THE WORLD BANK W O R L D B A N K O P E R A T I O N S E V A L U A T I O N D E P A R T M E N T ISLAMIC DEVELOPMENT BANK OPERATIONS EVALUATION OFFICE THE ISLAMIC DEVELOPMENT BANK 33348 Tunisia: Understanding Successful Socioeconomic Development AJoint World Bank­Islamic Development Bank Evaluation of Assistance OPERATIONS EVALUATION DEPARTMENT ENHANCING DEVELOPMENT EFFECTIVENESS THROUGH EXCELLENCE AND INDEPENDENCE IN EVALUATION The Operations Evaluation Department (OED) is an independent unit within the World Bank; it reports directly to the Bank's Board of Executive Directors. OED assesses what works, and what does not; how a borrower plans to run and maintain a project; and the lasting contribution of the Bank to a country's overall development. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank's work, and to provide accountability in the achievement of its objectives. It also improves Bank work by identifying and disseminating the lessons learned from experience and by framing recommendations drawn from evaluation findings. W O R L D B A N K O P E R A T I O N S E V A L U A T I O N D E P A R T M E N T I S L A M I C D E V E LO P M E N T B A N K O P E R AT I O N S E V A L U AT I O N O F F I C E Tunisia: Understanding Successful Socioeconomic Development A Joint World Bank­Islamic Development Bank Evaluation of Assistance 2005 The World Bank Washington, D.C. http://www.worldbank.org/oed Islamic Development Bank http://www.isdb.org Jeddah, Saudi Arabia © 2005 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved Manufactured in the United States of America The findings, interpretations, and conclusions expressed here are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. Cover photos courtesy of the World Bank Photo Library. ISBN 0-8213-5974-6 e-ISBN 0-8213-5975-4 Library of Congress Cataloging-in-Publication data have been applied for. World Bank InfoShop Operations Evaluation Department E-mail: pic@worldbank.org Knowledge Programs and Evaluation Capacity Telephone: 202-458-5454 Development (OEDKE) Facsimile: 202-522-1500 E-mail: eline@worldbank.org Telephone: 202-458-4497 Facsimile: 202-522-3125 Printed on Recycled Paper Contents v Acknowledgments vii Preface, Prefacio, Préface ix Executive Summary, Résumen, Résumé xvii Acronyms and Abbreviations 1 1 Tunisia's Socioeconomic Development: Progress Achieved and Challenges Ahead 1 Background 3 Poverty and Social Conditions 5 Debt Burden and External Assistance 6 Meeting the Challenges of Globalization 9 2 World Bank Assistance Program 9 World Bank Assistance Strategies 10 Economic and Sector Work 13 Lending 17 3 The Development Impact of World Bank Assistance 17 Macroeconomic Stabilization, Growth, and Structural Reforms 22 Human Development and Progress toward MDGs 25 Poverty Alleviation and Rural Development 29 Outcome, Sustainability, and Institutional Development 31 4 Contributors' Performance 31 Tunisia's Own Central Role 32 The World Bank's Performance 33 Other Development Partners 35 Exogenous Factors 37 5 Recommendations 39 Annexes 41 A: Statistical Annexes 79 B: List of People Met on Mission in Tunisia (and World Bank and IMF Staff Interviewed) 83 C: Guide to OED's Country Assistance Evaluation Methodology 87 D: Management Action Record i i i T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T 89 Attachments 89 1: Islamic Development Bank--Tunisia Country Assistance Evaluation 93 2: Report from the Committee on Development Effectiveness (CODE) 97 Endnotes 99 References Boxes 7 1.1 Mise à niveau Program (Enterprise Restructuring and Upgrading) 11 2.1 World Bank Strategies 23 3.1 Tunisia's Progress in Meeting the Millennium Development Goals Tables 3 1.1 Tunisia's Export Diversification, 1980­01 3 1.2 Main Macroeconomic Indicators 4 1.3 Poverty and Inequality Trends in Tunisia, 1990­2000 4 1.4 Selected Human Development Indicators in Tunisia and Comparator Countries 6 1.5 Tunisia: Net Receipts of External Financial Resources, 1990­01 13 2.1 Distribution of World Bank Commitments by Sector (FY90­03) 14 2.2 IBRD Proposed and Actual Lending, FY97­02 14 2.3 OED Evaluation Findings of Recently Evaluated Projects by Value 18 3.1 Tunisia and Comparators: Per Capita Income Indicators 21 3.2 Privatization by Sector, in Million Tunisian Dinar 28 3.3 Northwest Mountainous Areas Development Project: Selected Results from the 2000 Survey Figures 10 2.1 Bank Commitments, Disbursements, and Transfers 21 3.1 Business Climate Indices for Tunisia, MNA, and OECD 25 3.2 Education System Expansion at the Post-Basic Level 26 3.3 Net Primary Enrollment 26 3.4 Illiteracy 26 3.5 Infant Mortality i v Acknowledgments Fareed M. A. Hassan was the Task Manager for this IDB, is greatly acknowledged. Gregory K. In- report and acknowledges with thanks the con- gram, Director-General, Operations Evaluation; tributions by Adil Kanaan, Elaine W. Ooi, and Is- Ajay Chhibber, Director, Operations Evaluation abelle Tsakok (consultants). Ibrahim A. Elbadawi Department; and Kyle Peters, Senior Manager, and Jorge Garcia-Garcia reviewed the report. OEDCR, provided overall guidance, with sub- Gonzalo Salinas provided statistical information, stantial input into the formulation of the report. and Janice Joshi, administrative support. Special thanks are due to the officials of the The evaluation is the second cooperative ef- government of Tunisia for their valuable assis- fort with the Islamic Development Bank, fol- tance and to the civil society and donor repre- lowing the joint evaluation of the Jordan program. sentatives interviewed in the country. The report The support of Bader Eddine Nouioua, Adviser, has also benefited significantly from helpful and Operations Evaluation and Audit, IDB, and Djel- constructive suggestions from numerous World loul Al-Saci, Head, Operations Evaluation Office, Bank, IDB, and IMF staff. Director-General, Operations Evaluation: Gregory K. Ingram Director, Operations Evaluation Department: Ajay Chhibber Senior Manager, Country Evaluation & Regional Relations: R. Kyle Peters Task Manager: Fareed M.A. Hassan v P R E FA C E PREFACE PREFACIO PRÉFACE ~NOL A ENGLISH ESP FRANÇAIS This Country Assistance Eval- La presente Evaluación de la La présente Évaluation de uation (CAE) on Tunisia is the second Asistencia al País (EAP) para Túnez l'aide par pays (CAE) sur la Tunisie est cooperative effort with the Operations es la segunda iniciativa en coopera- le second effort de collaboration avec Evaluation Office (OEO) of the Islamic ción con la Oficina de Evaluación de le Bureau de l'évaluation des opéra- Development Bank, following the joint Operaciones (OEO) del Banco Islámico tions (OEO) de la Banque islamique de OED-OEO assessment of the Jordan de Desarrollo (BIsD), tras la evalua- développement, suite à l'évaluation Program. The two institutions carried ción conjunta del DEO y la OEO del conjointe OED-OEO du Programme jor- out a joint assessment of Tunisia's eco- Programa para Jordania. Ambas insti- danien. Les deux institutions ont mené nomic and social development since tuciones llevaron a cabo una evalua- à bien une évaluation conjointe du dé- 1990 and the challenges facing the ción conjunta del desarrollo veloppement économique et social de country. There will be two separate económico y social de Túnez desde la Tunisie depuis 1990 et des défis aux- reports; the assessments of each in- 1990, así como de los desafíos que el quels est confronté le pays. Il y aura stitution's assistance program were país enfrenta. Se entregarán dos in- deux rapports séparés ; l'évaluation prepared in parallel. This report ben- formes independientes; las evalua- du programme d'aide de chaque insti- efited from consultations and com- ciones del programa de asistencia de tution a été préparée en parallèle. Ce ments from OEO staff, and the two cada institución han sido elaboradas rapport a bénéficié des consultations evaluations generally agree on their en paralelo. Este informe contó con el et des commentaires du personnel de analysis. The Executive Summary of aporte de consultas y comentarios del l'OEO et les deux évaluations concor- the Islamic Development Bank's re- personal de la Oficina de Evaluación dent de manière générale dans leur port is attached (Attachment 1). de Operaciones; en términos genera- analyse. La note de synthèse du rapport A joint OED-OEO mission visited les, las dos evaluaciones concuerdan de la Banque islamique de dévelop- Tunisia in September 2003. The visit en su análisis. Se adjunta la Reseña del pement est ci-jointe (Pièce jointe 1). was facilitated by arrangements informe del Banco Islámico de Desa- Une mission conjointe OED-OEO made by the staff of the Tunisian rrollo (Anexo 1). s'est rendue en Tunisie en sep- Ministry of Economic Development En septiembre de 2003, una mi- tembre 2003. Cette visite a été faci- and International Cooperation. Their sión conjunta del DEO y la OEO efec- litée par les arrangements effectués cooperation and assistance is grate- tuó una visita a Túnez. La visita fue par le personnel du Ministère tuni- fully acknowledged. propiciada por las gestiones del per- sien du développement économique The report is organized as fol- sonal del Ministerio de Desarrollo et de la coopération internationale. lows: Chapter 1 assesses Tunisia's Económico y Cooperación Interna- Nous tenons ici à les remercier de socioeconomic development and the cional de Túnez, al que debemos leur coopération et de leur aide. challenges ahead. This chapter is nuestro reconocimiento y gratitud Le rapport est organisé comme common to the evaluation reports of por su cooperación y asistencia. suit : Le chapitre 1 est une évaluation both the World Bank and the Islamic El informe se organiza como se du développement socioécono- Development Bank. The subsequent detalla a continuación. El Capítulo 1 mique de la Tunisie et des défis aux- chapters examine the effectiveness of evalúa el desarrollo socioeconómico quels elle va être confrontée. Ce World Bank assistance in addressing de Túnez y los desafíos futuros. Ese chapitre est commun aux deux rap- these challenges. The last chapter capítulo es común a los informes de ports d'évaluation, celui de la presents recommendations. evaluación del Banco Mundial y el Banque mondiale et celui de la This Country Assistance Evalua- Banco Islámico de Desarrollo. Los Banque islamique de développe- tion was written by Fareed M.A. capítulos subsiguientes examinan la ment. Dans les chapitres suivants v i i T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T Hassan (Task Manager) with eficacia de la asistencia del est examinée l'efficacité de contributions by Djelloul Al- Banco Mundial para abordar l'aide de la Banque mondiale Saci (IDB); Adil Kanaan, Is- ~ NOL estos desafíos. El último ca- dans la façon d'aborder ces abelle Tsakok, and Elaine W. A pítulo presenta recomenda- défis. Dans le dernier cha- Ooi (Consultants). Gonzalo ciones. pitre sont faites des recom- ENGLISH Salinas and Janice Joshi pro- ESP Esta Evaluación de Asis- mandations. FRANÇAIS vided statistical analysis and tencia al País ha sido redac- L'Évaluation de l'aide par administrative support. tada por Fareed M.A. Hassan pays a été rédigée par Fareed Ibrahim Elbadawi and Jorge Gar- (Gerente de tareas), con los aportes M.A. Hassan (Chef de projet) avec la cia-Garcia peer-reviewed the report. de Djelloul Al-Saci (BIsD); Adil Ka- contribution de Djelloul Al-Saci The assistance of peer reviewers in naan, Isabelle Tsakok y Elaine W. Ooi (BID), Adil Kanaan, Isabelle Tsakok providing detailed comments on an (Consultores). Gonzalo Salinas y Ja- et Elaine W. Ooi (Consultants). Gon- earlier draft is gratefully acknowl- nice Joshi brindaron análisis estadís- zalo Salinas et Janice Joshi ont ap- edged. Those comments, as well as ticos y apoyo administrativo. porté les analyses statistiques et le others, received during OED's man- Ibrahim Elbadawi y Jorge Garcia- soutien administratif. agement review meeting, have been Garcia estuvieron a cargo de la revi- Ibrahim Elbadawi et Jorge Gar- taken into account in the evaluation. sión entre pares del informe. cia-Garcia ont été réviseurs-pairs Comments from the Regional Deseamos destacar nuestro agrade- pour ce rapport. Nous tenons à re- Management of the Bank have also cimiento a los colegas revisores por mercier les réviseurs-pairs pour avoir been reflected in the report. The la ayuda prestada. Sus comentarios apporté leurs commentaires dé- Regional response to the Manage- detallados, así como otros recibidos taillés sur une version antérieure du ment Action Record is included as durante la reunión de análisis de ges- document. Il a été tenu compte dans Annex D. Copies of the draft report tión, se han tenido en cuenta en la l'évaluation de ces commentaires, were sent to the government for evaluación. ainsi que d'autres commentaires review, and no written comments El informe también refleja las ob- reçus au cours de la réunion de ré- were received. servaciones de los directivos de la examen de la direction de l'OED. Oficina Regional del Banco. Se in- Il a également été tenu compte cluye, como Anexo D, la respuesta re- dans ce rapport des commentaires gional al Registro de Acción de de la Direction régionale de la Gestión. Se han enviado al gobierno Banque. La réponse régionale aux ré- copias del informe preliminar para su sultats des mesures de gestion fi- análisis, y no se han recibido co- gure à l'Annexe D. Copie du projet mentarios por escrito. de rapport a été adressé au Gou- vernement pour examen et aucun commentaire écrit n'a été reçu. v i i i E X E C U T I V E S U M M A R Y EXECUTIVE RÉSUMEN RÉSUMÉ SUMMARY ~NOL A ENGLISH ESP FRANÇAIS This Country Assistance Eval- Esta Evaluación de Asistencia Cette Évaluation de l'aide au uation was prepared in collaboration al País ha sido preparada en colabo- pays a été préparée en collaboration with the Islamic Development Bank. ración con el Banco Islámico de De- avec la Banque Islamique de Déve- Tunisia's socioeconomic development sarrollo. Se llevó a cabo una loppement. Le développement social et since 1990 and the challenges facing evaluación conjunta del desarrollo so- économique de la Tunisie depuis 1990 the country were assessed jointly; cioeconómico de Túnez desde 1990 y et les défis auxquels le pays doit faire each institution's assistance program de los desafíos que enfrenta el país; se face ont été évalués conjointement ; was evaluated in parallel. evaluaron en paralelo los programas chaque programme d'assistance des Tunisia has successfully shifted de asistencia de cada institución. institutions a été évalué en parallèle. from resource-based exports domi- Túnez ha realizado con éxito el La Tunisie est passée avec succès nated by oil and gas to manufactures paso de exportaciones basadas en re- d'un pays dépendant essentielle- and services. The economy is now cursos (principalmente petróleo y ment de ses exportations de pétrole driven mainly by textile, electrical, gas) a las de manufacturas y servi- et de gaz, à celui tirant ses ressources mechanical, and food processing ex- cios. En la actualidad, la economía de produits manufacturés et de ser- ports; tourism and related activities; está impulsada principalmente por vices. Son économie s'appuie doré- and production of olives and cereals. las exportaciones textiles, electro- navant sur les exportations de Real GDP growth has been rising con- mecánicas y las relacionadas con el textiles, d'équipements électriques sistently, increasing from 3 percent procesamiento de alimentos, así et mécaniques, de l'industrie ali- annually over 1985­90 to more than como por las actividades turísticas y mentaire, du tourisme et activités 5 percent annually over 1996­02. afines y la producción de aceitunas y liées, et de la production d'olives et Today, with a per capita income of cereales. El PIB real ha crecido en de céréales. La croissance du PIB US$2,000, Tunisians enjoy more than forma constante, de un 3 por ciento réel est en progression constante : two-and-a-half times the real incomes anual entre 1985 y 1990 a más de un en hausse de 3 pour cent entre 1985 that their parents had 30 years ago. 5 por ciento anual entre 1996 y 2002. et 1990 à plus de 5 pour cent sur la Tunisia signed an association agree- Hoy, con ingresos per cápita de USD période 1996-2002. Avec un revenu ment with the European Union 2.000, los ingresos reales de los tu- par habitant de 2000 USD, les Tuni- (EUAA) that provides for free trade in necinos corresponden a dos veces y siens jouissent aujourd'hui d'un re- manufacturing by 2008. The Euro- media los que obtenían sus padres venu 2 fois et demi supérieur à celui pean Union (EU) has been Tunisia's hace treinta años. Túnez ha celebrado de leurs parents trente ans plus tôt. dominant trading partner; the region un acuerdo de asociación con la Le pays a signé un accord d'asso- is the source of 67 percent of capital Unión Europea (EUAA, por sus siglas ciation avec l'Union européenne flows into Tunisia, accounts for a large en inglés) que prevé la implementa- (l'EUAA), instaurant des termes de share of Tunisia's tourism market, ción del libre comercio de manufac- libre-échange dans le secteur de la and is the region with the largest turas para 2008. La Unión Europea fabrication d'ici 2008. L'UE est le par- community of expatriate Tunisians. (UE) ha sido el principal socio co- tenaire principal de la Tunisie ; la This dominance renders Tunisia's mercial de Túnez; la región es la zone représente 67 pour cent des economy vulnerable to adverse de- fuente del 67 por ciento del flujo de flux de capitaux en Tunisie ; elle joue velopments in the EU. capital hacia Túnez, representa una un rôle important dans le marché du Rapid