUSID, supervision activity was considered especially important given its emphasis on equity financing. To address these concerns, and ensure the quality of supervision, the Bank and the PDBs agreed to implement the supervision plans discussed at negotiations. 3.12 BDET's Financial Condition. The two immediate concerns about BDET's financial situation were the decline in quality of its portfolio and the large amounts of foreign exchange losses, owed by the Government. BDET arrears situation worsened in 1984, with arrears amounting to TD 16 million, of which TD 12 million was overdue for more than 3 months representing about 6% of the  - 8 - outstanding loan portfolio; compared with arrears in 1983 of only TD 9.5 million (of which TD 7 million were for more than 3 months), representing about 4% of the loan portfolio3. During negotiations, the Bank agreed with BDET that it would keep the Bank abreast of an action plan for reducing arrears by furnishing the Bank monthly progress reports with the intention to reduce arrears to 5% of BDET's portfolio by 1986. The Bank was also concerned about the Government's debt of US$ 13 million to BDET for foreign exchange losses incurred as a result of foreign borrowings, which had put considerable financial strain on the institution. Therefore, the Bank proposed making Government payment of these losses a condition of Board presentation, then later changed it to a condition of effectiveness, and later dropped it, after receiving commitments from the Government for the payment before the end of 1985. 3.13 Export Credit Insurance. Originally the Bank was to finance technical assistance to assure the function and development of COTUNACE, the Export- Credit Insurance Company, which was established but not yet operating at the time of Project appraisal. At negotiations, the Bank and the Government agreed on the financing of the TA program with non-Bank funds. In addition, they agreed that if non-Bank funds did not become available by December 31, 1985, the Government would finance the shortfall. 3.14 Export Promotion Fund. The Bank had planned to allocate about US$0.5 million of this loan as a contribution to the fund. However, at negotiations, the Government requested reallocation of the amount to the credit line component and agreed to fund the activity through a small tax on imports. The Loan Agreement contained a covenant that the Export Promotion Fund would be set up by December 31, 1985. 3.15 Project Linkage with Industrial and Financial Sector Work. At negotiations, the Bank proposed that the Government commit itself to presenting the Bank with an action program of industrial policy reform, which was to take the form of a Supplemental Letter to the Loan Agreement. But since the recommendations of the Bank's industrial sector policy mission were not yet available, the Government was unwilling to commit its adherence to such a program. In addition, Tunisian authorities confirmed to the Bank that the Government was willing to engage in a dialogue on reform but was concerned about approving key industrial sector measures, in view of union and opposition groups. The Bank dropped the Supplemental Letter, leaving the resolution of policy matters until the industrial sector mission recommendations were available. The Bank also dropped a general review covenant which would have provided an opportunity to discuss a program for addressing issues identified in the FSS that was then in progress. The Government asked the Bank to drop this general review covenant for political reasons; the Bank did so but retained a covenant that allowed the Bank to review the development banks' interest rate structure. 3/ Of the 132 companies which were in arrears for more than three months, almost half of the arrears were concentrated in 22 public sector companies which were receiving special supervision efforts.  - 9 - 3.16 The Bank believed that the FSS preliminary findings during Project preparation did not warrant any delay in advancement of the Project. The FSb found the sector basically efficient and the Bank saw the Project as a vehicle for implementing its recommendations. However, there was some concern about the industrial sector since the existing framework encouraged inefficiencies and production for the domestic market rather than for export. To tackle the issue, the Government had done an in-depth study of the protection framework and the Bank had begun a dialogue on how to best rationalize the system. 4. PROJECT OBJECTIVES AND DESCRIPTION Objectives 4.1 The SAR of the Project cited two main objectives. The first objective was to promote the efficient development of export industries by financing, through BDET, BTKD and STUSID, the establishment, expansion and modernization of industrial enterprises engaged in exports. The second objective was to improve the institutional environment for exporters by (a) providing Government's funds to exporters for marketing support through FOPRODEX, (b) assisting the Export Credit Insurance Agency (COTUNACE) with the proper formulation and execution of a technical assistance program, and (c) helping to improve administrative procedures related to exports, particularly in the areas of customs formalities, foreign exchange controls and import regulations. Loan Amount and Project Components 4.2 The Project consisted of a US$ 50 million loan to the Government which would pass the proceeds, in local currency, on to BDET (US$ 20 million), BTKD (US$ 15 million) and STUSID (US$ 15 million) to cover part of their resource needs, for the financing of eligible industrial export projects. The subsidiary loans were made at the Bank's standard variable interest rate. The Government was to bear the foreign exchange risk. The signature of Subsidiary Financing Agreements between the Government and each of the PDBs was a condition of loan effectiveness. 4.3 The loans to the PDBs were to finance the foreign exchange costs of goods, works and services for industrial export projects which the PBDs were to finance under the loan. The Bank and the Government had estimated that about 60% of the investment cost of projects would consist of goods and services supplied from abroad. The Bank was to make disbursements for these subprojects based on standard documentation described in the Bank's disbursement procedures, except for expenditures below US$ 20,000, which would be made against statements of expenditures. 4.4 The definition of industrial export subprojects eligible for financing under the Project covered (a) new enterprises which would export at least 30Z of their production and (b) the balancing, modernization and/or expansion of existing enterprises which would export at least 50% of their incremental production. The subprojects should also carry an ERR of at least 10Z and a FRR of at least 12%. The Project set limits on the maximum loan amount for an individual project to be financed by the PDBs, in order to encourage the use  - 10 - of the loan proceeds for a large number of projects. This limit was US$ 2 million for BDET and US$ 1.5 million for BTKD and STUSID. 