Announcement of Ten Million Loan to Development Finance Company in Tunisia on September 8, 1967

• 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 67/44 Subject: $10 million loan to development September a, 1967 finance company in Tunisia The World Bank has approved a loan equivalent to $10 million to the Societe Nationale d'lnvestissement (SNI), a development finance company in Tunisia. The loan will nearly double SNI's resources for medium and long-term loans and invest- ments in productive pr,,jects undertaken by private Tunisian enterprises. SN!, established in 1959, was reorganized in 1965/66 with the technical and financial assistance of the Bank and its affiliate, the International Finance Corporation (IFC), and the support of the Government. Its resources were increased • nearly three-fold to a total of 6 million dinars ($11.4 million); it was brought under private control; and the scope of its operatio~s was widened to include medium and long-term loans as well as equity investments. Since then, SNI has made good progress in strengthening its organization and administration, and operations have expanded at a higher rate than was expected. It is now the principal institu- tional source of long-term loan and equity finance for industrial and tourist enter- prises in Tunisia. During 1966 and the first four months of 1967, SHI approved 3S loans totaling D3.2 million ($6.1 million), the greater part of which were foreign exchang~ loans. The projects financed were 9 hotels, and 13 manufacturing industries, among which were a wood particle board factory, food products, a food canning factory, plants manufacturing. asbestos cement, bottles, plastics, furniture, textiles, soap aad plastic foam. • At present Tunisian industry's contribution to gross domestic product and to exports is small. However, inc:lustrial products are expected to be exported in  - 2 - increasing quantities in the future and are already important to the balance of ~ payments position as substitutes for imports. There is room for substantial further investment in both industry and tourism. Tourism is proving to be the sector with the greatest growth potential in Tunisia and the Government intends to leave most of the new investments in this field to the private sector. Foreign exchange re- ceipts from tourism have been increasing at about 60% a year since 1961 and amounted to the equivalent of DlS million ($28.5 million) in 1966. In the three-year period 1967-69 it is estimated that total private investment in tourism and industry will amount to some D42 million ($80 million). The Bank loan announced today will increase SNI's long-term resources to the equivalent of about $22 million. This is made up of share capital of Dl.5 million ($2.85 million) of which Dl65,000 is held by Tunisian and European financial insti- • tutions, D820,000 by individual Tunisian shareholders, D300,000 by IFC, and the remainder, D215,000 by the Government and its agencies; D311,000 ($592,000) of reserves; Dl,770,000 ($3.36 million) of loans and grants from the Government and its agencies; and a loan of $5 million made by the World Bank in May 1966. The new Bank loan will cover more than thre~··,quarters of the fund~ SNI expects to need for its operations during the three~year period 1967-69 and will be used for its foreign exchange lending. The loan will be guaranteed by the Republic of Tunisia. Th~ initial amortiza- tion schedule provides for repayment to begin in May 1969 and to end not later than May 1, 19~5, but it will be modified to correspond with repayments to SNI by invest- ment enterprises benefiting from the loan. When part of the Bank loan is credited to the loan account, the rate of interest on that part will be the Bank's current standard rate. •