growth made possible a re- gran proporción del mercado del tu- tourisme du pays et compte la plus markable improvement in social in- rismo en ese país y constituye la re- importante communauté d'expatriés dicators and a decline in the poverty gión con la mayor comunidad de tunisiens. Par voie de conséquence, i x T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T rate from 40 percent in 1970 tunecinos expatriados. Por tal l'économie tunisienne est to 4 percent in 2000; the re- motivo, la economía es vul- sensible aux turbulences que maining poverty is predom- ~NOL nerable a cualquier circuns- peut connaître l'UE. inately rural. But if the A tancia adversa que pueda La croissance rapide de vulnerable population just afectar a la UE. l'économie dans sa globalité ENGLISH above the poverty line is in- ESP El rápido crecimiento hizo a rendu possible une remar- FRANÇAIS cluded, the percentage of the posible una mejora notable quable amélioration des in- poor would increase by an- en los indicadores sociales, así dicateurs sociaux et un déclin other 6 percentage points to over 10 como una reducción en la tasa de po- du taux de pauvreté de 40 pour cent percent. Addressing vulnerability breza, del 40 por ciento en 1970 al 4 en 1970 à 4 pour cent en 2000 ; le and rural poverty remains a priority, por ciento en el año 2000; la pobreza bastion de la misère reste essentiel- as does reconciling Bank and gov- que aún persiste es predominante- lement rural. Néanmoins, si l'on in- ernment estimates of the breakdown mente rural. No obstante, si se inclu- clut la population dans le besoin of poverty between rural and urban yera a la población que se encuentra située juste au-dessus du seuil de areas. Tunisia's social indicators are justo por encima de la línea de po- pauvreté, le pourcentage des per- better, on average, than those of the breza, el porcentaje de pobres se in- sonnes démunies augmente de six Middle East and North Africa (MNA) crementaría en otros 6 puntos points à plus de 10 pour cent. La Region and better than those of porcentuales, a más del 10 por ciento. lutte contre la précarité et la pau- other lower-middle-income coun- La vulnerabilidad y la pobreza rural vreté rurale reste une priorité, tout tries. Tunisia leads the MNA Region continúan siendo temas prioritarios, comme la mise en concordance des in gender equity. Challenges relate al igual que la conciliación de las es- évaluations de la Banque et du Gou- to sustaining higher growth, achiev- timaciones del Banco y el gobierno vernement concernant les écarts de ing closer integration with the EU, con respecto a la distribución de la po- pauvreté observés entre les mondes and improving efficiency of social breza en las áreas rurales y urbanas. rural et urbain. Les indicateurs so- services in the face of Tunisia's vul- En promedio, los indicadores socia- ciaux de la Tunisie sont en moyenne nerability to external shocks, its level les de Túnez superan al resto de la re- plus favorables que ceux de la zone of indebtedness, and the more com- gión del Medio Oriente y Norte de MOAN ou des autres pays à revenus petitive environment it will likely África (MENA) u otros países de in- moyens plus bas ; le pays se situe confront in the future. greso mediano bajo; el país también également en première position de The Bank's strategy since 1990, es líder en esta región en cuanto a la la zone MOAN en ce qui concerne rooted in wide-ranging and influen- igualdad de los géneros. Los desafíos l'égalité des sexes. Les défis posés re- tial analytic and advisory activities, que enfrenta consisten en poder sos- lèvent d'une croissance supérieure was to support macroeconomic sta- tener un crecimiento elevado, lograr durable, d'une meilleure intégration bilization, pro-market structural re- una mayor integración con la UE y au sein de l'UE et d'une plus grande forms to foster growth, and social mejorar la eficiencia de los servicios efficacité des services sociaux face à programs, as well as human devel- sociales, en vista de la vulnerabilidad la vulnérabilité de la Tunisie vis-à- opment. The strategy was relevant to de Túnez ante golpes externos, su vis des chocs externes, de son niveau the government's priorities, outlined nivel de endeudamiento y el entorno d'endettement et d'une compétiti- in a series of national development más competitivo que probablemente vité accrue à laquelle elle devra pro- plans. An increased focus on the so- deba enfrentar en el futuro. bablement faire face à l'avenir. cial sectors was aligned with the Mil- Desde 1990, la estrategia del La stratégie de la Banque depuis lennium Development Goals Banco, con base en actividades de 1990, qui s'appuie sur un large éven- (MDGs) and the country's emphasis análisis y asesoramiento influyentes y tail d'activités de conseil et d'analyses on human resource development. de gran alcance, consistió en apoyar d'influence, a consisté à soutenir la The Bank lending program is large, la estabilización macroeconómica, así stabilisation économique et les ré- both in per capita terms and as a como las reformas estructurales para formes structurelles en direction des share of the MNA portfolio. Annual promover programas sociales y de marchés, de façon à encourager la average lending commitments for crecimiento, y el desarrollo humano. croissance et les programmes sociaux x E X E C U T I V E S U M M A R Y fiscal years 1990­03 were Esta estrategia era relevante ainsi que le développement US$200 million (or US$20 per para las prioridades del go- humain. Elle s'est révélée per- capita per year), represent- ~NOL bierno, planteadas en una tinente en ce qui concerne les ing over one-quarter of the A serie de planes nacionales de priorités du Gouvernement MNA Regional portfolio. An- desarrollo. La mayor atención qui ont été soulignées dans ENGLISH nual average net disburse- ESP a los sectores sociales era com- une série de plans de déve- FRANÇAIS ments were only US$27 patible con los Objetivos de loppement nationaux. L'at- million, and net transfers Desarrollo del Milenio (ODM) tention particulière portée aux were negative for most of the pe- y el énfasis del país en el desarrollo de secteurs sociaux s'est alignée sur les riod. Policy-based lending, in con- los recursos humanos. El programa de objectifs de développement pour le junction with various donor financiamiento del Banco es impor- millénaire (MDG) et sur l'engage- programs, accounted for 40 percent tante, tanto en valores per cápita ment du pays en faveur du dévelop- of total lending and addressed trade, como en términos de la proporción pement des ressources humaines. Le financial, and private sector devel- que representa en la cartera para la re- programme de prêt de la Banque re- opment. Investment loans supported gión de Medio Oriente y Norte de présente une contribution substan- mainly rural and human develop- África. Los compromisos de financia- tielle, à la fois par habitant et comme ment projects. The Bank served as a miento anual promedio para los ejer- part du portefeuille de la zone MOAN. significant catalyst for mobilizing re- cicios fiscales de 1990 a 2003 fueron Les efforts annuels moyens consentis sources, leveraging nearly US$1 for de USD 200 millones (o USD 20 per pour les années fiscales de la pé- every IBRD dollar. cápita por año); esto representa más riode 1990­2003 ont atteint les With timely and effective support de un cuarto de la cartera regional. 200 millions USD (20 USD par habi- from the Bank and other donors, Los desembolsos netos anuales pro- tant et par an), soit plus du quart du Tunisia averted a balance of pay- medio fueron de sólo USD 27 millo- portefeuille régional. Les versements ments crisis in the late 1980s, and nes, y las transferencias netas fueron moyens nets annuels se sont élevés à since then has maintained a solid negativas para la mayor parte del pe- 27 millions USD ; cependant, les trans- record of macroeconomic stability ríodo. El financiamiento basado en ferts nets ont été négatifs pendant la and remarkable socioeconomic políticas, conjuntamente con diversos plus grande partie de la période. Les progress. The main attributes of programas de donantes, representó prêts fondés sur les politiques, asso- Tunisia's success were ownership un 40 por ciento del financiamiento ciés aux différents programmes des and broad political consensus, a well- total y se destinó al desarrollo co- bailleurs, ont représenté 40 pour cent developed human resource base, mercial, financiero y del sector pri- du total des prêts et du développe- and a stable macroeconomic envi- vado. Los préstamos para inversión se ment des échanges commerciaux, du ronment. The Bank's programs suc- destinaron a apoyar principalmente secteur financier et privé. Ceux liés à cessfully promoted policy reforms. proyectos de desarrollo rural y hu- l'investissement ont soutenu les pro- Substantial financial sector reforms mano. El Banco tuvo una importante jets de développement principale- were achieved, as well as the removal función catalizadora al movilizar re- ment ruraux et humains. La Banque of disincentives for investment and cursos a razón de USD 1 por cada a servi de puissant catalyseur dans la the privatization of public enter- dólar del BIRF. mobilisation des ressources, en per- prises. Tariffs have been reduced and A fines de la década de 1980, con un mettant de lever presque 1 USD pour the economy is now more open to apoyo oportuno y eficaz del Banco y chaque dollar de la BIRD. the outside world. Manufactured ex- otros donantes, Túnez evitó una crisis Grâce au soutien effectif et en ports have grown steadily, increasing de la balanza de pagos, y desde en- temps utile de la Banque et d'autres their share to 80 percent of exports. tonces ha mantenido un historial só- donateurs, la Tunisie a pu éviter une The overall soundness of the bank- lido de estabilidad macroeconómica y crise de sa balance des paiements à ing system has improved, as indi- un notable progreso socioeconómico. la fin des années 80. Dès lors, elle a cated by progress in prudential Los factores principales del éxito de enregistré des chiffres solides en ma- ratios. Privatization in the banking Túnez han sido la identificación con los tière de stabilité macroéconomique sector has also advanced. programas y el amplio consenso polí- et des progrès socioéconomiques re- x i T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T Bank assistance also con- tico, así como una base de re- marquables. Les principaux tributed to significant cursos humanos calificada y points forts de sa réussite ré- progress in the rural and so- ~ NOL un entorno macroeconómico sident dans une forte impli- cial sectors. The Bank's major A estable. Los programas del cation et un large consensus contribution in the rural sec- Banco promovieron con éxito politique, des ressources hu- ENGLISH tor was in putting Tunisian ESP las reformas a las políticas. Se maines bien développées et FRANÇAIS agriculture on the path of lib- lograron reformas sustancia- un environnement macroé- eralization, supporting re- les en el sector financiero, así conomique stable. Les pro- form measures that contributed to como la eliminación de desincentivos grammes de la Banque ont appuyé increasing farm incomes in remote para la inversión y la privatización de avec succès les réformes de politique. areas, and improving resource man- empresas públicas. Se redujeron las Les évolutions importantes du sec- agement sustainability. With Bank tarifas, y la economía está ahora más teur financier ont été menées à bien, support, Tunisia made impressive abierta al mundo. Las exportaciones de de même que la mise à l'écart des fac- progress in almost all areas covered manufacturas han experimentado un teurs défavorables aux investisse- by the MDGs, already meeting some crecimiento sostenido, hasta repre- ments et à la privatisation des targets--and the country is likely to sentar un 80 por ciento del total. La so- entreprises publiques. Les droits de meet others by 2015. For example, lidez general del sistema bancario ha douane ont été réduits et l'écono- by the mid-1990s, almost all chil- mejorado, como lo indica el avance mie est dorénavant plus ouverte au dren attended school, meeting the de los coeficientes prudenciales. La monde extérieur. Les exportations MDG of universal primary educa- privatización del sector bancario tam- de produits manufacturées ont aug- tion. Overall, the outcome of the bién ha experimentado avances. La menté de façon régulière et leur part Bank's assistance program is rated asistencia del Banco contribuyó asi- représente aujourd'hui 80 pour cent. satisfactory, based on its substantial mismo a un progreso significativo en La crédibilité générale du système relevance and efficacy. Institutional los sectores social y rural. El principal bancaire s'est améliorée, comme l'in- capacity was strengthened further aporte del Banco al sector rural fue dique l'évolution favorable des ra- with the Bank's support, and insti- poner a la agricultura de Túnez en el tios prudentiels. La privatisation du tutional development impact is rated camino de la liberalización, apoyando secteur bancaire a également avancé. substantial. reformas que contribuyeron a incre- Par ailleurs, l'assistance de la Banque Despite significant development mentar los ingresos agrícolas en áreas a entraîné des améliorations notables progress and the satisfactory out- remotas y a mejorar la sostenibilidad dans les secteurs ruraux et sociaux. come of the Bank's assistance pro- de la gestión de recursos. Con el apoyo Sa contribution majeure dans le sec- gram, shortfalls in some areas, del Banco, Túnez hizo avances nota- teur rural a consisté à engager l'agri- combined with the more competi- bles en casi todas las áreas de los ODM, culture tunisienne sur la voie de la tive environment that Tunisia will pues ya ha alcanzado algunos objeti- libéralisation, en soutenant les ré- likely face in the future, pose risks to vos, y probablemente cumpla otros formes qui ont contribué à augmen- sustaining its remarkable develop- para el año 2015. Por ejemplo, para me- ter les revenus des exploitations ment performance. Both the low diados de la década de 1990 casi todos agricoles dans les régions les plus re- rate of private investment and the in- los niños habían asistido a la escuela, culées et à améliorer la durabilité de efficiency of overall investment are con lo que se cumplió la ODM de la la gestion des ressources. Grâce au indicators that past growth may be educación primaria universal. En tér- soutien de la Banque, des progrès difficult to sustain without deeper re- minos generales, el resultado del pro- remarquables ont été réalisés dans la form. One area where progress re- grama de asistencia del Banco se quasi-totalité des domaines couverts mained below Bank expectations considera satisfactorio, debido a su re- par les MDG, en atteignant d'ores et was that of promoting private sector levancia y su eficacia sustanciales. La ca- déjà certains objectifs. Les autres le development; the government still pacidad institucional se fortaleció aún seront probablement d'ici 2015. On plays a significant role in economic más con el apoyo del Banco, y se con- constate ainsi que, dès le milieu des activity. In the financial sector, pub- sidera que ha habido un impacto sus- années 90, la plupart des enfants sont lic banks remain large in terms of as- tancial sobre el desarrollo institucional. scolarisés, ce qui répond à l'objectif x i i E X E C U T I V E S U M M A R Y sets, and nonperforming Pese a los avances signifi- d'éducation primaire pour loans impose a heavy burden cativos en el desarrollo y al tous. Globalement, le résul- on the sector and pose risks ~NOL resultado satisfactorio del pro- tat du programme d'assis- to stability. In trade policy, A grama de asistencia del tance de la Banque est jugé tariff rates remain above com- Banco, las deficiencias en al- satisfaisant. La capacité insti- ENGLISH petitors' levels, and more ESP gunas áreas, combinadas con tutionnelle a pu être une nou- FRANÇAIS needs to be done to ensure el entorno más competitivo velle fois renforcée grâce à that discrimination against que Túnez posiblemente en- son soutien, et l'impact du non-EU trade is eliminated within frente en el futuro, plantean riesgos développement institutionnel est es- the overall framework of the EUAA. para la sostenibilidad de su desta- timé substantiel. Another area where the govern- cado desarrollo. Tanto la baja tasa de En dépit de progrès significatifs en ment's program needs to be en- inversión privada como la ineficien- matière de développement et des ré- hanced and the Bank needs to direct cia de las inversiones en general in- sultats encourageants du programme greater attention is the overall effi- dican que el crecimiento pasado d'assistance, certains domaines lais- ciency and fiscal sustainability of so- posiblemente sea difícil de mante- sent apparaître des failles qui, combi- cial expenditures, as expenditures ner si no se profundiza la reforma. Un néesàunenvironnementtoujoursplus on social services remain high. Edu- área en la que el progreso no satisfizo compétitif auxquels la Tunisie sera pro- cation expansion at the post-basic las expectativas del Banco fue la pro- bablement confrontée à l'avenir, me- level and a decline in basic education moción del desarrollo del sector pri- nacentlesremarquablesperformances enrollment because of demographic vado; el gobierno continúa de développement. Le taux d'investis- changes will necessitate efficiency desempeñando un papel significa- sement privé peu élevé et, plus géné- improvements. In the rural sector, tivo en la actividad económica. En