4.5 For the subprojects financed by BDET, the legal documents included a "free limit" of US$750,000. For subloans less than or equal to the free limit amount, BDET needed to provide the Bank with only a summary description of the investment, the investment enterprise, and the terms of the subloan instead of a detailed appraisal report. The SAR for the Project estimated that about 40Z of the number of subprojects financed by BDET would be for projects above the free limit. The Project did not provide a free limit for BTKD and STUSID in order to allow maximum Bank review of projects financed by them and thus help them to strengthen their appraisal capability. 4.6 For subprojects above the free limit, a detailed appraisal format justifying the export potential of the investment was required to provide the following information: (a) detailed market analysis with statistics of demand, supply and imports in target markets; (b) justification of price/quality competitiveness of projects that the enterprise expected to manufacture; (c) steps taken by sponsors to secure an export market; (d) marketing channels abroad and purchase orders received or contracts made on a long-term basis, if any; (e) past export performance in the case of balancing, modernization and/or expansion subprojects; (f) detailed calculations of net foreign exchange earnings annually for a period of five years, showing breakdown of income and cost in foreign and local currencies; (g) eligibility for the Government's export incentives and the provision of related details; and (h) a description of the protection framework to ensure that subprojects did not depend on excessive protection for the part of their output sold on the domestic market. 4.7 Technical Assistance to COTUNACE. The financing for this technical assistance was to come from concessionary non-Bank funds. However, since the Bank had helped to design and establish COTUNACE, with the assistance from the French Export Insurance Agency, COFACE, it was agreed that the Bank, under the Project, would coordinate the development of the program and monitor its progress. 4.8 Export Marketing and Promotion. To further strengthen the institutional framework with regards to exports, the need to establish an Export Promotion Fund (FOPRODEX) was identified. Although no Bank resources were channelled  - Li - through this Fund, its development and operations were important in encouraging the growth of exports. Therefore, the Loan Agreement contained a covenant stipulating that an Export Promotion Fund, with procedures, organizational structure and staffing satisfactory to the Bank, would be set up by December 31, 1985. The role of the Bank was a monitoring one. Resources from FOPRODEX were made available for (a) assistance in market research, (b) preparation of market studies, (c) participation in trade fairs and training programs related to exports, and (d) preparation of brochures and catalogues for individual enterprises. CEPEX were responsible for operating FOPRODEX. 4.9 Improvements in Procedures for Exports. During the negotiations for the Project, the Bank reviewed recommendations of CEPEX to simplify the complex procedures faced by Tunisian exporters, which were a constraint on the expansion of exports. The Bank and the Government reached agreement that CEPEX would issue a guidebook, by December 31, 1985, outlining the improved procedures, though this was not a covenant in the Loan Agreement. 5. PROJECT IMPLEMENTATION Delay in Loan Effectiveness 5.1 Loan effectiveness were postponed three times, from the original date of November 11, 1985 to February 1986 then to May 1986 and finally to June 1986. This was due to delays in the ratification of Project documents by the National Assembly. This act was necessary to conclude the signing of Subsidiary Financing Agreements between the Government and the PDBs. Amendment to the Project Agreement 5.2 In August 1989, the Bank at the request of the PDBs made two changes ((a) and (b) below) and an addition ((c)) to the Project Agreement, to encourage greater use of the loan proceeds: (a) extension of the commitment date for subproject applications, from June 30, 1988 to June 30, 1989; (b) statement of the maximum value of subloans in constant 1985 US dollars to account for the effects of inflation; and (c) a requirement to add, in the subproject appraisal reports, a description of goods to be produced and, in addition, for goods manufactured domestically and whose production was to be financed under the Loan, a statement of the cost of any imported components. Low Utilization of the Credit Line 5.3 Disbursements and Cancellations. Out of an original loan amount of US$ 50 million, the Bank only disbursed a total of US$ 25.7 million, cancelling the remaining US$ 24.3 million.  - 12 - 5.4 Industrial Sector Review. An Industrial Sector Note (ISN), dated February 20, 1990, and prepared by the Industry and Energy Division of the Bank's Maghreb Department provided some interesting insights which could help explain the performance of the loan. The basis of this study's findings was a series of meetings with some 40 entrepreneurs from the main industrial subsectors; with each of the agencies responsible for key aspects of industrial investment, export and technology promotion; with most major commercial and development banks, the stock exchange; and with research and academic institutions. The ISN noted that GDP increased from TD 6.2 billion in 1984 to TD 8.6 billion in 1988, but there was a decline in total investment from 32% of GDP in 1984 to about 19% in 1988. Industrial investment also had declined as a share of total investment since 1984. 5.5 The main constraint to the growth of investment was the inability of many enterprises to obtain the necessary investment financing, due to the following reasons: (a) the high cost of evaluating new projects oriented towards external markets or new technology; (b) difficulty in assessing project performance without an adequate data base on the industrial sector and export markets; c) uncertainty of the policy environment, especially concerning the pace of trade liberalization and Government intentions concerning the exchange rate; and (d) interest rate caps and existing portfolio weaknesses constraining banks' willingness to take risks; 5.6 Despite the lower share of industrial investment in total investment during 1984-88, the share of manufactured exports grew substantially after 1987, increasing their share in total exports from 50% in 1985 to 75% in 1988. The report looked behind this growth and made two important observations. First it pointed out that companies which exported all of their production were responsible for 40% of industrial exports and more than 90% of their inputs came from outside Tunisia. Usually a foreign investor associated with an offshore company marketed the products abroad. Based on this information, the ISN came to the conclusion that the greater efficiency and marketing skills of such exporters had not yet permeated into domestic industries. Second, exports were highly concentrated in the textile subsector and markets were concentrated in France, Italy and Germany. 