Announcement of Joint Financing in Tunisia on May 11, 1966

International Bank for Reconstruction and Development International Finance Corporation 1818 H STREET. NW., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 66/20 IFC Press Release No. 66/6 Subj,~: Joint Financing in Tunisia May 11, 1966 Financial institutions in Tunisia, France, Germany, Italy and Sweden are joining the World Bank and its affiliate, the International Finance Corporation (IFC), in providing about $6 million in share and loan capital for the Soci~te Nationale d'Investissement (SNI), a development finance company in Tunisia. This financing, together with a Tunisian Government contribution, will result in a threefold increase in SNI's total capital resources. At the same time, • SNI is being reorganized and will provide a wide range of financial and other assistance to private industrial enterprises in Tunisia, including the tourist industry which is becoming increasingly important as a source of foreign ex- change earnings. The reorganization will bring SNI under private control. The World Bank is making a loan equivalent to $5 million to SNI, while IFC and European and Tunisian financial institutions are investing in share capital as follows: IFC, 300,000 Tunisian dinars ($570,000); European in- stitutions, D 120,000 ($230,000); Tunisian banks, D 89,000 ($170,000). The interested European investors are Banca Commerciale Italiana Bank £Ur Gemeinwirtschaft Caisse Centrale de Cooperation Economique Caisse des Depots et Consignations Stockholms Enskilda Bank The Tunisian participants are the Societe Tunisienne de Banque, which ~ is increasing its present shareholding in SNI, and the five following commercial  . . - 2 - banks which are participating in SNI's share capital for the first time: Banque d'Escompte et de Credit a l'Industrie en Tunisie, Banque de Tunisie, Banque Nationale Agricole, Union Bancaire pour le Co111Lerce et l'Industrie and • Union International de Banques. The new funds will increase SNI's total capital resources from D 2 million to about D 6 million ($11.4 million), of which D 1.5 million ($2.85 million) will be share capital. With greater resources at its disposal, in foreign as well as local cur- rency, SNI will be in a position to expand its operations substantially. In addition to equity investments, it will make medium and long-term loans to private entrepreneurs. Where appropriate, it will assist them in preparing investment proposals, obtaining suitable partners, or by guaranteeing credits from other sources. SNI will support the development of a local capital,market, • in particular by reactivating the securities market through underwritings and the sale of investments from its portfolio. SNI was established in 1959 on the initiative of the Tunisian Government, with funds provided mainly from Government sources. SNI's operations to date have consisted chiefly of equity investments; these make up about 80% of its present portfolio of approximately D 2.25 million ($4.3 million). Its re- organization stems from a study carried out by IFC in 1964 to determine Tunisia's industrial financing needs. The Government and IFC subsequently agreed on the reorganization of SNI along the lines. which have now been adopted. The Government is giving its full support to SNI by granting it a number of tax and other concessions, as well as by direct financial aid. Industrial production in Tunisia, which now accounts for 14% of the gross national product, has been increasing at an average rate of about 6% annually since 1960, in line with the over-all growth of the economy. The Government is • • - 3 - taking measures to accelerate industrial growth and in particular to encourage private investment. Su~stantially higher investment in industry is envisaged under the Tunisian Four-Year Development Plan of 1965-68, and the strengthening of SNI is one of the measures taken to increase the role of the private sector in achieving this target. Investment in hotels and other tourist facilities is expected to increase significantly over the next few years. Tunisia is rapidly gaining in popularity among tourists and tourist revenues are a growing source of foreign exchange. Tunisia's total tourist receipts, which were less than $10 million in 1964, are likely to more than double by I968. The attractive possibilities of this sector are encouraging first ventures by a number of Tunisian private investors. The proceeds of the World Bank loan will be available for equity invest- • ments as well as loans. The loan will be for a term of llbout 18 years and bear interest at the rate to be applied by the Bank at the time of actual commitment of funds for specific projects. The amortization schedule will conform sub- stantially to the aggregate of the repayment schedules applied to SNI loans i. investments financed out of the proceeds of the World Bank loan. None c a repayment schedules will extend beyond 15 years. The loan is guaranteed u_ che Tunisian Government. This is the second loan made by the World Bank in Tunisia, as well as IFC's second investment in that country. The Bank made a loan equivalent to $7 mil- lion in 1964 to assist in financing a modern port for Tunis. In 1962 IFC in- vested $3.5 million in loan and share capital in NPK-Engrais S.A.T., a producer of triple superphosphate fertili~ers. The Bank's other affiliate, the Inter- • national Development Association, extended a credit of $5 million to Tunisia in 1962 for secondary and technical school construction.