el ralement, le manque d'efficacité des addressing issues such as land sector financiero, los bancos públicos investissements, indiquent qu'il sera tenure, rural finance, non-farm rural siguen estando sobredimensionados sans doute difficile de maintenir la development, and research and ex- en términos de activos, y los présta- croissancesansenvisagerdeprofondes tension will be important, as these mos no redituables representan una réformes. La promotion du dévelop- are areas where past Bank assistance carga pesada para el sector, además pement du secteur privé est l'un des programs were less successful. Fi- de constituir un riesgo para la esta- domaines où les progrès restent en nally, past positive development out- bilidad. En materia de política co- deçà des attentes de la Banque car le comes have fostered a large middle mercial, los aranceles siguen estando Gouvernement joue encore un rôle class that will press for more partic- por encima de los niveles de los com- non négligeable dans l'activité écono- ipation in the development process. petidores, y es necesario tomar más mique. Dans le secteur financier, les In the past, Tunisia has managed well medidas tendientes a eliminar la dis- banquespubliquessontimportantesen its economic and regional political criminación contra el comercio pro- termes d'actifs. Les prêts non-produc- uncertainties by maintaining social veniente de países fuera de la UE, tifs (NPL) imposent une charge lourde and macroeconomic stability, grad- dentro del marco general del EUAA. surlesecteuretengendrentdesrisques ually diversifying its export base, and Otra área en la que es necesario me- pour la stabilité. En ce qui concerne la forging closer relations with the EU. jorar el programa del gobierno, y a la politique des échanges commerciaux, Given its past record, sustainability que el Banco necesita prestar más les taux des droits de douane restent of these achievements is rated likely. atención que en el pasado, es la efi- supérieurs à ceux des concurrents. De This evaluation recommends that ciencia general y la sostenibilidad fis- nouvelles mesures doivent être enga- the Bank continue to support im- cal del gasto social, pues el gasto en gées afin de garantir la levée de toute proving the environment for private servicios sociales sigue siendo ele- discrimination dans le cadre général sector development and enhancing vado. La expansión de la educación de l'EUAA, vis-à-vis des échanges hors competitiveness, as the country en el nivel posterior al básico, con- zone européenne. Un autre domaine seeks to integrate more into the jugada con la declinación en la ins- où le programme de l'État a besoin global economy and will confront cripción en la educación básica d'être développé et sur lequel la an increasingly competitive climate debido a cambios demográficos, Banque doit diriger davantage son at- x i i i T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T in the next few years. Adopt- harán necesaria la imple- tention est celui de l'efficacité ing a results-based approach, mentación de mejoras orien- globale et de la durabilité de la with agreed and monitorable ~NOL tadas a la eficiencia. En el politique budgétaire des dé- output and outcome indica- A sector rural será importante penses sociales, celles concer- tors embedded in an im- abordar temas como la te- nantlesservicessociauxrestant ENGLISH proved monitoring and ESP nencia de tierras, el financia- élevées. Le développement de FRANÇAIS evaluation framework, would miento del sector rural, el l'éducationàunniveaupost-ba- help to anchor the Bank's as- desarrollo rural no agrícola y sique et le recul du recrute- sistance program in the future. la investigación y extensión, pues son ment dans l'éducation de base dû à Specifically, the Bank should (i) help áreas en las que los programas de des évolutions démographiques né- the country pursue trade openness asistencia anteriores del Banco han cessiteront une meilleure efficacité. with the EU and the rest of the tenido menos éxito. Por último, los Dans le secteur rural, la résolution de world; (ii) help improve the busi- resultados positivos del pasado en problèmes tels que l'accession à la pro- ness environment through regula- el área del desarrollo han promovido priété foncière, le financement rural, le tory and judiciary reforms, including la formación de una gran clase media développement du monde rural non- measures to reduce the flow and que ejercerá presión para lograr una agricole,larechercheetlavulgarisation, stock of nonperforming loans; and mayor participación en el proceso sera essentielle, puisque ces domaines (iii) promote enterprise and financial de desarrollo. En el pasado, Túnez ha s'avèrent être ceux dans lesquels les sector privatization. Future Bank tenido se ha manejado bien ante la in- programmes d'assistance antérieurs programs should also (iv) help certidumbre económica y política re- de la Banque ont connu le moins de strengthen rural institutions to sup- gional, manteniendo la estabilidad succès. Enfin, les résultats antérieurs port efficient output and input mar- social y macroeconómica, diversifi- positifs en termes de développement kets (for example, land and rural cando gradualmente su base de ex- ont nourri une importante classe finance) while maintaining social portaciones y forjando relaciones moyenne qui insistera sur sa partici- and political stability through better- más estrechas con la UE. A la luz de pation accrue dans le processus de dé- targeted safety nets. After 21 years sus antecedentes, se considera pro- veloppement par le biais d'un rôle plus without a rural sectorwide review, bable que pueda sostener sus logros. important de la société civile et du sec- the Bank should undertake one to Esta evaluación recomienda que el teur privé. Par le passé, la Tunisie a su inform its future programs. Finally, Banco continúe apoyando las mejo- gérer les incertitudes politiques régio- the Bank should also fill the gaps in ras coyunturales para el desarrollo nales et économiques en maintenant core diagnostic economic and sec- del sector privado y el aumento de la une stabilité macroéconomique et so- tor work (ESW) by completing a Pub- competitividad, dado que el país pro- ciale, en diversifiant progressivement lic Expenditure Review (PER), a cura profundizar su integración a la ses exportations de base et en instau- Country Financial Accountability As- economía global, y probablemente rant des relations plus privilégiées avec sessment (CFAA), and a Country Pro- deba enfrentar un clima cada vez más l'UE. De ce fait, la durabilité de ces pro- curement Assessment Review competitivo en los años venideros. La grès est jugée probable. (CPAR). In particular, a PER could adopción de un enfoque orientado a La présente évaluation recom- help build capacity to prioritize pub- los resultados, con indicadores de mande que la Banque poursuive son lic spending and provide the basis productos y resultados acordados en soutien en direction d'une améliora- for measures to efficiently address un entorno mejorado de seguimiento tion des conditions nécessaires au dé- education expansion. y evaluación, ayudaría a forjar una veloppement du secteur privé et base firme para el programa de asis- d'une augmentation de la compétiti- tencia del Banco en el futuro. Espe- vité, le pays visant une plus grande cíficamente, el Banco debería (i) intégration au sein de l'économie ayudar al país a procurar lograr la mondiale et s'exposant à un environ- apertura comercial con la UE y el nement toujours plus compétitif dans resto del mundo, (ii) contribuir a me- les années à venir. Une approche s'ap- jorar el entorno comercial mediante puyant sur des conclusions recon- x i v E X E C U T I V E S U M M A R Y reformas regulatorias y jurí- nues et vérifiables et sur des in- dicas, por ejemplo con medi- dicateurs de réalisation et de ~NOL das para reducir el flujo y la résultats ayant bénéficié eux- A cantidad de préstamos no re- mêmes d'un meilleur enca- dituables, y (iii) promover la drement en termes de suivi et ESP privatización del sector fi- d'évaluation, contribuera à an- FRANÇAIS nanciero y de las empresas crer le programme d'aide de la públicas. Los programas fu- Banque à l'avenir. Plus préci- turos del Banco deberían, además, sément, la Banque doit (i) assister le (iv) ayudar a fortalecer las institu- pays afin qu'il poursuive son ouverture ciones rurales a fin de dar apoyo a los aux échanges commerciaux avec l'UE mercados eficientes de productos e et le reste du monde, (ii) l'aider à insumos (por ejemplo, el financia- améliorer l'environnement des affaires miento rural y de adquisición de tie- par le biais de réformes ayant trait aux rras) manteniendo a la vez la réglementations et au cadre juridique, estabilidad social y política a través de en incluant des mesures visant à ré- redes de seguridad mejor orienta- duire les flux et les stocks des NPL, et das. Después de 21 años sin realizar (iii) promouvoir la privatisation du un examen con alcance a todo el sec- secteur entrepreuneurial et financier. tor rural, el Banco debería llevarlo a Les programmes futurs de la Banque cabo para informar sus futuros pro- doivent également contribuer au ren- gramas. Por último, el Banco tam- forcement des institutions rurales de bién debería llenar el vacío existente manière à soutenir les marchés d'in- en materia de trabajos básicos de trants et d'extrants rentables (par diagnóstico con estudios económicos exemple, le financement de la pro- y sectoriales, mediante una Revisión priété foncière et du monde rural), del Gasto Público, una Evaluación de tout en maintenant une stabilité so- la Capacidad de Gestión Financiera y ciale et politique via de meilleurs ré- una Evaluación de las Contratacio- seaux de sécurité ciblés. La Banque nes del País. En particular, el estudio doit pallier à 21 années d'absence del gasto público podría ayudar a for- d'étude large du secteur rural pour talecer las capacidades para priori- mieux asseoir ses programmes à venir. zar el gasto público y proporcionar un Enfin, elle doit également combler les parámetro de medición para abor- lacunes du diagnostic de fond du TES : dar con eficiencia la expansión de la Revues des dépenses publiques (PER), educación. Évaluation des système de gestion des finances publiques (CFAA) et Évalua- tion du système de passation des mar- chés publics (CPAR). En particulier, une PER pourrait contribuer à donner priorité aux dépenses publiques et apporter les bases d'outils de mesures permettant de s'atteler efficacement au développement de l'éducation. Gregory K. Ingram Director-General, Operations Evaluation x v ACRONYMS AND ABBREVIATIONS AAA Analytical and advisory activities AAL Agricultural Adjustment Loan AFD Agence Française de Développement (French Development Agency) AfDB African Development Bank ASIL Agricultural Sector Investment Loan BNA Banque Nationale Agricole BNP Banque Nationale de Paris CAE Country Assistance Evaluation CAS Country Assistance Strategy CEM Country Economic Memorandum CFAA Country Financial Accountability Assessment CPAR Country Procurement Assessment Review ECAL Economic Competitiveness Adjustment Loan EFRSL Enterprise and Financial Reform Support Loan EIB European Investment Bank ESW Economic and sector work EQIP Education Quality Improvement Program EU European Union EUAA European Union Association Agreement FDI Foreign Direct Investment FSD Financial sector development GDP Gross domestic product GNI Gross national income GNP Gross national product GOT Government of Tunisia GSM Global System Mobile IBRD International Bank for Reconstruction and Development IDB Islamic Development Bank IMF International Monetary Fund INS Institut Nationale des Statistiques (National Institute of Statistics) ITPAL Industry and Trade Policy Adjustment Loan KfW Kreditanstalt für Wiederaufbau (German Agency for Reconstruction) M&E Monitoring and evaluation MDG Millennium Development Goal MEDA Mesures d'accompagnement financiers et techniques à la reforme des structures économiques et sociales dans le cadre du partenariat euro-méditerranéen MFA Multifibre Arrangement MM Macroeconomic management MNA Middle East and North Africa Region MOA Ministry of Agriculture MOE Ministry of Education NGO Nongovernmental organization NPL Nonperforming loans ODESYPANO Office du Développement Sylvo-Pastoral du Nord-Ouest OECD Organisation for Economic Co-operation and Development OED Operations Evaluation Department x v i i T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T PE Public enterprise PER Public Expenditure Review PERL Public Enterprise Restructuring Loan PPAR Project Performance Assessment Report QAG Quality Assurance Group QR Quantitative restrictions SAL Structural Adjustment Loan SDR Special Drawing Rights SMEs Small and medium-size enterprises UNDP United Nations Development Program VAT Value added tax WSIP Water Sector Investment Project WTO World Trade Organization x v i i i 1 Tunisia's Socioeconomic Development Progress Achieved and Challenges Ahead T his Country Assistance Evaluation (CAE) looks at the effectiveness of World Bank assistance since 1990 from three perspectives: an analysis of the Bank's assistance program, the Bank's development impact, and the contribution of the Bank and its development partners to development outcomes. Annex C describes the methodology. The evaluation is based on background studies, internal World Bank reports, and interviews with gov- ernment officials, Bank staff, donors, and civil society. Annex B contains a list of the people interviewed. The CAE was prepared in collaboration with the Islamic Development Bank. Background Tunisia's land is arid, or semi-arid, with as little Tunisia gained its independence from France in as 3 percent of arable land irrigated, while rain- 1956. As a republic with a strong central author- fed agriculture is subject to severe annual ity vested in the president, it has since experi- fluctuations in rainfall. In 2002, the population enced political stability at a time when its of 9.8 million had a per capita income of neighborhood has been experiencing signifi- US$2,000 (annex table A.1). cant turmoil. As a moderate Arab country in After independence, the political leadership North Africa, it has managed not to be opted initially for a dirigiste economic system, absorbed within the vortex of the more with mainly public ownership of manufacturing complex Middle Eastern politics, while industries, banks, and other financial institu- maintaining a good link with its Arab tions. At independence, the country's most neighbors, often serving as an interlocutor or a important raw materials were petroleum, political haven. The United States announced natural gas, and phosphates. However, oil and the opening in 2004 of a regional office in Tunis gas production has been decreasing as reserves of the U.S.­Middle East Partnership Initiative. have been depleted, and the quality of As with its neighbors in North Africa, much of phosphate deposits is poor. As an alternative 1 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T source of income, attention has been given to progress, although the state continued to keep a the development of manufacturing, tourism, prominent position in the economy. The fiscal and other services. At the same time, the deficit and inflation fell, and GDP grew at 4 country invested heavily in human resource percent per annum between 1987 and 1994. The development and paid particular attention to fiscal and current account deficits have hovered welfare and education. This proved an around 4 percent of GDP since the mid-1990s. important contributor to Tunisia's economic performance in subsequent decades. A new phase of development by the mid-1990s. Given Tunisia's limited domestic markets, the govern- The oil boom of the 1970s. The multifold increase ment decided to increase its integration in the in the price of crude generated high export world economy to accelerate higher growth. In revenues that financed significantly higher 1995, Tunisia became the first country in the levels of investment (30 percent of GDP), region to sign an association agreement with the particularly in manufacturing. As a result, real European Union (EUAA). The agreement GDP growth averaged 7.4 percent annually includes provisions for the phased establish- throughout the 1970s. High oil revenues ment of a free trade zone for manufacturers over allowed the economy to perform well under the a 12-year period (1996­08). Also, Tunisia signed dirigiste system. Directive policies controlling bilateral trade agreements with Morocco, investment and prices were broadly applied, in Jordan, Libya, Iraq, and Syria. The economy is the context of protected trade and generous now more open to the outside world, and subsidies to enterprises. The priority given to imports and exports constitute about 90 percent human resource development continued. of GDP, up from 70 percent in the mid-1980s. This ratio compares favorably to other Middle The first half of the 1980s: decline and apprehension. East and North Africa (MNA) Region countries at Problems with economic performance started similar income levels (annex table A.2k). to emerge in the early 1980s as oil prices and production levels declined, while high invest- From oil-dominated and volatile to more stable and ment levels and public expenditures were diversified economy. Since the mid-1980s, maintained. Although Tunisia's Sixth Five-Year Tunisia's exports have been successfully diversi- Plan (1982­86) proposed stringent policies, fied, moving away from resource-based exports unaffordable investment levels and lax policies dominated by oil and gas to manufactures (table continued, leading to a deterioration in the 1.1). Export of manufactures has grown at macroeconomic situation. By 1984, inflation around 10 percent a year in real terms since had risen to 10 percent; the current account 1987, increasing the share of manufactures in deficit had grown to almost 11 percent of GDP, exports to over 80 percent. Tunisia's economy is external debt to 46 percent of GDP, and the now driven mainly by textiles, electrical and debt service ratio to 21 percent. By 1985, a mechanical equipment, and food processing (in balance of payment crisis appeared imminent. the manufacturing sector); tourism and related activities (in the services sector); and production The turning point in the mid-1980s. Faced with of olives and cereals (in the agricultural sector). growing macroeconomic imbalances, the govern- Tunisia's major exports are now textiles and ment pursued a program of stabilization and leather (making up 50 percent of exports). Today, adjustment supported by Tunisians enjoy more than two-and-a-half times Today, Tunisians enjoy the World Bank and the the real incomes that their parents had 30 years more than two-and-a-half International Monetary ago. The service sector, which accounts for times the real incomes Fund (IMF). The reform nearly 60 percent of GDP, has been providing the program proceeded at largest contribution. The industrial sector is the that their parents had 30 a gradual but steady second largest, with about 28 percent of GDP, years ago. pace, consolidating past and has been fairly dynamic. Agriculture's contri- 2 T U N I S I A' S S O C I O E C O N O M I C D E V E L O P M E N T: P R O G R E S S A C H I E V E D A N D C H A L L E N G E S A H E A D T u n i s i a ' s E x p o r t D i v e r s i f i c a t i o n , T a b l e 1 . 