5.7 The ISN further noted that incentives to export in Tunisia were not sufficiently strong to offset the high level of domestic industry protection. These incentives included tax-free income for export earnings, exemption from license, value added tax on all inputs required for exports, and duty free imports of inputs required for exports. However, based on the interviews with both exporters and entrepreneurs that did not export, these incentives were not adequate to induce companies producing for the domestic market to export since:  - 13 - (a) tax exemptions were not very useful to a company that pays little or no taxes or understates income (a common practice in Tunisia); (b) in spite of incentives "on the books," exporters were frequently obliged to pay value added tax on imported inputs purchased locally and it remained nearly impossible to obtain a rebate; and (c) as a result of a general relaxation of import licenses, producers usually could obtain an annual authorization for all their estimated import needs whether they exported or not. 5.8 Consultant Report on Credit Line Use. About a year prior to the ISN, a Bank consultant evaluated the Project's pipeline subprojects. The consultant noted that, despite a revision in the expected utilization of the credit from US$ 50 million to US$ 32.5 million, there would be a lack of credit demand under the Project due to : (a) International Factors. Demand from major importing countries (mainly the EEC) was sluggish and this have lessened the demand for Tunisians goods; (b) Domestic Factors. Among these factors, were political uncertainty in Tunisia, delays in decrees for establishing liberalization measures adopted by the Government and persistence of complicated administrative formalities; (c) Institutional Support in Promotion. The consultant noted that the activities of CEPEX were not integrated into a private sector export development strategy which aimed at developing quality products for specific markets. In addition, CEPEX was not well perceived by entrepreneurs; (d) Availability of other financing sources. The Bank line's interest rate of at least 11% made it uncompetitive with other subsidized credits (French, Italian and Belgian) as well as with preferential credits to exporting industries, available through commercial banks. Execution of the Institutional Support Component 5.9 The Borrower had agreed to provide the Export Promotion Fund with the necessary resources and begin operating it by the end of 1985. The Fund became operational at the beginning of 1986. During the period 1986-88, the budget of the Fund averaged TD 10 million annually. 5.10 COTUNACE became operational in July 1985 with a staff of 25 persons divided among six departments -- short-term production (less than 180 days), medium-term production (greater than 180 days), risk studies, administration/financing, legal, and information. The organization received training with funds from the European Economic Community (EEC). During a 1988  - 14 - mission, the Director of COTUNACE mentioned the need for additional funds for training programs and documentation, in the order of $60,000, but that COTUNACE did not need funds from the Bank for this purpose. 6. PROJECT RESULTS Credit Line Component 6.1 Based on appraisal reports sent to the Bank for approval, the Project supported the development of 27 subprojects. The single subsector receiving the largest amount of investment funds was the textile subsector, which accounted for more than one third of the total, followed by electrical and mechanical industries. The expected share of production for export for the subprojects varied from 30% to 90%, except for a few that were to produce entirely for the export market. In addition, all subprojects projected ERRs and FRRs ranging between 15% and 100%, and 16% and 68%, respectively. Subloans by the PDBs to export enterprises carried interest rates ranging from 11.5-13% and maturities varying from 7-11 years with grace periods of 1-3 years. Although there are no available data to assess the actual contribution of the subprojects's export earnings, general export data for Tunisia show that between 1985 and 1991, exports in the manufacturing sector increased from US$ 877 million to US$ 2.8 billion'. 6.2 For the purpose of this PCR, two PDBs, BDET and STUSID, reported that proceeds from the loan had financed 19 subprojects, with a total projected investment cost of approximately US$ 150 million. The number of jobs generated were 3,535 on an amount disbursed of US$ 15.3 million, which is satisfactory when compared with Project's appraisal forecast of 10,000 job on an initial loan amount of US$ 50 million. The textile subsector and the electrical and mechanical industries subsector were the main sources of employment, contributing 73% and 11%, respectively. 6.3 Information received from BDET and STUSID also revealed that loan proceeds as a proportion of total investment costs of the subprojects did not follow a regular pattern and fluctuated widely. In addition, the average subloan for individual projects financed by the PDBs was relatively small, compared to the ceiling set at US$ 2.0 million for BDET and US$ 1.5 million for STUSID (para. 4.4). This situation is particularly striking for BDET. With the exception of one subproject financed at US$ 2 million, the other subprojects averaged approximately US$ 360,000. One underlying cause could be that the PDBs were using the Project as a lender of last resort, after having exhausted other more competitive sources. In addition, a review of BDET's portfolio financed with the loan showed that the portfolio is not performing well. Of a loan portfolio outstanding of TD 10.6 million, 6 loans out of 9, totalling TD 5.8 million, have arrears. Additional information on the aging 4/ If OED decide to do a project performance audit for this project, the PCR recommends that OED make an ex-post review of the actual performance of the subprojects financed by the proceeds of the loan, particularly of their exports.  - 15 - of arrears and the terms of the loans would be needed to determine the seriousness of the situation. Institutional Support from COTUNACE and FOPRODEX 6.4 The SAR noted that an institutional strengthening of COTUNACE and FOPRODEX would benefit exports by addressing market and financial constraints. Together with an improvement in administrative procedures, these measures would have a potential benefit in terms of increased exports that would far exceed their costs. Although it was not possible to assess quantitatively the effect of these measures, the SAR noted that even an increase of 1% in the value of export would translate into about TD 50 million over a period of about 5 years. 6.5 COTUNACE. During 1990, COTUNACE's activities stabilized after experiencing substantial growth during 1985 and 1988, when the number of insurance policies issued rose from 43 to 329. Since 1989, COTUNACE has expanded its coverage and offered 6 types of policies (compared to 3 previously): (a) a global policy reserved for exported consumer goods, (b) a policy covering medium and long-term risks for services based on individual transaction, (c) a market-interruption policy which complemented the two previous policies, (d) a policy covering material losses aimed at enterprises doing construction, public works abroad, (e) a policy covering merchandise losses stocked abroad for trade fairs, --(d) and (e) cover exclusively political risks and/or natural disasters-- and (f) a policy covering non- payment of financial credits. During 1990, the volume of exports covered by COTUNACE reached 295 million DT, experiencing a 12X decline from a volume of 335 million DT in 19895. 6.6 CEPEX and the Export Promotion Fund. The Center for the Promotion of Exports (CEPEX) was in charge of operating the Export Promotion Fund (FOPRODEX) which has been in operation since 1986. Originally the financing of the Fund was to come from a customs tax, but most of the resources actually came directly from the Tunisian Government. During the period 1986-88, the budget of the Fund averaged TD 10 million annually. Decisions on the use of the resources came from a commission which included the representatives of exporters and representatives of the Minister of the National Economy. The Fund was engaged in a number of important activities, but it has not been successful in researching new markets for Tunisian products outside the EEC. Also, there was not a clear distinction between the operations of CEPEX and FOPRODEX. 5/ By 1988, insurance policies from COTUNACE covered about 20% of Tunisia's exports, up considerably from about 10% in 1987. The level of coverage was fairly substantial considering that the rate was about 28% for France and that coverage rarely exceeded 30% anywhere in the world. COTUNACE had built a database of 900 resident enterprises each with annual exports in excess of TD 20,000.  - 16 - 6.7 Administrative Procedures for Exporters. CEPEX was to prepare, by December 1985, a comprehensive guide to help exporters with the intricate procedures and regulations of exports (para 4.9). CEPEX did not prepare the guide, maintaining that several brochures of CEPEX and a publication by the Central Bank already covered such procedures. A user-friendly guide integrating and clarifying the information is still needed. 7. PERFORMANCE OF THE BORROWER AND PARTICIPATING BANKS The Government. 7.1 Responsibilities vis i viS the Participating Developing Banks. The Government, as the Borrower under the Loan was to (a) on-lend the proceeds of the loan to the PDBs (b) ensure that the PDBs meet their obligations under the Project Agreement and make satisfactory provisions to protect them against losses resulting from foreign exchange transactions and (c) review, annually with the Bank, the financial requirements of the PDBs for each coming year. Except for the lateness in reimbursing BDET for its foreign exchange losses, the Government's performance was satisfactory. In 1987, the Government recommended that the Bank prepare a seminar to help the PDBs prepare appraisal reports on subprojects, since the latter had shown some deficiencies, especially in marketing analysis and cost estimation. A Bank's consultant did an assessment of the PDBs' subprojects portfolio and made recommendations for improvements (para 8.6). Also, in support of improved utilization of the loan proceeds, the Government requested an amendment of the Loan Agreement to allow expanded coverage of eligible expenditures and periodic updating of the investment ceiling for subprojects to take account of inflation (para 5.2). 7.2 COTUNACE. According to Section 4.02 and 5.01 of the Loan Agreement, the Government was responsible for overseeing the operation of COTUNACE and ensuring that adequate funds were available for technical assistance and training of COTUNACE staff. COTUNACE received funds from the EEC for technical assistance (para 5.10) and its operation were relatively satisfactory to the Bank during the course of the Project. However, the Bank expressed concern about the adequacy of funds to cover political risk. In 1988 the Bank reviewed COTUNACE's operations and noted that the Government was providing only half of the back-up funds required to cover political risks, although the Government was required, by statute, to cover the full amount. The Government's main reason for not providing the full amount was its severe budgetary constraints. The Bank review also cited the need to monitor premium rates charged in relation to the array of insurance policies provided to exporters. 7.3 Export Promotion Fund. The Government was to provide the Fund with the necessary resources for operation by December 31, 1985. The Government's performance in the set-up and operation of the Fund was found satisfactory; but several areas of the Fund's operation needed improvement. Although the Fund brought out innovative measures to help exporters penetrate new markets and diversify their production, it did not devote sufficient attention to helping exporters adapt their products to the needs of foreign consumers. The Fund also needed to improve its monitoring procedures.  - 17 - 7.4 Foreign Exchange Risk. The Government prepared a study on foreign exchange risk, as specified in the Loan Agreement. The Bank considered the completion of the study satisfactory as a fulfillment to the Loan Agreement, but viewed it only as an initial step in a dialogue for future improvements in the financial sector's overall management of risk and the setting of risk premiums. The Participating Development Banks (PDBs) 7.5 Utilization of the proceeds of the loan was slow. The Bank extended the commitment date and the closing date to enable the PDBs to employ the resources fully. But, when the Project finally closed in June 30, 1992, 49Z of the original loan amount had been cancelled. Only US$ 25.7 million were disbursed. Actual amounts disbursed by each PDB are shown in Table I below. BDET, had the lowest rate of credit line utilization in relation to the original allocation. BTKD and STUSID had similar rates of utilization, at 69% and 67% respectively. Table 1 Use of the Loan Proceeds by PDB (US$ million) PDB Original Allocation Actual Disbursements BDET 20.0 5.2 BTKD 15.0 10.4 STUSID 15.0 10.1 50.0 25.7 7.6 BDET. Compared to the other two PDBs, BDET's credit line utilization was the lowest, mainly due to BDET's accessibility to less expensive French and Italian bilateral funds and to competition from BTKD and STUSID. BDET's appraisal reports were for the most part well-organized, complete and substantial, but market analyses were too optimistic. In response to competition from other development banks, BDET focussed on new enterprises and emphasized quantity of projects over quality, but it did not have the in-house capability to promote, appraise and supervise sophisticated and technologically advanced projects. During the course of the Project, BDET made some progress in improving its supervision process, which was a concern at the time of Project appraisal. But it experienced financial difficulties because of the significant arrears the Government owed to it in compensation for losses on foreign exchange transactions. 