1 1 9 8 0 ­ 0 1 1980 1987 2001 Oil products 52.5 23.5 9.2 Non-oil products 47.5 76.4 90.8 Manufactures 35.7 60.3 80.7 Chemicals 13.2 18.1 10.0 Machinery and transport equipment 2.4 6.1 15.4 Food 7.2 12.7 7.9 Source: U.N. Comtrade Database; data refer to percentage ratio. bution to growth fluctuates widely, largely based measured by the head count index, dropped on weather conditions. Nevertheless, agriculture from 40 percent of the population in 1970 to 11 remains a major sector in the economy, employ- percent by 1985, to 8 percent by 1990, and to 4 ing about one-fourth of the labor force and percent by 2000 (table 1.3). Although rural accounting for almost 12 percent of GDP in 2001. poverty has also decreased over the years, its level has remained twice the national average. Economic and social performance since the late 1980s. However, there is Tunisia has achieved very good economic and controversy about the Tunisia has made social performance by maintaining a stable rural poverty incidence remarkable progress in macroeconomic framework, placing strong (chapter 3). The rural reducing poverty. emphasis on social achievement, and implement- population comprises ing--although gradually--structural reforms. 35 to 40 percent of the Table 1.2 reflects progress in macroeconomic population, and the rural poor derive their performance; tables 1.3 and 1.4 show progress in incomes primarily from agricultural activities, poverty reduction and social development. which are subject to large fluctuations. These fluctuations have a strong impact on the Poverty and Social Conditions economy. A one percentage point decrease in agriculture causes a 0.25 percent decline in Poverty reduction. Tunisia has made remarkable overall GDP, stemming from significant indirect progress in reducing poverty. The Bank's effects on manufacturing and service activities estimate of Tunisia's incidence of poverty, as that have a linkage with agriculture. The share T a b l e 1 . 2 M a i n M a c r o e c o n o m i c I n d i c a t o r s Indicator 1986­90 1991­95 1996­00 2001 2002 Est. 2003 GDP growth (%, real GDP at market price) 2.9 3.9 5.6 4.9 1.7 5.5 Inflation (%, CPI Index) 7.1 5.8 3.4 2.7 2.3 2.1 Real effective exchange rate (REER) index (1990=100) 107.9 102.6 104.2 100.9 99.7 -- Budget deficit (% GDP) 3.8 3.7 3.7 3.8 3.5 3.1 Current account deficit (% GDP) 3.9 5.8 3.1 4.7 3.5 3.1 Foreign direct investment (% GDP) 0.8 1.6 2.6 2.2 3.8 2.1 Total public debt (% GDP) 62.0 60.7 59.4 60.2 64.3 60.2 Gross foreign reserves (months of imports c.i.f.) 1.9 1.8 2.9 2.5 2.9 2.9 Source: Calculations based on data from the World Bank (2000b) and IMF data. 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T P o v e r t y a n d I n e q u a l i t y T r e n d s i n T u n i s i a , T a b l e 1 . 3 1 9 9 0 ­ 2 0 0 0 1990 1995 2000 National Rural Urban National Rural Urban National Rural Urban Incidence: National Headcount Index (% of population) 7.9 14.8 3.3 8.1 15.8 3.2 4.1 8.3 1.7 Inequality: Gini coefficient 0.40 0.35 0.37 0.42 0.35 0.39 0.41 0.36 0.39 Source: Bank staff estimate for 2000 and World Bank 2000c, box 1, page 6. S e l e c t e d H u m a n D e v e l o p m e n t I n d i c a t o r s T a b l e 1 . 4 i n T u n i s i a a n d C o m p a r a t o r C o u n t r i e s Lower- middle- income Tunisia MNA countries Indicator 1970­75 2000­01 1970­75 2000­01 2000­01 Life expectancy (years) 55 72 46 68 69 Total fertility rate (births per woman) 5 2 6.6 3 2 Infant mortality (per thousand births) 94 26 125 43 33 Gross primary enrollment (% of school-age population) 72 119 69 97 107 Male 79 123 .. 103 107 Female 65 116 .. 90 107 Gross secondary enrollment (% of age group) 22 73 29 64 70 Adult illiteracy (% of population 15 years and above) 64 28 67 34 15 Male 51 18 56 24 9 Female 77 39 77 46 21 Note: Data refer to the most recent year available during the period specified. Source: World Bank, World Development Indicators (various issues); details in Annex A, tables A.2d and A.2e. of the poor and vulnerable people in the total mid-1990s, Tunisia had succeeded in enrolling population--as measured by the number of almost all of the country's six-year-olds in first people having expenditures both below and grade, meeting the Millennium Development about 30 percent above the poverty line--rose Goal (MDG) of universal primary education. from 14 percent in 1990 to 17 percent in 1995, Tunisia's social indicators are better than the before falling to 10 percent in 2000. Addressing average of MNA countries, as well as of other this vulnerability and targeting anti-poverty lower-middle-income countries. The UNDP interventions becomes more difficult as Human Development Report for 2003 ranks poverty incidence falls. Tunisia ninety-first out of 175 countries on the human development index, ahead of other MNA Social achievement. Tunisia has made impressive countries at similar income levels (UNDP 2003). achievements in human development in the past 30 years. Life expectancy has grown from 55 Gender equity. Tunisia leads the MNA Region with to 72 years; adult illiteracy has decreased from regard to gender equity (table 1.4). The gap 64 to 28 percent; and infant mortality has between girls and boys in basic education is low, dropped by nearly two-thirds (table 1.4). By the and more than half of all university students are 4 T U N I S I A' S S O C I O E C O N O M I C D E V E L O P M E N T: P R O G R E S S A C H I E V E D A N D C H A L L E N G E S A H E A D women. Compulsory education for girls and shocks. The ratio of Compulsory education for boys through ninth grade has helped bridge the external debt to GDP is girls and boys through gap between female and male school enroll- relatively high, hovering ninth grade has helped ment rates. The status of women has improved around 60 percent steadily, with rates of female labor force partici- (table 1.2), and the U.S. bridge the gap between pation that are higher than those of other dollar, with a share of female and male school countries in the Region, but at 32 percent (in over 40 percent, enrollment rates. 2001), low compared with other lower-middle- dominates the currency income countries (World Bank data, 2003). composition of this debt. These factors, Tunisia's female participation rate in the together with the current account and budget workforce increased by 4 percentage points deficits, make the country vulnerable to during the 1990s. Tunisian women received the external shocks. Furthermore, foreign right to vote immediately after independence in exchange reserves have remained low (below 1957, before the women of many other MNA three months of imports). The economy countries; the proportion of seats held by weathered past shocks well (for example, the women in the national parliament was 12 continued aftermath of September 11, 2001, percent in 2001. Tunisia ranks above the MNA events and a terrorist attack in Djerba, which average on the United Nations Gender led to a sharp drop in tourism) in terms of Development Index (GDI).1 As indicated earlier, maintaining macro balances. However, the this was due to the direct attention given to transition to greater integration into global human resource development, with particular markets raises challenges for debt sustainabil- emphasis on gender equity. ity because of competitive pressures and Further progress in the social sectors is increased exposure to volatility.2 Tunisia has required to consolidate past gains and prepare recently been trying to diversify the currency Tunisia for a more competitive environment in composition of its debt by issuing euro- the twenty-first century. There is still room for dominated sovereign bonds, as it did in July enhancing the quality and efficiency of social 1999. Also, the government is gradually shifting achievements. For example, the school system from external to domestic sources of financing. is still burdened with high dropout and repeti- Tunisia received large net financial flows tion rates in the upper grades. Adult illiteracy (including grants and private flows) averaging rates remain high. Public health resources are nearly US$700 million annually (3.5 percent of not used efficiently (as evidenced by low rates GDP) over the 1990­01 of use of public health services), and the quality period (table 1.5). In Further progress in the of services does not meet the population's per capita terms, social sectors is required expectations. Social progress has been Tunisia received an to consolidate past gains achieved at a high cost relative to comparator annual average of countries: public expenditures on education US$70 per capita in net and prepare Tunisia for a are 7.7 percent of GNP compared with a MNA flows, below those for more competitive average of 5.2 percent and a lower-middle- other MNA countries at environment in the income-country average of 4.9 percent (World similar income levels. twenty-first century. Bank 2000b). Similarly, Tunisia's health The Bank has provided expenditures of 5.5 percent of GDP are higher significant assistance to than the MNA average of 4.6 percent (World Tunisia, committing US$2.7 billion for 40 loans Bank data, 2003). since 1990. With old loans being serviced and repaid, the Bank's share of net flows to Tunisia Debt Burden and External Assistance is about 5 percent. Since 1996, European Union Despite its remarkable economic progress and (EU) member states have provided increased ability to weather past shocks, Tunisia's assistance to support the implementation of economy remains vulnerable to external Tunisia's association agreement of 1995. The 5 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T T u n i s i a : N e t R e c e i p t s o f E x t e r n a l T a b l e 1 . 5 F i n a n c i a l R e s o u r c e s , 1 9 9 0 ­ 0 1 ( y e a r l y a v e r a g e s ) 1990­01 1990­95 1996­01 $m % $m % $m % Total receipts, neta 689 100 762 100 615 100 IBRD 33 5 48 6 18 3 EC/ EU 347 50 280 37 413 67 France 98 14 64 8 132 21 Germany 26 4 26 4 23 4 Japan 100 15 100 13 100 16 United States 62 9 128 17 ­4 ­1 Arab countries and agencies 3 0 17 2 ­10 ­2 a. Total includes both official and private flows, from all sources, excluding the Islamic Development Bank. Source: OECD (2003), as detailed in Annex A, table A.3a. share of the EU and France nearly doubled in the EUAA and in their export markets after the the 1996­01 period. Also, Tunisia is one of the elimination of the MFA. Since Tunisia's domestic largest recipients of Islamic Development Bank market is small, investment and growth will (IDB) assistance, with $1.2 billion in financing depend critically on greater export competitive- since 1976 (or about US$2 per capita per year). ness and further integration into the global market. Meeting the Challenges of Globalization Increasing competitive pressures. The Tunisian The role of the state in a rapidly changing world scene. economy will face increasing competitive The prudent and gradual approach--which has pressures with the implementation of the EUAA produced positive development outcomes--is and the elimination of the Multifiber Agreement now likely to have reached its limit under new (MFA). Tunisia's economy is open, but it is developments in the international markets. The dependent on one dominant market (the EU) demise of the MFA and full implementation of the and on a few products (e.g., textiles account for EUAA in the next few years impart some urgency 42 percent of exports). More than 75 percent of to the need to accelerate reforms to enhance Tunisia's trade is currently with the EU, the competitiveness and integration into the global region is the source of 67 percent of the capital economy. The government still involves itself in that flows into Tunisia, it accounts for a large economic activities, with a public investment share of Tunisia's tourism market, and it has a share of GDP at 13 percent, and still owns signifi- large number of expatriate Tunisians (600,000). cant shares of the financial sector and public Therefore, economic conditions in the EU affect enterprises, which the government views as both external demand for Tunisia's products necessary to preserve social cohesion. One such and domestic demand (through workers' program is the mise à niveau program (box 1.1). remittances and tourism receipts). The The World Bank has reservations about the economic opening--agreed with the EU over a program's efficacy and the distorted incentives it 12-year period beginning in 1996--poses encourages. More important, the response of further challenges: dismantling tariffs, liberaliz- private investment to the policy measures has not ing the service sector, and establishing a free been as strong as expected. Tunisia's private gross trade zone for manufactures by 2008. Tunisian fixed investment remains low: averaging 13.5 producers will face much stronger competition percent of GDP during 1997­01, up moderately in the local market with the implementation of from 13 percent over 1990­96 (World Bank data, 6 T U N I S I A' S S O C I O E C O N O M I C D E V E L O P M E N T: P R O G R E S S A C H I E V E D A N D C H A L L E N G E S A H E A D 2003) because of the slow pace of reform. Public with the objective of The demise of the MFA investment accounts for another 13 percent of leveling the playing field and full implementation GDP. The high and persistent unemployment rate within the private sector. of the EUAA in the next (14.3 percent in 2003) highlights the need to Past positive develop- strengthen investment to sustain higher growth ment outcomes have few years impart some and generate jobs under increasing competitive fostered a large middle urgency to the need to pressures. As such, sustaining Tunisia's positive class (80 percent of the accelerate reforms to economic performance in the more competitive population) that will environment that it is likely to face in the next press for greater partici- enhance competitiveness decade will likely require reducing the govern- pation in the develop- and integration into the ment's role in economic activity, as well as contin- ment process through an global economy. uing to improve the design and operational increased role for civil efficiency of the regulatory and incentives regime, society and the private sector. M i s e à n i v e a u P r o g r a m ( E n t e r p r i s e B o x 1 . 1 R e s t r u c t u r i n g a n d U p g r a d i n g ) Mise à niveau program and the Government Ninth Develop- million or 1.3 percent of GDP). These grants are funded by a 1 per- ment Plan (1997­01). The Ninth Development Plan aimed at im- cent surcharge on the value added tax (VAT), which has raised, proving business conditions and competitiveness. Within this so far, about TD 30­40 million annually. In addition, the EU and framework, the mise à niveau program targeted the modern- the African Development Bank (AfDB) supported the program. The ization of industrial infrastructure by adopting new technology, management of the mise à niveau concluded that, between 1997 promoting quality, and training workers. The program finances: and 2003, the firms benefiting from the program seem to have out- (i) upgrading and modernization of equipment, for which the performed the manufacturing sector's benchmark with regard to subsidy covers 10 to 20 percent of the cost; (ii) the cost of "in- turnover (11 percent growth, compared with 8.5 percent for the tangibles" (e.g., consultants and software), for which the sub- benchmark); export growth (16 percent growth, compared with sidy covers up to 70 percent of the cost; and (c) financial 11 percent); and employment growth of 4 percent (not bench- restructuring, for which no subsidy is provided. marked). However, the real net effect of the mise à niveau pro- Mise à niveau program coverage. This program started in 1996 gram is not clear, either in terms of actual improved performance and has been targeted at small and medium-size enterprises in relation to enterprises that have not benefited from such as- (SMEs)--that is, enterprises with more than 10 employees. So sistance, or in terms of penetration of export markets. far, 2,700 of approximately 3,600 eligible enterprises have par- The mise à niveau program is controversial. While the EU and ticipated. Of these, 1,550 have had their restructuring programs the AfDB are supporting the program financially, the Bank has approved. However, the program is having difficulty reaching the reservations about its efficacy and the distorted incentives it en- small end of the SME sector, since these firms have problems courages. The government feels that it would be politically very in obtaining the required commercial bank sponsorship. They difficult to subject enterprises to more competition without sup- are too small for the commercial banks, and too large for the spe- porting the enterprises with technical assistance and equipment cialized micro credit bank. financing to upgrade their operations. The government also Program effectiveness. About 1,550 enterprises benefited seeks to support social stability through this program. The from the program, requiring total investment expenditures of Bank's reluctance to support this program, given its reservations Tunisian dinar (TD) 2.5 billion (US$1.8 billion) and matching in- about the program's efficacy and the targeted nature of the sup- centives grants from the government of TD 356 million (US$260 port, is justified. Source: OED mission findings. 7 2 World Bank Assistance Program T he World Bank has been a large player in Tunisia in both lending and pol- icy influence. Annual average lending commitments for fiscal years 1990­03 were US$200 million (or US$20 per capita per year), repre- senting over one-quarter of the MNA portfolio (figure 2.1). Annual average net disbursements were US$27 million; however, net transfers were negative for most of the period, as old loans were being serviced and repaid (the Bank has com- mitted US$5.1 billion for 121 projects since 1958). The Bank also served as a significant catalyst for efforts to promote The overarching strategy mobilizing resources, leveraging US$1 on every economic integration objective is growth with IBRD (International Bank for Reconstruction within the world equity. and Development) dollar. The Bank also economy, and particu- maintained an active policy dialogue, and its larly that of the EU, analytical work pointed out the agenda for while maintaining social stability and environ- reforms and guided Bank strategies and lending. mental sustainability (World Bank 1995a). The proposed Bank program under this country World Bank Assistance Strategies strategy emphasized nonlending services and, In the 1990s and in 2000, World Bank programs within lending operations, sector investment were guided by country strategy documents (box loans to support targeted sectoral policies to 2.1). The overarching strategy objective is growth modernize key sectors (box 2.1). with equity. The Bank emphasized support for (i) The 2000 Country Assistance Strategy (CAS) stability and growth, boosting competitiveness, reaffirmed the main themes and objectives of enhancing outward orientation, and rejuvenating its predecessor, reflecting the judgment that private investment; (ii) human development; and Bank assistance to Tunisia should stay the (iii) rural development. course of a strategy that had yielded good The mid-1990s country strategy was based results so far and was still appropriate. Accord- on the 1995 Country Economic Memorandum ingly, the Bank would support Tunisia's efforts (CEM), which argued for a Bank program in to increase its outward orientation, develop a Tunisia that would support the country's larger and more dynamic private sector, further 9 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T B a n k C o m m i t m e n t s , D i s b u r s e m e n t s , F i g u r e 2 . 1 a n d T r a n s f e r s US$m 500 400 300 200 100 0 ­100 ­200 ­300 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Commitments Net disbursements Net transfers strengthen human resources, and consolidate and general education another fifth of the environmental management (box 2.1). budget. There are serious education sector fiscal World Bank strategies were relevant and issues looming, with declining primary student consonant with Tunisia's development priorities populations and booming demand for second- as outlined in a series of five-year plans. For ary and higher education. example, the Ninth Development Plan World Bank strategies developed indicators (1997­00) aimed at opening up the economy to for monitoring results, but several of these are competition while maintaining macroeconomic difficult to measure effectively since they are stability and strengthening the social agenda and neither quantified nor time-bound. Many environmental management. The Tenth indicators exhibit such weaknesses as vague Development Plan (2002­06) also aims to wording, input orientation, or no baseline data. strengthen competitiveness, embrace the For example, in the education sector, the 2000 knowledge economy, and meet the jobs CAS progress indicators include "greater cost challenge. The Bank strategies reflected recovery in higher education, improvements in Tunisia's development priorities as outlined in teacher training"; and in the health sector, its development plans. The increased focus on "enhance efficiency of public expenditure on the social sectors in the Bank strategies has been health." Despite the declaration about the appropriate and is reasonably aligned with the importance of monitoring and evaluation MDGs and the country's emphasis on human (M&E), the commitment to M&E is weak.1 The resource development. 2000 CAS (p. 33) noted that the indicators were While largely relevant subject to refinements: "These indicators, to be While largely relevant to toTunisia'sdevelopment refined with additional data availability, have Tunisia's development constraints and priori- been designed from available baseline values ties, the country strate- and reasonable medium-term targets." constraints and priorities, gies did not pay the country strategies did sufficient attention to Economic and Sector Work not pay sufficient the fiscal sustainability of Economic and sector work (ESW) was relevant, attention to the fiscal social policies, with of high quality, conformed to the Bank's health care and social assistance strategy, and provided a solid basis sustainability of social affairs absorbing a fifth of for policy dialogue with the government policies. government spending, (annex table A.4). Some core diagnostic ESW-- 1 0 W O R L D B A N K A S S I S TA N C E P R O G R A M B o x 2 . 1 W o r l d B a n k S t r a t e g i e s Mid-1990s Country Strategy: An Outward-Oriented 2000 CAS: An Update of the Earlier Strategy Private-Sector-Led Growth Strategy Goals. The 2000 CAS substantially reiterated the mid-1990s Goals. The objective was to promote rapid and sustainable country strategy objectives, noting that the pace of private in- outward-oriented and private-sector-based growth, while main- vestment remained gradual. The strategy to achieve these ob- taining social stability and environmental sustainability. The jectives was similar to that of the earlier period. strategy to achieve this objective emphasized: (i) deepening Assistance program. The CAS outlined three scenarios for the structural reforms to foster competition; (ii) human capital de- proposed lending program for fiscal years 2000­02. Under the velopment toward middle-income standards; and (iii) modern- base case scenario, the Bank would maintain the level of com- ization of key infrastructure services and environmental mitments of previous years, averaging about US$200 million per management. year. The proposed program would sustain the change in the mix Assistance program. Under the base case scenario, lending of instruments begun with the mid-1990s country strategy, em- would average US$240 million per year during fiscal years 1996­99. phasizing sector investment loans, policy-based lending, and eco- The proposed program would allocate nearly half the portfolio to nomic and sector work (ESW). The base case would include one sectorwide investment loans, with the other half divided be- policy-based operation (for US$150 million, or 25 percent) focus- tween policy-based loans and traditional investment projects. The ing on private sector development and/or the financial sector. base case scenario assumed satisfactory implementation of pol- Under the low-case program, lending would be scaled back, fo- icy reforms and unavailability of other sources of finance (e.g., EU cusing on one or two investment-type operations targeted at the and AfDB). Triggers for higher lending levels (US$350 million per social sectors. Triggers for the high-case scenario included: (i) im- year) included a strong acceleration of structural reforms or a plementation of the free trade agreement with the EU, (ii) a sub- shock to the economy. The mid-1990s country strategy envisaged stantial increase in privatization proceeds, (iii) further progress in strategy notes on the role of the state and on structural changes financial sector reforms, and (iv) initiation of social security and in agriculture, and the general equilibrium model analysis of the labor market reforms. The level of commitments under the high case impact of trade liberalization on the agricultural sector. In addi- scenario was not proposed. Planned ESW included 18 reports, sec- tion, the Bank would prepare a seminar on "Cross-Country Lessons tor notes, and workshops covering trade, private sector develop- from Civil Service Reform." ment, social conditions, education, transport, water, and agriculture. including the 1995 CEM, the 2000 Social and uniform tariffs was the right approach. The Structural Review, and the 1995 Poverty Allevia- main thrust of the 1990 analytical work was to tion report--covered macro, social, and argue the case for a greater openness in the sectoral issues and informed Bank strategies as Tunisian economy in order to increase competi- discussed below. Other ESW sought to address tion, and thereby the efficiency of investment. known policy shortcomings in such sectors as The work also emphasized the need to explic- finance and water, as well as labor and employ- itly adopt a more aggressive export-orientation ment issues (annex table A.4). On the other policy. The recommendations of a subsequent hand, the last agricultural sector review was economic report in 1991 reinforced those of the undertaken in 1982. earlier work and stressed the need to increase The World Bank's analytic and advisory activi- the efficiency of investment by increasing ties (AAA) were generally sound but had some domestic and foreign competition. notable omissions, as discussed below. Tunisia Similarly, the Bank's analysis and its is a relatively small country and increasing its recommendations on private sector develop- integration into the global markets was ment and privatization were sound. The Bank appropriately emphasized; the high tariff and economic work at the beginning of the 1990s non-tariff barriers of the 1980s were distor- emphasized the need to strengthen signifi- tionary, and replacing them with low and cantly the role of the private sector and to 1 1 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T remove the barriers to domestic competition. threat of international competition in general, The 1994 Private Sector Assessment also made but particularly within the EU-related a strong case for a relatively small country such economic sphere. The Update represented as Tunisia to improve its export performance another piece of good analysis that utilized a and, to that end, to significantly expand the survey of Tunisian enterprises. It reiterated the role of the private sector (World Bank 1994b). main recommendations of the Review, That, the report argued, would in turn require presented a detailed review of private sector policies to increase domestic and external development to date, and made recommenda- competition and to remove obstacles facing the tions for future development. functioning of markets. During the first half of 2001, a sizeable Bank- The 1995 CEM, Republic of Tunisia: Fund mission visited Tunisia twice, as part of the Towards the 21st Century, built on the joint IMF-World Bank Financial Sector Assess- recommendations of these reports and ment Program (FSAP). The overall assessment underpinned the three strategic directions of was that the authorities had implemented the mid-1990s country strategy: (i) the pace of prudent and appropriate financial policies over structural reform needed to move forward the preceding decade, enabling the country to more decisively, particularly to complete trade achieve reasonably high and stable growth with liberalization and forcefully open up to private low inflation. A program to modernize, restruc- sector development; (ii) the State needed to ture, and consolidate banking, the securities redefine its role in the economy and concen- market, and the insurance industry had been trate on strengthening its role in the provision gradually implemented. It had so far included of public goods, while opening up much more an overhaul of the legal and accounting significantly to the domestic and foreign frameworks, a strengthening of financial private sectors; and (iii) despite good progress supervision, and a shift to more market- so far, the country needed to continue to oriented policies. The assessment systemati- upgrade human resources and environmental cally examined the whole range of financial management to meet the expected increase in reform areas, pointing out where further action international competition. The CEM also was needed and concluding with a list of policy included environmental considerations in its priorities for the future. analysis of growth prospects and the role of Internal Bank analytical work tried to help government, and emphasized the need to the government understand why, despite assess the sustainability of land and water strong growth, unemployment remains high, at resources in an integrated fashion. around 15 percent. This work provided an in- The 2000 Social and Structural Review depth analysis of the employment and labor (World Bank 2000b) and the 2000 Private market situation and made a number of Sector Assessment Update (World Bank 2000a) recommendations to improve it. It concluded provided the main strategic orientation of the that unemployment remains high, partly 2000 CAS. The review, which gave Tunisia high reflecting demographic pressures, and partly marks on economic reforms and achievement the decrease in the employment intensity since the mid-1980s, argued that if the country growth. While this analysis argued that the hoped to achieve a level of development main solution to the employment problem is comparable to countries in the lowest tier of continued growth, it also provided an extensive Organisation for Economic Co-operation and list of recommendations to help improve Development (OECD) employment policies and procedures to Despite strong growth, countries, it needed not remove rigidities in the labor market, including unemployment remains only to maintain facilitating exit of private firms. reforms, but also to The analytical reports were of satisfactory high, at around 15 accelerate their pace, in quality. The Quality Assurance Group (QAG) percent. view of the imminent assessed a number of reports, rating them all 1 2 W O R L D B A N K A S S I S TA N C E P R O G R A M either highly satisfactory or satisfactory. The Lending recommendations were reflected in the 2000 The structure of the Bank's portfolio changed CAS. Summary evaluations of key reports are rapidly after 1990, when policy-based lending provided in the forthcoming OED working was introduced, with commitments amounting papers (Kanaan; Tsakok) listed in the bibliogra- to nearly US$900 million (table 2.1). Economic phy. Omissions in ESW include core diagnostic policy, financial, and private sector develop- products: public expenditure reviews (PERs), ment drew the largest amount of Bank support Country Financial Accountability Assessments between FY90 and FY03 (39 percent of total (CFAAs), and Country Procurement Assessment Bank commitments), followed by education Reviews (CPARs). Periodic reviews of public and health (21 percent), and rural/agriculture expenditures would have been of particular (19 percent). As evident from table 2.1, the importance to improving the efficiency and fiscal Bank provided support to other sectors; sustainability of social services, while at the same however, this evaluation is confined to the time preserving social gains.2 Other fiduciary above-mentioned sectors, constituting 80 diagnostic reports--CFAAs and CPARs--are also percent of total commitments. essential to analyze issues related to economic management, governance, and transparency. Resource mobilization. The Bank mobilized--in Because of these omissions, the share of conjunction with various donor programs--a resources allocated to Tunisia's ESW--averaging high co-financing ratio for its support. Between 16 percent a year during the 1990s--was below FY90 and FY03, the Bank attracted US$2,372 the Bankwide average (18 percent), and far million in co-financing against US$2,745 million below the MNA average (21 percent) (annex in IBRD commitments, leveraging nearly table A.6). US$1.00 on every IBRD dollar (table 2.1).3 D i s t r i b u t i o n o f W o r l d B a n k C o m m i t m e n t s T a b l e 2 . 