7.7 BTKD. The financial position and organization of BTKD, along with mounting arrears, became a concern under the Project. Historically BTKD had a tendency to finance projects backed by the State. As a result, a large share of its arrears were, and are still, due to public enterprises. BTKD's supervision activities were also relatively lax; for example, it did not have a process of systematic visits to client enterprises, not even those with  - 18 - major arrears. The Bank recommended that BTKD management hire a consultant to do a thorough review of its performance portfolio and operational procedures. 7.8 STUSID. The financial position of STUSID remained fairly sound throughout the Project implementation period. STUSID exercised caution in its selection of industries to support. One aspect in STUSID's management which had contributed to a strong portfolio was that its Board had to authorize investments at TD 1 million or more. 7.9 Compliance with financial covenants as stipulated in Loan documents. The three PDBs had provided the Bank with their yearly financial statements which were audited by independent auditors, acceptable to the Bank, i.e. Commissaire aux Comptes or a private accounting firm. The Bank accepted the audit reports as presented as they were prepared in accordance with banking regulations prevailing in Tunisia at the time. The PDBs' financial statements are available in the Project Files. 8. PERFORMANCE OF THE BANK Project Preparation and Appraisal. 8.1 The Bank's preparation and appraisal work were satisfactory in establishing the need for the credit line and the technical assistance components, but the Bank did not pay sufficient attention to (a) the relation of the size of the loan to investment demand and the capabilities of the PDBs to process viable subprojects, (b) the importance of clarifying the administrative regulations for exporters, and (c) the appropriate conditionality to ensure the Government's compensation for BDET of losses on foreign exchange transactions and future handling of foreign exchange risk. 8.2 Loan Size. Until loan negotiations, the Bank was planning on a loan of US$30-35 million but during negotiations, the Government convinced the Bank to increase the amount to US$ 50 million. Although the SAR cited a substantial pipeline of projects for investment financing, there was no evidence of a detailed evaluation of the quality of projects in the pipeline. The files, and staff involved in the preparation of the Project, also indicated that the size of the loan was related more to the desire of the Tunisians for a large loan and the fact that the Bank was willing to increase its annual lending program to Tunisia. 8.3 Administrative regulations for exporters. As per the Decision Memorandum of the Project, the preparation of a draft brochure on administrative regulations was to be available for discussion at Project negotiations. Also, the Government was to prepare recommendations for improving export procedures in the Government departments and the Central Bank. In particular, the Customs Office was to establish a service department to help exporters with administrative procedures, and this was to be a condition of loan effectiveness. The Bank ultimately dropped these items as conditions for negotiation and effectiveness of the loan. This was unfortunate, as supervision missions and consultant reviews during the  - 19 - implementation of the Project confirmed that a major obstacle to exporters was the lack of clarity about export regulations. 8.4 Government repayment of BDET's losses and Foreign Exchange Risk. The Decision Memorandum for the Project noted agreement in the Bank that the Government, as a condition of negotiations, should reimburse BDET for its outstanding payments to compensate BDET for foreign exchange losses paid by BDET on behalf of Government on foreign loans that had accumulated during 1981-83. However, the Bank dropped this condition under pressure from the Government. Subsequently, the Bank made the repayment of these losses a condition of effectiveness and then dropped it, in order to expedite loan effectiveness. In hindsight, it would have been more prudent to make repayment of losses and the start-up of a foreign exchange risk study conditions of negotiations and its completion a condition of effectiveness, even if at the cost of postponing the Project. This would have given a clear signal to the Government about the importance of resolving foreign exchange issues early in the Project's execution. Project Supervision 8.5 Subproject Evaluation and Monitoring the Performance of PDBs. In 1986, before the loan became effective, the Bank's first supervision mission recommended that a consultant do an in-depth, project-by project review of BDET's projects in arrears. The consultant's recommendations on an action plan was transmitted to BDET's management in June 1987. 8.6 Moreover, the Bank employed another consultant to (a) reassess the pipeline of export industry projects, (b) review the quality of subproject appraisals, and (c) visit some of the enterprises in difficulty, especially those with large arrears. The files contain a very detailed draft report dated June 1987, which reviewed the portfolios of the PDBs and made recommendations for improvements. At this point there was a discontinuity in the supervision process, since the next supervision mission made no reference to the consultant report or any follow-up work but instead focused on an overall review of the low utilization of the credit line and the need for changes in the Loan Agreement. It was not until the supervision report of December 1988 that the Bank again addressed the operations of the PDBs in detail. 8.7 A review of the subproject appraisal reports, the approval process and documentation available in Bank's files revealed a lack of consistency in the Bank's subproject examination process. For example, most of the files for STUSID's subprojects contained a standardized summary project information and rating sheet with a very detailed checklist of points in the appraisal report and a formal statement of approval. There were no such sheets, however, in the files of the other two PDBs. This was unfortunate, especially since BDET did not perform well in terms of the utilization of the credit line. Also, the PCR review noted that, in certain cases, actual disbursements on subprojects were higher (in several cases by about 50%) than the amounts formally authorized, with no documentation explaining the discrepancy. Interviews with Project staff indicated that there were basically two reasons for the discrepancies: (a) devaluation of the Dinar relative to the US$ and  - 20 - (b) requests from the PDB for a higher level of disbursement which the Bank authorized verbally but did not always document. 