1 b y S e c t o r ( F Y 9 0 ­ 0 3 ) No. of Commitments Co-financing Sector Projects US$m % US$m % Economic policy, financial, and private sector development a 8 1,060 39 522 22 Education 7 474 17 362 15 Health, nutrition and population 3 106 4 108 5 Rural b 10 525 19 787 33 Energy and mining 1 60 2 39 2 Environment 2 12 0 3 0 Transport 3 139 5 87 4 Urban development 4 250 9 401 17 Water supply and sanitation 2 118 4 100 4 TOTAL 40 2,745 100 2,372 100 Memo items Adjustment 5 867 32 484 20 Investment 35 1,878 68 1,888 80 a. Includes ECAL I-III ($487 m), Economic and Financial Reform Support ($250 m), Public Enterprise Reform ($130 m), Export Development ($35 m), Industry Support ($39 m), and Private Investment Credit ($120 m). b. Includes Northwest Mountainous and Forestry ($34 m) and Areas Development ($28 m), Agricultural Support Services ($21m), Water Sector Investment ($103 m), Agricultural Sector Investment I &II ($162 m), Natural Resource Management ($27 m), National Rural Finance ($65 m), Forestry Development II ($69 m), and Agricultural Research ($17 m). Source: World Bank data as of September 30, 2002. 1 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T I B R D P r o p o s e d a n d A c t u a l L e n d i n g , T a b l e 2 . 2 F Y 9 7 ­ 0 2 Country strategy period Country strategy period FY97­99 FY00­02 Proposed Actual Proposed Actual Loan commitments (US$ million at current prices) Total during period 659 658 623 511 Average annual 220 219 208 170 (% of total commitments) Adjustment lending 25 36 25 49 Other 75 64 75 51 Source: Own calculations based on Bank's strategies. The Bank's actual lending volumes were OED Findings on Closed Projects roughly the same as proposed in the CASs, but OED ratings of Tunisia's projects have been high-- the share of adjustment lending was signifi- in terms of outcome and sustainability--relative to cantly higher than planned (table 2.2). Some all projects Bankwide and to other countries in the projects included in the 2000 CAS base case MNA Region (table 2.3). This is true for both were delayed due to low government interest adjustment and investment lending, while or interventions by other donors, and others Tunisia's project rating in institutional develop- were reduced in scope.4 The difference was ment impact is similar to the Bankwide average. made up by increasing the size of planned policy-based loans. Whereas the 2000 CAS base Portfolio Performance Assessments case called for one relatively small adjustment Ratings of Tunisia's project portfolio are also operation (US$150 million), the third good and compare favorably with both MNA Economic Competitiveness Adjustment Loan and Bankwide project ratings. Only 11 percent (ECAL III) was for US$253 million, or nearly half of Tunisia's active projects and 6 percent of of the total lending program. commitments were considered "at risk." For O E D E v a l u a t i o n F i n d i n g s o f T a b l e 2 . 3 R e c e n t l y E v a l u a t e d P r o j e c t s b y V a l u e ( e x i t s i n c e F Y 9 0 ) Total Satisfactory Likely Substantial evaluated outcome sustainability ID Country (US$ million) (%) (%) (%) Tunisia 2,367 82 84 41 O/w adjustment lending 967 87 100 17 MNA Region 15,974 71 52 35 Algeria 3,253 46 721 Egypt 2,025 83 40 34 Jordan 1,534 94 80 49 Morocco 4,736 67 38 59 Bankwide 251,234 76 66 43 Source: OED rating database, details in Annex A, table A5. 1 4 W O R L D B A N K A S S I S TA N C E P R O G R A M MNA as a whole, the comparable numbers are Efficiency of World The Tunisian country 25 percent and 28 percent; Bankwide, they are Bank Assistance assistance program is 18 percent for both projects and commitments. The Tunisian country relatively inexpensive. The Bank's current portfolio comprises 18 assistance program is operations with commitments of over US$1.1 relatively inexpensive billion. About a third of the commitments are (annex table A.6). The average program cost of for financial and private sector development, US$13 per US$1,000 of net commitments for another third for urban development and water satisfactory and non-risky projects is lower than supply (building new infrastructure and the MNA average of US$21 and the Bankwide tourism development), a quarter for human average of US$16 for the 1990s. Tunisia's development projects, and the remainder for average project size is close to the Bankwide transport and agriculture/rural development. and MNA averages. 1 5 3 The Development Impact of World Bank Assistance T his chapter evaluates World Bank assistance by assessing its contribu- tion to Tunisia's development outcomes. This is done by examining in more detail the progress in each of the three areas identified in the Bank's strategy: macroeconomic stabilization, growth, and structural reforms, in- cluding financial, trade, and private sector development; human resource development; and poverty alleviation and rural development. Macroeconomic Stabilization, Growth, been successfully implemented. As discussed and Structural Reforms below, they have also supported structural The Bank's strategy has focused on mainte- reforms in the financial, external, and private nance of macroeconomic stability (in conjunc- sectors. Tunisia's prudent macroeconomic tion with the IMF) and promoting equitable and management and cautious yet determined sustainable growth, mainly through increasing structural reforms have led to improved the country's openness to domestic and economic performance, essentially across the external competition. To promote increased entire spectrum of standard indicators: competition, the Bank's assistance has been sustained economic growth; declining inflation; directed at a number of key structural areas, a stable real exchange rate; a sound and stable including financial sector reform, trade liberal- fiscal position; controlled monetary aggregates; ization, enhancing the business environment, and a stable and manageable balance of and promoting private sector development. All payments position (table 1.2). of the Bank's policy-based loans--the 1987 Real GDP growth accelerated from about 3 Industry and Trade Policy Adjustment Loan percent over 1986­90, to about 4 percent over (ITPAL); the 1988 Structural Adjustment Loan 1991­95, and to over 5 Real GDP growth (SAL); the 1991 Enterprise and Financial Reform percent over 1996­02, accelerated from about 3 Support Loan (EFRSL); and ECAL I (1996), ECAL meeting the country II (1999), and ECAL III (2001)--have included strategy targets (annex percent over 1986­90, to the maintenance of a stable macroeconomic table A.7a). Tunisia has about 4 percent over environment as a primary component and, been one of the fastest 1991­95, and to over 5 therefore, have supported underlying fiscal, growing economies monetary, and exchange rate policies that have among MNA and other percent over 1996­02. 1 7 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T T u n i s i a a n d C o m p a r a t o r s : P e r C a p i t a T a b l e 3 . 1 I n c o m e I n d i c a t o r s Lower-middle- Tunisia income countries MNA Regionc Indicator Mid-1980sa Late 1990sb Mid-1980sa Late 1990sb Mid-1980sa Late 1990sb GDP per capita ($ current) 1,158 2,137 1,422 1,665 2,852 2,512 GNP per capita ($ current) 1,160 2,060 1,250 1,740 1,990 2,000 a. Refers to data from 1982 to 1987. b. Refers to data from 1994 to 1998. c. MNA includes oil-exporting countries. Source: World Bank (2000b). lower-middle-income countries since the mid- a new regulatory and supervision framework for 1980s (table 3.1). banks was put in place; about 90 percent of interest rates were liberalized, although money Financial Sector Reform market rates remained fixed by the Central The Bank assistance program set out to Bank. The level of reform and Bank support in decontrol interest rates, improve the soundness this sector were ratcheted up in the late 1990s in of the banking system, and privatize financial conjunction with ECAL II; all the agreed institutions. Next to stabilization policies, the performance criteria for loan disbursement reform and modernization of the financial sector were met. The agreed targets for reducing has achieved the most progress. Certainly it has nonperforming loans (NPLs) were also met, progressed more rapidly than other structural although at the expense of the budget and the adjustment areas. The Bank and the Fund, banks. The overall soundness of the banking among others, have been very active supporters system improved significantly, in accordance in this area. Except for ECAL I, all the Bank with a number of prudential ratios. The activities adjustment operations had significant financial of non-banking intermediaries increased sector reform components, with ECAL II having appreciably, as did those of the securities and been devoted entirely to that objective. The money markets. Civil code revisions regarding implementation experience of all these loans loan recovery were approved, although with improved after a relatively slow start. The loans some delay. A revised Banking Law that met were based on analyses contained in several international standards was submitted to the ESW pieces, including the 1995 CEM and the Chamber of Deputies, and a revised Civil and 2000 Social and Structural Review. Commercial Procedures Code was approved. Initial progress was made in conjunction with Progress was made in privatization. An ITPAL, with the partial freeing of interest rates, insurance company (Tunisian Lloyds) was although ceilings were maintained for a number privatized in conjunction with ECAL II. Most of sectors. A further initial and partial increase in recently and in conjunction with ECAL III, competition was achieved in conjunction with another large insurance company (Al Ittihad) the SAL, when certificates of deposit and was restructured, and a new mutual fund commercial paper were introduced and a company was created to take it over. The branch of a foreign bank privatization of one commercial bank, Union The reform and was opened in Tunisia. Internationale des Banques (UIB), was modernization of the Steps were also taken at completed and that of another, Banque du Sud, financial sector has that time to remove caps is proceeding, although at a pace that is slower on interest rate spreads. than originally envisaged. In October 2002, the achieved the most In the early 1990s, and in French group Société Générale bought a 52 progress. conjunction with EFRSL, percent stake in UIB. By 2002, assets in private 1 8 T H E D E V E L O P M E N T I M PA C T O F W O R L D B A N K A S S I S TA N C E banks were 55 percent of total bank assets, still international environ- The government is below the 2000 CAS target of 60 percent (annex ment. The Central Bank reluctant to give up table A.7a). Eleven private leasing companies continues to closely ownership of some key were operating in the country in 2001; leasing monitor the situation and companies' share of financing private invest- is implementing a entities that it uses to ment rose from 8 percent in 1996 to 12 percent scheme that allows it to exercise control over part in 2001.1 At present, only four commercial work with the banks of the market. banks remain in the public sector, with involved to clean up their combined assets that represent 45 percent of portfolios over time. A the entire commercial banking system.2 At least major problem is that the judicial system is very for the foreseeable future, there appears to be slow in implementing procedures related to loan no intention to privatize these banks, because recovery; for example, the seizure of property their continued role in the public domain is used as collateral is possible in principle, but the considered necessary to serve "strategic" procedure is so cumbersome and lengthy that it is sectors, one per sector: agriculture, housing, effectively not an option that can be used at tourism, and micro-credit for very small present. In addition to dealing with the stock of enterprises (although there is talk of merging NPLs, it is even more important to deal with the last two). The government does not wish to preventing new NPLs by addressing the root relinquish the control it exerts over the bank causes within the public enterprise (PE) sector and enterprises through the public banks, as it (particularly the tourism sector). The Central Bank feels there is adequate competition since is trying to instill a new credit culture within the private banks are not prevented from operat- banking system to prevent new NPLs in the future. ing in these sectors. Nevertheless, these public banks with their heavy burden of nonperform- Trade Liberalization ing loans pose risks to financial stability. By the mid-1980s, Tunisia was a highly Progress in reform of the insurance industry, protected economy, with extensive restrictions with much-appreciated World Bank support, on imports and a widely dispersed and high has also taken place. Two insurance companies tariff structure. Immediately following the have recently been privatized; however, the implementation of the successful stabilization country's largest insurance company, with a 34 in 1986, the country embarked on a number of percent share of the entire market, is likely to structural reforms, including trade liberaliza- remain in the public sector for some time. As tion, to inject more competitiveness and with the banks, the government is reluctant to efficiency into the economy. Both the Bank and give up ownership of some key entities that it the Fund gave priority to supporting the uses to exercise control over part of the market government program and often pressed it to or to provide subsidized services for social or take action in dismantling the quantitative stability reasons. But when the EUAA comes restrictions (QR) regime and in reforming the into effect in 2008, the Tunisian economy will tariff structure. Four Bank structural adjustment have to align its structure along EU norms, operations (ITPAL, SAL, EFRSL, and ECAL I) which will require an even greater private role included trade liberalization components, and in the financial sector. one investment operation (Export Develop- Nonperforming loans remain a top priority for ment Project) supported export development action in the financial sector and for the economy through financing technical assistance and pre- at large. In conjunction with ECAL II, NPLs were shipment finance guarantees. Considerable reduced from about 36 percent in 1993 to about 19 analytical work was undertaken to support percent in 2001,3 which was still high. They are reforms in trade policy, including the 1994 believed to have increased to 22 percent since report on the determinants of export growth 2002, reflecting the exposure of banks to the (World Bank 1994a), the 1995 CEM, and the tourism sector, which was hit by the unfavorable 2000 Social and Structural Review. 1 9 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T Early Bank operations with regard to disman- Private Sector Development and the tling the QR regime met with stiff resistance, and Enabling Environment achieved only modest progress in rationalizing Under the dirigiste system that characterized the tariff structure (e.g., the tariff range was the economic structure until the mid-1980s, compressed from 5­235 percent to 14­41 the economy was heavily regulated and public percent). This continued until the mid-1990s, enterprises dominated the business sector, when Tunisia joined the World Trade Organiza- including banks and other financial intermedi- tion (WTO) and signed the EUAA. On the eve of aries. Since 1987, the Bank has given top these events, 30 to 40 percent of imports were priority in its assistance strategy to helping the still subject to restrictions. Since then, liberaliza- country inject more competition into the tion has proceeded in the context of the free economy by creating a friendlier climate for trade component of the EUAA. Tunisia's private sector development, privatizing public weighted average tariff rate fell from 30 percent enterprises, or helping them become more in the mid-1990s to 27 percent in 2001. With the efficient. To that end, eight Bank lending exception of Morocco's rate of 28 percent, operations (ASAL I [Agriculture Adjustment Algeria, Egypt, and Jordan have lower rates Loan], ITPAL, SAL, PERL [Public Enterprise (Annex table A-2l). Also, the weighted average Restructuring Loan], EFRSL, PICP [Private tariff rate in non-MNA high-growth countries Investment Credit Project], ECAL I, and ECAL (Chile, Korea, Malaysia, Mauritius, and Thailand) III) have included major components designed is much lower, ranging from 5 percent in to help achieve these objectives. All these loans Malaysia to 16 percent in Mauritius. were, in turn, based on a set of high-quality Further progress in trade liberalization will ESW that included the 1994 and 2000 Private be governed by implementation of the EUAA Sector Assessments and the 2000 Social and (i.e., full liberalization of the trade regime, at Structural Review. least regarding trade with the EU, is now The results and achievements of the expected in 2008). In the meantime, implemen- country's efforts and the Bank's support have tation of the early phase of the EUAA has been mixed. Progress has been greatest in actually increased effective protection, since specific, more "technical" areas such as price duties on production inputs have been reduced decontrol and some aspects of the regulatory ahead of those on final goods, but this is the and procedural environment; progress on the standard nature of this agreement as applied in more strategic dimensions such as the pace of several other countries that have similar privatization and addressing the financial and agreements with the EU. The gap between other problems of public enterprises has been tariffs applied to imports from the EU and the slow but steady. For example, upon completion rest of the world has also widened (annex table of the EFRSL in the early 1990s, prices and A-2m).4 It would have been preferable for margins had been decontrolled for the bulk of Tunisia to move more forcefully to lower protec- commodities, although some controls remain tion and barriers to free trade. However, in view to date at the retail level. A law prohibiting non- of the importance of the EUAA, it was competitive pricing was passed. A unified understandable for the Bank to go along with Investment Code was adopted under the the requirements of that agreement while EFRSL, although it still contained some costly pointing out the need for Tunisia to take other and inefficient clauses such as tax privileges for measures to enhance competitiveness, such as foreign investors. A new Company Code was reducing cost of production. Such complemen- adopted in November 2002 and amendments tary measures have been slow in coming. In are being proposed. Some modest measures addition, the Bank could have helped design have been implemented to facilitate labor programs to reduce the discrimination against mobility. A law that created a severance scheme non-EU trade in parallel with implementation of for laying off workers has been passed, but the EUAA. enterprises continue to face obstacles and very 2 0 T H E D E V E L O P M E N T I M PA C T O F W O R L D B A N K A S S I S TA N C E B u s i n e s s C l i m a t e I n d i c e s f o r T u n i s i a , F i g u r e 3 . 1 M N A , a n d O E C D ( v a l u e s 0 ­ 1 0 0 ) Court involvement in closing a business (higher values indicate more court involvement) Closing a business (higher values indicate a more efficient system) Getting credit (higher values indicate easiness of getting credit) Enforcing contracts (higher values indicate more complexity) Employment laws (higher values indicate rigid laws) 0 10 20 30 40 50 60 70 80 Tunisia MNA average OECD average Source: Doing Business database (World Bank 2004). complex procedures if they want to dismiss (PERL). However, the The private sector enjoys workers for "economic reasons." reform program was a better business climate Recent Bank surveys of the business climate modest, resulting in the in Tunisia than in other show that the private sector enjoys a better privatization of a few business climate in Tunisia than in other MNA small-scale PEs, generat- MNA countries. countries. Specifically, Tunisian entrepreneurs ing about US$80 million score higher, on average, than the entrepre- neurs of other MNA countries in terms of P r i v a t i z a t i o n b y starting a business, getting credit, and closing a S e c t o r , i n M i l l i o n business. In contrast, they face more rigid T a b l e 3 . 2 T u n i s i a n D i n a r employment laws and more court involvement ( 1 9 8 7 t o A u g u s t in the process of closing a business than the 3 1 , 2 0 0 3 ) Regional average. Tunisia lags considerably Of which: behind the OECD countries (figure 3.1). Total Receipts from As far as privatization is concerned, 163 PEs Sector receipts foreign investors were sold for a total of 2,345 million dinars Tourism 277 93 (US$1720 million or 9 percent of GDP) during Transport 69 17 1987­03 (table 3.2). When the privatization Chemical & mechanical industries 108 6 program started in 1987, the sectors earmarked Trade 137 76 for privatization were chosen strategically, but Agriculture, fishing, food 75 - gradually other sectors of the economy were Construction materials 825 771 drawn in. The first privatization program Textiles 19 5 (1987­94) targeted small and medium-size PEs, mainly in the textile, tourism, and construction Others 835 788 sectors. The Bank supported the reform Total 2345 1756 through a Public Enterprise Restructuring Loan Source: Ministry of Economic Development. 2 1 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T in sales proceeds. Further progress has taken performance, in light of the more competitive place since 1995 with the privatization of large environment that Tunisia is likely to face in the PEs--such as the cement plants--under next few years. Although tariffs have been ECAL I, with privatization proceeds amounting reduced and the economy is now more open to to US$570 million in 1998. Sales take place the outside world, tariff rates are still high competitively primarily through invitations to relative to competitors. Progress has been tender with set terms and conditions, or made in privatization, but it is not clear that the through the securities market (annex table state's role in commercial sectors has been A.2j). However, in the recent privatization of substantially reduced, because the Bank's Global System Mobile (GSM), the Bank was not program did not specify objective indicators for comfortable with the process and allowed the measuring progress, such as reducing the associated floating tranche of ECAL III to lapse. percentage of revenues or value added Moreover, more information is needed on the generated by state-controlled firms. Despite relative importance of the privatized recent steps to eliminate past losses and enterprises, in terms of their size in the PE establish a sound regulatory framework for the sector and their contribution to employment, banking sector, nonperforming loans remain to assess the overall impact of the program. high and have risen recently, reflecting Tunisia attracted a small but rising amount of incomplete enterprise adjustment (e.g., privati- foreign direct investment (FDI) inflows, averaging zation) and a slowdown in tourism. As a result, 2.6 percent of GDP, during the 1990s, compared Tunisia's private investment remains low as a with an average of 0.8 percent during the second share of GDP (13.5 percent) and of total invest- half of the 1980s. Annual average FDI inflows to ment (56) and does not compare favorably with other MNA countries at similar income levels other MNA countries at similar income levels during the 1990s were also small: Jordan received (annex table A.7a). Also, the private investment an amount of FDI averaging 0.7 percent of GDP ratio to GDP in non-MNA high-growth annually; Morocco, 1.1 percent of GDP; and Egypt, countries (Chile, Korea, Malaysia, Mauritius, 1.1 percent of GDP (Dabour 2000).5 Apart from and Thailand) was 25 percent over the 1990s small FDI amounts directed to tourism, Tunisia (World Bank data, 2003). Moreover, the receives negligible FDI in the non-energy services country is already beginning to face some of sector (World Bank data, 2003). the socioeconomic problems that prevail in In sum, a successful stabilization and more developed countries, such as persistent economic growth program supported by the youth unemployment.6 The Bank's program Bank and the Fund was maintained. Tunisia has needs to continue to support Tunisia's effort to also experienced a significant diversification of implement the EUAA and pursue trade its resources, with non-oil/gas manufactures openness beyond the EU, to improve the assuming a larger role in the economy. The regulatory climate for private enterprises, to Bank's program successfully promoted policy strengthen the court system to enforce reforms in the trade, financial, and private business laws and regulations (particularly in sectors, especially with relation to nonperforming loans), and to The Bank's program respect to improving continue progress on enterprise and financial successfully promoted the soundness of the sector privatization. policy reforms in the banking system, as evidenced by a number Human Development and Progress trade, financial, and of prudential ratios. toward MDGs private sectors, especially Nevertheless, incom- The Bank's human resource development with respect to improving plete reforms in these strategy has emphasized achieving universal areas have the potential primary education, expanding post-primary the soundness of the to make it difficult to enrollment, reducing infant mortality and fertil- banking system. sustain past economic ity, increasing health coverage, and enhancing 2 2 T H E D E V E L O P M E N T I M PA C T O F W O R L D B A N K A S S I S TA N C E T u n i s i a ' s P r o g r e s s i n M e e t i n g t h e B o x 3 . 1 M i l l e n n i u m D e v e l o p m e n t G o a l s 2015 Indicator 1990 1995 1999­2000 Goals 1. Eradicate extreme poverty and hunger .. .. .. Population below $1 a day (%) .. 2.0 .. 1 Prevalence of child malnutrition (% of children under 5) 10.3 9.0 .. 5.15 Income share held by lowest 20% .. 5.7 .. .. 2. Achieve universal primary education Net primary enrollment ratio (% of relevant age group) 93.5 97.8 98.2 100 Youth literacy rate (% ages 15­24) 84.1 89.8 93.4 100 3. Promote gender equality Ratio of girls to boys in primary and secondary education (%) 81.9 89.1 93.0 100 Ratio of young literate females to males (% ages 15­24) 81.0 87.6 91.6 100 4. Reduce child mortality Under 5 mortality rate (per 1,000) 52.0 33.0 30.2 17.6 Infant mortality rate (per 1,000 live births) 37.3 30.5 25.8 12.3 Immunization, measles (% of children under 12 months) 93.0 91.0 84.0 .. 5. Improve maternal health Maternal mortality ratio (modeled estimate, per 100,000 live births) .. 70.0 .. 52.2 Births attended by skilled health staff (% of total) 80.0 81.0 82.0 .. 6. Combat HIV/AIDS, malaria, and other diseases Prevalence of HIV, female (% ages 15­24) .. .. .. a Tuberculosis cases detected under DOTS (%)b .. .. 79.0 a 7. Ensure environmental sustainability Access to an improved water source (% of population) 80.0 .. .. 90 Access to improved sanitation (% of population) 76.0 .. .. 88 8. Develop a Global Partnership for Development Personal computer (per 1,000 people) 2.6 6.7 22.9 .. Fixed line and mobile telephones (per 1,000 people) 37.6 58.6 95.6 .. a. Halt and begin to reverse. b. DOTS or "directly-observed treatment, short-course" is the internationally recommended TB control strategy. Source: World Development Indicators database, April 2003. the quality and efficiency of education and health outcomes. Education and health were the basis services. The Bank's strategy focus on the social for 21 percent of all Bank lending to Tunisia sectors is aligned with the MDGs and the during the 1990s. Most of this went to education, country's emphasis on social achievements. With a pattern repeated from previous decades.7 Bank and other donor support--for example, the EU, the African Development Bank (AfDB), Education. The Bank and the French Development Agency (Agence focused initially on Tunisia has already met Française de Développement, AFD)--Tunisia increasing enrollments, some MDG target levels has already met some MDG target levels and is then shifted toward and is likely to meet them likely to meet them all by 2015 (box 3.1). The improving quality and Bank's assistance contributed to many of these efficiency. The consider- all by 2015. 2 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T able Bank support to schools, vocational outcomes. Weak monitoring and evaluation training, and more recently to universities, mechanisms helped sustain these assumptions supplemented government resources substan- and practices, and costs were not kept in check. tially and also attracted a number of co- Recent performance in international standard- financiers. The government has assigned top ized testing (an outcome measurement) was priority to funding education ever since poor, reinforcing concerns about the quality of independence. At times, education accounted education.9 With Bank support, the government for over a quarter of the total budget of the launched a reform program in 2002, including central government--higher than in any the introduction of new subjects (physics to comparator country, including those at much students in the seventh grade and English to higher income levels. Much of the Bank's students in the fourth grade) and improvements support and Tunisia's investment went into in the quality of textbooks. However, funding of infrastructure and equipment, at times forming management and systemic improvements was 85 to 90 percent of total project costs (annex small, even for those Bank projects with overrid- table A.2o). Bank programs have been credited ingly qualitative objectives.10 with improving basic education services, with Areas that require closer monitoring by the particular emphasis on poor areas. Basic school government and warrant Bank support include enrollments have steadily risen to near 100 expansion of the education system at the post- percent; between 1990 to 2001, there was a basic level, as demographic changes cause doubling in enrollment in the second cycle of enrollment in basic education to fall and basic and secondary schools (grades 7 to 12) demand for secondary and higher education to (annex table A.7b). increase (figure 3.2).13 There are now 300,000 Although early Bank education projects university students, and this number will rise to emphasized enrollment expansion, in line with 500,000 by the end of the decade. The government policy, the lending portfolio of the composition of education expenditure is more mid- to late 1990s addressed quality and skewed toward the secondary and higher efficiency. Recent projects have focused on education levels than in other countries.14 teaching and learning processes that are child- Public spending on education is already high centered and on improving the efficiency of (27 percent of total public expenditure and education spending, albeit largely at the tertiary more than 7 percent of GDP in 2003), and level. Repetition and dropout rates of sixth cannot be expected to expand significantly, graders declined from 23 percent and 13.6 thus further improvements in efficiency need percent in 1995 to 8.1 percent and 4.7 percent to be pursued. There is no mechanism for in 2001, respectively.8 Likewise, completion analyzing the education system's fiscal sustain- rates for grades 6 and 7 rose from 62 percent ability in the ongoing Bank-supported and 32 percent in 1995 to 87 percent and 63.5 Education Quality Improvement Program percent in 2001, respectively (annex table A.7b). Phase 1 (EQIP 1), which focuses on promoting Basic, secondary, vocational, and tertiary facili- inclusion in basic education by reducing ties and services have also been enhanced, dropout and repetition rates through improved although further improvements are needed in teaching.15 With the upcoming completion of the efficiency of services. For the vocational the EUAA, the projected pressures on the education subsector, attempts to improve the budget for higher social spending, and the relevance of training and to strengthen linkages need to accelerate the reduction of the public with the job market have been moderately debt by more ambitious fiscal consolidation, successful. improving the efficiency of social expenditures Nevertheless, Bank projects have tended to is becoming of paramount importance. equate quality with inputs (teacher training, class size, equipment, and higher spending per Health. During interviews, government officials student) instead of student performance and acknowledged the Bank's support for construc- 2 4 T H E D E V E L O P M E N T I M PA C T O F W O R L D B A N K A S S I S TA N C E E d u c a t i o n S y s t e m E x p a n s i o n a t t h e F i g u r e 3 . 2 P o s t - B a s i c L e v e l Number 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 77­78 82­83 87­88 92­93 97­98 02­03 1st cycle of basic education 2nd cycle of basic and secondary education Source: Government data: Statistiques de l'enseignement scolaire. tion of 20 percent of total primary health units Poverty Alleviation Improving the efficiency and for providing equipment. Health coverage and Rural of social expenditures is has expanded, and fertility and mortality have Development16 becoming of paramount declined. The infant mortality rate dropped to Rapid economic growth 26 per thousand live births in 2002, compared laid the groundwork for importance. with 30.5 in 1995, and total fertility rate declined poverty reduction, given to 2 biths per woman (table 1.4). The efficiency that income inequality remained unchanged. of large urban hospitals has improved with The poor accounted for 4 percent of the popula- management upgrading and cost sharing with tion in 2000, down from 8 percent in 1990 the social security program, and management (World Bank data). Tunisia's incidence of information systems are being installed.11 poverty is the lowest among MNA countries at However, the Ministry of Health has not granted similar income levels (annex tables A.2b and these hospitals the autonomy to fully manage A.2c). Although rural poverty has decreased their human resources and budgets.12 Reform of over the years, its 2000 level remained four times health insurance has been slow. Recent reforms the urban level (World Bank data). such as decentralization, regional health planning, and effective resource allocations are Controversy on poverty estimates not yet resolved. As expected to enhance quality and efficiency. mentioned earlier, there is a range of estimates In sum, the support of the Bank and other of poverty in Tunisia. World Bank and Tunisian donors (EU, AfDB, and AFD) and the govern- analysts note that poverty is predominately ment's sustained emphasis on human resource rural, and this contradicts the findings of the development have resulted in remarkable governmental institutions (Ayadi, Matoussi, progress in almost all areas covered by the MDGs and Feser 2001). Official Tunisian data shows (box 3.1). Figures 3.3­3.5 summarize the main that poverty has not been primarily rural since achievements in comparison with the averages 1990. According to the National Institute of for MNA and other middle-income countries. Statistics (INS), the incidence of rural poverty 2 5 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T Net Primary Net Primary F i g u r e 3 . 