8.8 Institutional Components. It was not until the end of 1988 that the Bank devoted any significant attention to the operation of COTUNACE and the Export Promotion Fund. The review of the December 1988 mission was thorough and was backed by a detailed consultant report on the set-up and operations of these two institutions. The report contained a number of recommendations to improve the operational efficiency and responsiveness of the institutions to exporters needs, but the Bank did not pursue further to implement the recommendations. 8.9 Industrial Sector Issues. Bank supervision missions did not address industrial sector issues to any notable extent until late in 1988. The December 1988 supervision report discussed a number of industrial sector performance issues and strategies covering the macroeconomic picture, reasons for the decline in investment levels and changes in the regulatory framework and the role of public sector agencies in export promotion and development. Subsequently, the ISN of 1990 treated some of the same issues in detail but supervision work on the Project during 1990-91 did not use any of this earlier work to evaluate the sector implications for the Project's performance. 8.10 Financial Sector Issues. A Bank memorandum on the effectiveness of the Project noted that receipt by the Bank of the foreign exchange risk study fulfilled one of the covenants of the Loan Agreement. The Project did not follow up on the results of the study. However, these were later discussed and were beneficial in defining a foreign exchange risk scheme under SAL (1988). The other financial issues noted in Project supervision were that the Ministry of Finance and Planning had agreed to allow development banks to lend to their clients on a short-term basis, and that the Central Bank had agreed on the development of a standardized accounting plan for banks. 9. SUSTAINABILITY OF PROJECT ACHIEVEMENTS 9.1 The Project's main achievements were (a) the build-up of COTUNACE and the Export Promotion Fund managed by CEPEX, (b) some improvements of the appraisal/supervision capacities of the PDBs, and (c) some impact on reducing BDET's arrears. Ihe low level of credit line utilization under the Project reflected prevailing economic conditions, as well as some obstacles that the Government and the exporters themselves did not address in order to have a significant impact on export performance, and still need to address in the future. The sector work which the Bank addressed in the context of Project supervision indicated that further growth of exports in Tunisia would depend mainly on the ability of exporters to improve the marketing of their products. In this context, exporters faced the following three obstacles: (a) inadequate marketing skills which reflected lack of awareness of market variability and limited knowledge of updated sales techniques;  - 21 - (b) lack of concern about the qualititative fit between exported products and the demand of foreign consumers, especially in the areas of product specifications and quality standards; (c) insufficient flexibility to diversify production to take full advantage of market opportunities. To address these constraints, Tunisian authorities still need to work closely with the private sector to complement and enhance the effectiveness of Project's institutional achievements in the areas of export promotion and export insurance. Recommended actions include: (a) preparation of a brochure which explains in clear, simple language, the existing administrative requirements for exporters; and (b) identification of mechanisms to make administrative agencies more responsive to, and supportive of, the Government's export strategy. (c) periodic consultation of CEPEX with exporters to explore the need for improving or expanding its service. The Bank could assist the Government in developing a more clearly focussed export strategy, by first analyzing export performance, and delineating the strategic components required to meet export objectives. Subsequently, the Bank could help to define the mechanisms for export promotion agencies to achieve their stated goals. Finally, it would be worthwhile to study the offshore activities of Tunisia and other countries to derive export development experience which Tunisian exporters could benefit from. 10. LESSONS LEARNED 10.1 A Review of the implementation experience and results of the Project indicate the following lessons learned : (a) Design and maintain policy conditionality as an integral component of sector strategy. The Bank did not insist strongly enough on maintaining conditionality in the early stages of the Project. This affected two aspects of the Project's design and implementation. Firstly, the Bank may have encouraged the Government to establish and operate the foreign exchange risk fund earlier and thereby mitigated BDET's accumulation of arrears, if the Bank had insisted on making Government payment to BDET for losses on foreign transactions a condition of negotiations. Secondly, the Bank dropped some support for the clarification of administrative regulations for exporters and, more generally, the export sector, when it dropped the Supplemental Letter on Industrial Policy and the conditionality for developing a brochure clearly outlining administrative regulations for exporters. (b) Maintain sector linkage with the project throughout the project cycle. The Bank, during project preparation, intended to first establish an industrial and financial sector framework for the project supported by related project conditionality. However, the Bank abandoned the conditionality when the timing of the studies supporting a new policy did not conform to the  - 22 - timetable set for loan processing. After the Bank financed the Project, neither the industrial sector nor the financial sector received much attention until problems emerged with the utilization of the credit line. Industrial sector work that occurred late in the project cycle provided some insight into the performance of the project, but subsequent supervision missions did not link the findings to specific problems in the portfolio of subprojects. Also, changes in the financial sector, such as the availability of competing credits on more attractive financial terms, had an impact on the credit line utilization as well. (c) The PDBs should have flexibility in setting interest rates. A cause of low utilization of the proceeds of the loan was that the interest rate on subloans under the Project were not competitive with other credits available to exporters. This is attributable to two factors. First, preferential credits from the Central Bank and credits at low interest rates from bilateral agencies were available to exporters, and these funds were not blended with the Bank's funds. Second, the PDBs did not have the flexibility in setting attractive interest rates on subloans, as a consequence of terms stated in the Project Agreement between the Bank and the PDBs. According to the Agreement, the rate on subloans could be set no lower than 11%. In future operations participating banks should have the discretion to set interest rates on subloans such that the margins are satisfactory based on their respective average cost of funds and operating expenses. (d) Eligibility criteria for participating banks which include financial performance targets agreed upon at appraisal and followed-up during supervision. The Bank had detected the deterioration of the financial performance of the PDBs and had agreed with the PDBs that they should take measures to improve their performance. However, the Bank and the PDBs did not establish a well-defined set of performance criteria which would have provided the Bank with a clear basis for evaluating the financial performance of the PDBs. For future operations, the Bank should agree with participating financial institutions on minimum objective standards of financial performance to be maintained throughout project implementation, and should monitor, through project supervision, that these standards are met. Failure to meet acceptable financial standards should be cause for eligibility suspension by a given financial institution. (e) Bank's supervision efforts need to be regularly planned and better implemented. The Bank had identified (i) the deterioration of BDET's and BTKD's portfolio and (ii) the capacity of the three PDBs to appraise and supervise investments. To address the first problem, the Bank made recommendations on ways to improve the two institutions. Specifically, the Bank agreed with BDET that it should furnish the Bank monthly progress reports with the intention of reducing its arrears (para 3.12). Concerning the level and quality of supervision of the PDBs, the Bank agreed with the PDBs on supervision plans (para 3.11). However, in both cases, the Bank did not follow-up on its recommendations and did not ensure that corrective measures were taken which would produce ultimate results. The Bank should have taken a more critical stance on these issues. Supervision also suffered from a lack of continuity and regularity. Most of the supervision reports are "time slices", often focussing intensively on a single aspect of the project without  - 23 - sufficient backward and forward linkages. Only one report was comprehensive in that it integrated industrial and financial sector issues, institutional issues, use of the credit line and the financial condition of the participating banks. Only two supervision missions (1986 and 1991) produced full supervision reports using the standardized, comprehensive format which the Bank provides (Form 590) and only one mission (1991) included a review of the status of all major project covenants. (f) Create a useful data base for monitoring and evaluating subprojects. There was no comprehensive data base containing subproject descriptions and expected achievements. A number of evaluation reports were missing; and the quality of the reports sent to the Bank for review varied from each PDB. The lack of a data base may have caused some inefficiency in the monitoring and approval of subprojects, making it necessary to search through various documents to reference essential information instead of accessing a one-page information summary. The reviewer of the subproject appraisal report should record the essential project information on a standard form in a computerized data base for reference and update it throughout the project cycle.  - 24 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN PART II REPORT OF THE BORROWER  - 25 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN The Borrower did not prepare a Part II.  - 26 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN PART III STATISTICAL INFORMATION  - 27 - Table 1 Related Bank Loans Loan Year of Purpose Amount No. Approval Diisbursed US$mlllion- 1969 1981 Small-Scale Industry Development 30.0 2012 1981 Textile Rehabilitation 18.6 2113 1982 Electrical and Mechanical Industries 30.5 2301 1983 Industry IV Foundry 16.8 Table 2 Proiect Timetable Stage of Project Original Date Actual Date Cycle Original Date_Actual _Date Identification October 1983 October 1983 Appraisal April 1984 April 1984 Negotiations March 1985 March 1985 Board Approval April 1985 April 1985 Effectiveness August 1985 June 1986 Loan Closing June 1991 June 1992 Project Completion October 1991 October 1992  - 28 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN Table 3 Cumulative Estimated and Actual Disbursements by End of Calendar Year (US $ million) Estimated Actual 1985 1.28 1986 8.10 1987 22.14 -- 1988 36.26 11.96 1989 44.64 19.20 1990 50.00 24.20 1991 -- 25.63 1992 -- 25.70  - 29 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN Table 4 Selected Project Implementation Indicators Implementing Indicators Expected Actual Comments Agency Date Date The Preparation of a 3/31/86 3/31/86 03/31/86 Government Foreign Exchange Risk of Tunisia Study Provision of Export 12/31/85 01/86 01/86 Promotion Fund with Resources Necessary for Operation BDET Completion of lending 6/31/91 6/31/92 Partial US$ 20 million from Achievement Loan proceeds to US$5.2 enterprises for export million lent projects BTKD Completion of lending 06/31/91 6/31/92 Partial US$ 15 million from Achievement Loan proceeds to US$10.4 enterprises for export million lent projects STUSID Completion of lending 6131/91 6/31/92 Partial US$ 15 million from Achievement Loan proceeds to US$ 10.1 enterprises for export million lent projects Table 5 Project Costs and Financing Project Costs and Financing Original Est. Actual Amount US$ million US$ million Bank Financing 50 26  - 30 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN Table 6 Project Results A. Direct Benefits Estimited at Appraisal Actual Expanded resources for export Achieved but at a lower level of project investments. investment financing demand. Improved subproject appraisal and Achieved for BDET and STUSID; BTKD supervision capability. still needs some improvement. Preparation of a Foreign Exchange Achieved. Study to serve as a Risk Study. preliminary step for action on ____________________________________ management and funding issues. Establishment and funding of the Achieved. Also project supervision Export Promotion Fund. reviewed the Fund's operation and made recommendations for improvements. Establishment of COTUNACE supported Achieved. In addition, the Project by technical assistance and reviewed the operations of COTUNACE training. and made recommendations for _____________=______________________ _ _ improvements.  - 31 - B. Indirect Benefits Estimated at Appraisal Actual Increase in export earnings of US$ Data not available to link 100 million per year associated with subprojects with actual export data investment projects financed. but, on a global basis manufactured exports increased dramatically during the period of project implementation (1986-1992). Creation of 10,000 jobs through Partially Achieved. Information investment projects on an initial from BDET and STUSID indicated loan amount of US$ 50 million. creation of 3,535 on disbursement of US$ 15.3 million. C. Rates of Return on Subproject Investments Estimated Actual Minimum ERR of 10 15x-100: (Est.) Minimum FRR of 122 15%-67% (Est.)  - 32 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN Table 7 Status of Project Covenants A. Loan Agreement (LA) LA: Section 2.01 Covenant: Borrower Commitment to objectives and responsibilities under the project. Status: Compliance. LA: Sections 3.02 - 3.03 Covenant: General on lending provisions Statues: Compliance. LA: Section 3.04 Covenant: Maintain the Expert Promotion Fund, provide it with necessary resources by December 31, 1985, and provide funds to enterprises for the promotion of experts to develop new markets and promote product marketing. Status: Compliance. LA: Section 3.05 Covenant: Provision of information reasonably requested by the Bank and preparation with COTUNACE of a report on the execution, coat and benefits of parts B + C of the project. Status: Not yet received.  - 33 - LA: Section 4.01 Covenant: Negative pledge. (Regulations concerning the creation of liens). Status: Compliance. LA: Section 4.02 Covenant: Borrower responsibility for the conduct of COTUNACE Status: Compliance. LA: Section 4.03 Compliance: Non-interference with the Development banks in the execution of responsibilities under the Project Agreement. Status: Compliance. LA: Section 4.04 Covenant: Completion of a foreign exchange risk study by March 31, 1985. Status: Compliance, results were instrumental in defining a scheme adopted under SAL I. LA: Section 4.05 Covenant: Protection of BDET, BTKD and STUSID from losses resulting from exchange rate changes. Status: Partial compliance. Delays in compensating BDET for losses from exchange rate changes.  - 34 - LA: Section 4.06 Covenant: Bank/Borrower review of financial requirements of Development Banks by December 31 of each year. Status: Compliance. Done in the context of a review of interest rate structure in Tunisia. B. Project Agreement PA: Section Z.01 Covenant: Commitment of BDET, BTKD and STUSID to project objective. status: C ::ince PA: Section 2.02 Covenant: Execution of iub-loans by BDET, BTKD and STUSID according to criteria in Schedule l. Status: Compliance. PA: Soction 2.03 Covenant: Documentation required for presenting a sub-loan to the Bank. Status: Compliance for subprojects for vhichAdocumentation i. available 11 in thie Sank's& files.  - 35 - PA: Section 2.04 Covenant: Obligation of BDET, BTKD and STUSID to protect the interests of the Bank and the Borrower in contract for sub-loans.. Status: Compliance. PA: Section 2.05 Covenant: Reporting requirements of BDET, BTKD and STUSID on use of Bank funds. Status: Compliance. Audit reports submitted with occasional delay. PA: Section 2.06 Covenants Rules governing the establishment of any subsidiaries by DBET,l BTKD or STUSID. Status: Compliance. PA: Section 2.07 Covenant: BDET, BTKD and STUSID to perform obligations under ito respective Subsidiary Financing Agreement. Status: Compliance. PA: Section 2.08 Covenant: Requirement for exchange of views between each of the participating banks and the Bank on the progress of the project. Status: Compliance.  - 36 - PA: Schedule 1 Covenant: Eligibility criteria for investment projects | Status: Compliance. E PA: Schedule 2 Covenant: Appraisal report format | Status: Compliance.  - 37 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN Table 8: Use of Bank Resources A. Staff Time Allocation by Stage of Project Cycle (Staffweeks) Preparation and Negotiations through Supervision Total FY Appraisal Effectiveness 1983 0.5 ---- ---- 0.5 1984 46.3 ---- ---- 46.3 1985 12.4 17.8 0.7 30.9 1986 ---- ---- 10.2 10.2 1987 ---- ---- 10.7 10.7 1988 5.9 5.9 1989 ---- ---- 11.9 11.9 1990 ---- ---- 11.3 11.3 1991 ---- ---- 12.6 12.6 1992 ---- ---- 3.3 3.3 1993 ---- ---- 0.7 0.7 Total 59.2 17.8 67.3 144.3 Source: MIS  - 38 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN Table 9: Use of Staff Resources B. Maior Proiect Missions Activity Date # of # of Specialization Project days Persons represented Rating ID 10/11-11/1/83 NS 4 FA, IEC, 2IS NA APP 3/19-4/9/84 15 3 FA, EC, IS NA SP 9/22-10/9/85 19 2 LO, OF NA SPN1 12/2-12/19/85 18 3 FA, EC, OF NA SPN2 4/14-5/1/86 17 2 FA NR SPN3 5/11-22/86 12 2 LO NR SPN4 1/19-2/6/87 20 3 FA, CON, OF 3 SPN5 9/1-10/87 11 1 OF NR SPN6 6/26-7/8/88 13 1 CON NR SPN7 9/3-16/89 14 4 OF, OA, FA, CON * SPN8 10/11-24/90 14 4 OF, OA, FA, CON * SPN9 11/4-20/92 17 2 FA, OA 2 Activities: APP = Appraisal; ID - Identification SP - Supervision Preparation SPN - Supervision Staffing: EC = Economist CON - Consultant FA - Financial Analyst IS - Industrial Specialist LO - Loan Officer OA = Operations Assistant OF = Operations Officer NA - Non Applicable NR - Not Reported * Based on TORS Supervision Report not on file.  - 37 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN Table 8: Use of Bank Resources A. Staff Time Allocation by Stage of Project Cycle (Staffweeks) Preparation and Negotiations through Supervision Total FY Appraisal Effectiveness 1983 0.5 0.5 1984 46.3 ---- ---- 46.3 1985 12.4 17.8 0.7 30.9 1986 ---- ---- 10.2 10.2 1987 ---- ---- 10.7 10.7 1988 ---- 5.9 5.9 1989 ---- ---- 11.9 11.9 1990 ---- ---- 11.3 11.3 1991 ---- ---- 12.6 12.6 1992 ---- ---- 3.3 3.3 1993 ---- ---- 0.7 0.7 Total 59.2 17.8 67.3 144.3 Source: MIS  - 38 - PROJECT COMPLETION REPORT TUNISIA: EXPORT INDUSTRIES PROJECT LOAN 2522-TUN Table 9: Use of Staff Resources B. Maior Proiect Missions Activity Date # of t of Specialization Project days Persons represented Rating ID 10/11-11/1/83 NS 4 FA, IEC, 2IS NA APP 3/19-4/9/84 15 3 FA, EC, IS NA SP 9/22-10/9/85 19 2 LO, OF NA SPN1 12/2-12/19/85 18 3 FA, EC, OF NA SPN2 4/14-5/1/86 17 2 FA NR SPN3 5/11-22/86 12 2 LO NR SPN4 1/19-2/6/87 20 3 FA, CON, OF 3 SPN5 9/1-10/87 11 1 OF NR SPN6 6/26-7/8/88 13 1 CON NR SPN7 9/3-16/89 14 4 OF, OA, FA, CON SPN8 10/11-24/90 14 4 OF, OA, FA, CON SPN9 11/4-20/92 17 2 FA, OA 2 Activities: APP = Appraisal; ID - Identification SP - Supervision Preparation SPN - Supervision Staffing: EC - Economist CON - Consultant FA - Financial Analyst IS - Industrial Specialist LO = Loan Officer OA - Operations Assistant OF = Operations Officer NA - Non Applicable NR - Not Reported * Based on TORS Supervision Report not on file.