3 F i g u r e 3 . 4 Illiteracy Enrollment Enrollment Percent Percent 120 80 100 60 80 60 40 40 20 20 0 0 1975 1990 2000 1975 1990 2000 Tunisia MNA Lower-middle-income Tunisia MNA Infant F i g u r e 3 . 5 Mortality Per 1,000 live births 140 120 100 80 60 40 20 0 1975 1990 2000 Tunisia MNA Lower-middle-income Source: World Bank, World Development Indicators database. in 1990, 1995, and 2000 was 5.7, 4.9, and 2.9 assessment is completed (a collaborative effort percent, respectively. These levels are much between the government and the Bank is lower than those reported by the Bank (table recommended) to address differences in 1.3) (Tunisia 2000). The Bank is working with poverty measurements. the Tunisian authorities to reconcile the methodological differences that are driving the The Bank's rural development strategy. The Bank substantial discrepancies in poverty estimates. assistance strategies have broadly agreed on the It is important to close following priorities for agriculture and rural Every attempt should be the large gap between development: (i) liberalize the agriculture sector, estimates so that the (ii) increase the efficiency of resource use, (iii) made before the 2005 focus can be shifted to promote sustainable natural resource manage- Household Survey and policy and strategy to ment, (iv) increase incomes in remote rural areas, before the next poverty reduce poverty. Every (v) strengthen agricultural support services; and assessment is completed attempt should be (vi) promote land consolidation and tenure made before the 2005 security. These objectives have been rooted in the to address differences in Household Survey and Bank's analytical work since 1982 (annex table poverty measurements. before the next poverty A.4).17Toachieveitsobjectives,theBankprovided 2 6 T H E D E V E L O P M E N T I M PA C T O F W O R L D B A N K A S S I S TA N C E a number of agricultural loans: two Agriculture tion of wheat maintains an incentive system that Sector Adjustment Loans (ASALs), two Agriculture favors the cultivation of cereals, a low-value Sector Investment Loans (ASILs); one Water crop. Problems of accessing the EU market18 and Sector Investment Project (WSIP); two Agriculture domestic problems of marketing high-value Research and Extension/cum/ Services projects; crops are also undermining the switch to higher- two Northwest Mountainous Areas Development value crops; addressing these problems Projects, one Forestry Development Project; one warrants Bank support. Natural Resource Management Project; and one Rural Finance Project. Progress toward addressing Sustainable natural resource management. There the Bank's program priorities is examined below. have been substantial physical achievements in Forestry II, Natural Resource Management, the Liberalization. With assistance from the Bank Northwest Mountainous Areas, and the through the two ASALs, Tunisia has undertaken Northwest Mountainous and Forested Areas substantial agricultural policy reforms since projects. For example, in the Northwest 1989. Subsidies for fertilizer, animal feed, seed, Mountainous Areas project the water conserva- irrigation, and mechanized services have been tion component was fully implemented, substantially reduced. The supply of farm covering some 53,000 hectares. Improved soil inputs, collection of produce, and the management allowed farmers to plant pastures provision of mechanized plowing and harvest- and alternative crops on land that would ing have been privatized. The role of private otherwise have been left fallow. An increased extension agents and veterinarians has demand for agro-forestry species was met by the expanded. Progress has been slower, however, Office du Développement Sylvo-Pastoral du in liberalizing food marketing, with the state Nord-Ouest (ODESYPANO), a regional develop- remaining involved in cereals, milk, olive oil, ment agency, supporting the establishment of 36 sugar, tea, coffee, and tobacco. small private enterprise nurseries. The Bank sought to improve natural resource management Increased efficiency of resource use in irrigated in a sustainable fashion by involving local perimeters. This objective, supported by ASIL and communities. The partnership between the WSIP loans, was partially achieved as water tariffs Forestry Department and local NGOs expanded were raised, and many water users' associations from piloting 10 integrated rural development were created to manage irrigation in a decentral- operations to 40. Forestry Groups with Collec- ized way. Since Tunisia has not developed direct tive Interest (groupement forestier d'interet measurements of water savings at farm and collectif, GFIC), in forested areas, and Agricul- irrigation perimeter levels, there is no direct tural Development Groups (groupement measure. But there are some indirect measures, développement agricole, GDA), in agricultural including the extent of the use of water-saving areas, have been created. The government devices and the value added from the use of subsequently allocated increased resources-- irrigated perimeters. In 1995, the government budgetary and donor--to natural resource launched a national water savings program by management. subsidizing the purchase of water-saving equipment. So far, around 72 percent of the Increased incomes in remote rural areas. The Bank public irrigation perimeters are equipped with sought to increase the incomes of poor farm these devices. However, following the drought families in remote rural areas such as the North of 1998, the government started to subsidize West Region through its two Northwest water tariffs. This subsidization runs counter to Mountainous Area Development projects. It the objective of increasing water tariffs and substantially achieved this objective as well as water-saving devices to improve efficient use. the broader objective of improving the living Regarding the value added from the use of standards of these farm families (table 3.3). The irrigation perimeters, the continued subsidiza- major benefits to the poor have been improved 2 7 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T N o r t h w e s t M o u n t a i n o u s A r e a s T a b l e 3 . 3 D e v e l o p m e n t P r o j e c t : S e l e c t e d R e s u l t s f r o m t h e 2 0 0 0 S u r v e y Indicator Unit 1996 2000 Difference (%) Agricultural income Less than 5 hectares TD 1,113 1,633 46.7 More than 5 hectares TD 3,141 4,724 50.4 Contribution to total household income Less than 5 hectares % 47 48 1.0 More than 5 hectares % 65 67 2.0 Employment on family farm Work day 136 285 109 Distance to potable water km 1.5 0.8 ­46.7 Areas close to basic education facility % 39 46 17.9 Distance from clinic km 7 3.9 ­44.3 Wheat yield Less than 5 hectares QT/HA 11.5 13.6 18.3 More than 5 hectares 10.7 16.1 50.5 Barley yield QT/HA 11.1 15.4 38.7 Notes: TD: Tunisian Dinar; km: kilometers; QT/HA: Quintal per hectare. 1 Quintal = 100 Kilos. The survey covered 158 households with less than 5 hectare farms and 101 households with greater than 5 hectare farms. These households come from 28 Community Development Groups. Source: Northwest Forestry and Pastoral Development Agency (ODESYPANO). The major benefits to the access to public goods finance) and to strengthen several institutions poor have been improved and services, including (such as water and community groups) as schools, health facili- means to achieving developmental objectives. access to public goods ties, and potable water. The outcome is mixed. The Bank achieved its and services, including The positive results on objectives to improve participation and schools, health facilities, poverty reduction are resource management and to increase family supported by the Bank incomes by supporting water users associa- and potable water. findings in 2003, which tions and community development structures, noted the overall reduction in rural poverty both local-level institutions. The Bank's contri- and pointed out that the North West Region is bution to strengthening agriculture research no longer the poorest of rural areas.19 Table 3.3 and extension and rural finance to assist also shows that farm income is only half of total smallholders was less successful. Despite some household income for small farmers (with less progress, research and extension is far from than 5 hectares), reflecting the positive but being demand-oriented because the agendas limited contribution of improved agricultural of researchers still dominate, and the transla- techniques to rural vulnerability/poverty tion of research results into extendable reduction. The project report points out that messages is still problematic. In rural finance, the very poor and landless did not benefit government policy on debt forgiveness in much from the agricultural interventions.20 response to drought continues to undermine This highlights the need for supplementing financial discipline, and therefore the viability efficiency gains with better-targeted safety nets. and reach of rural finance. Strengthen agricultural support services. The Bank Land consolidation and tenure security. The Bank sought to improve agricultural support services tried to promote land consolidation and tenure (such as research and extension and rural security as a means of improving incentives to 2 8 T H E D E V E L O P M E N T I M PA C T O F W O R L D B A N K A S S I S TA N C E invest in land and increase productivity, burden of nonperform- Overall, the outcome of especially among smallholders. It succeeded in ing loans still dominate the Bank's assistance implementing some pilot cases, but did not the banking sector and program is rated succeed in accelerating the process of land pose risks to the consolidation and tenure security. A 2003 system's stability. Tariffs satisfactory, based on its project performance assessment report (PPAR) have been reduced and substantial relevance and notes that the Bank did not give sufficient the economy is now efficacy. attention to these complex and sensitive land more open to the issues and argues correctly that the Bank has outside world, but protection remains high largely tacked the land issue onto projects (ASAL compared with Tunisia's competitors. Further II, ASIL I, and Northwest Mountainous Area progress in trade liberalization will be governed projects) (World Bank 2003).21 On the other by the implementation of the EUAA. The Bank's hand, the Bank contributed in later years to assistance also contributed to significant raising government consciousness and increas- progress in the rural and social sectors. In the ing government resources for land issues. rural sector, the Bank's assistance made To conclude, the Bank was successful in important contributions such as achieving supporting measures that raised farm incomes sustainable resource use, increasing farm in remote rural areas, increased local institu- incomes, and improving living standards in tions' participation, and improved resource remote areas. However, efforts to facilitate rural management sustainability. On the other hand, credit and land consolidation were less the Bank's contribution to linking research to effective. With Bank support, remarkable extension, to enhancing rural finance, and to progress in meeting the MDGs was made. promoting land tenure and output markets was Almost all children attend school, more less successful. Future Bank programs should children are surviving their first years, life focus on these areas: supporting institutions expectancy has grown substantially, and gender essential for efficient functioning of output and equity has improved steadily. However, the input markets (for example, land and rural Bank did not pay sufficient attention to the finance), while maintaining social cohesion country's expanding social programs, and through better-targeted safety nets for the rural public expenditure reviews were not periodi- population. Ministry of Agriculture (MOA) cally undertaken. Overall, the outcome of the officials suggested that the Bank and the MOA Bank's assistance program is rated satisfactory, should closely collaborate to undertake a based on its substantial relevance and efficacy. sectorwide review as a first step. As MOA There are two risks/vulnerabilities to sustain- officials pointed out, the last agricultural sector ability: the relatively high level of external debt and review was carried out over 20 years ago, and a large fiscal deficit increase Tunisia's vulnerabilities new review is needed to inform future Bank to external shocks, and vulnerabilities to regional programs. and international developments, including the expiration of the MFA. However, the country has Outcome, Sustainability, and managed economic and regional political Institutional Development uncertainties quite well by gradually diversifying its The Bank's assistance, in tandem with that of export base, forging closer relations with the EU, the IMF and other donors, made a contribution and maintaining social A broad political to maintaining macroeconomic stabilization and macroeconomic and structural reforms, which in turn facilitated stability.22 The progress consensus that realizes growth. Along with sustained per capita income achieved in attaining and the benefits and growth, solid progress was made in reducing maintaining macroeco- understands the poverty. With Bank assistance, the overall nomic stability is likely to soundness of the banking system improved. be sustained--a broad importance of economic However, large public banks with a heavy political consensus that stability has evolved. 2 9 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T realizes the benefits and understands the severance scheme for laying off workers has been importance of economic stability has evolved. passed, enterprises continue to face obstacles Similarly, the structural reforms that have been and very complex procedures if they want to accomplished have been based on a consensus dismiss workers for "economic reasons." among the key actors in the economy and are likely Other organizations were restructured. The to be sustained. As Tunisia has joined WTO and has capacity of the ODESYPANO, a regional develop- signed a free trade agreement with the EU, trade ment agency in the northwest, still one of the and investment policy reforms are unlikely to be poorest regions, and of the community develop- reversed. Sustainability is rated likely. ment committees has been enhanced. Contract- The already relatively good institutional ing of soil and water conservation works to capacity in the country was strengthened further private firms, privatization of veterinary services, by the Bank's support. Institutional changes in and strengthening of water user and community Tunisia's policy, regulatory, and legal environment development groups and agricultural develop- were accomplished with the help of Bank ment associations all have ahd a positive impact. assistance. A broad range of investment, competi- On the other hand, the Bank's efforts to tion, and banking laws were implemented (annex strengthen institutional development to table A.2n). New structures were established and promote rural finance, enhance research and now are operating successfully, such as the bank extension, and address land tenure problems-- supervision and the associated revised banking some of the most difficult structural problems in law, and the new regulatory framework for rural development--had a limited impact. In mutual funds that complied with international contrast, substantial institutional and structural standards and represented good progress in changes were made in the education and health ensuring an adequate legal framework for the sectors with the Bank's support, facilitating the sector. On the other hand, there has been poor remarkable progress toward meeting the MDGs. enforcement of regulations concerning loan On average, the Bank's contribution to institu- recovery and, although a law that created a tional development has been substantial. 3 0 4 Contributors' Performance Tunisia's Own Central Role T he main party responsible for the significant socioeconomic achieve- ments of Tunisia is the country itself. The Bank's support and that of other development partners no doubt played important roles, but it was the government's own belief in the correctness of the policies it followed and its ability to muster the national consensus to implement them that made the biggest difference. Perhaps three main attributes of Tunisia's These factors enabled the country to efforts were crucial for this overall success: (i) implement reforms across a wide variety of program ownership and the explicit policy of areas: price liberalization, trade, financial and the government to move ahead with difficult private sector development, investment policies and reforms only after a broad consen- incentives, legal and institutional frameworks, sus with labor unions, the business community, human resources, and agriculture and rural and the political structure had been achieved, development. However, although comprehen- albeit within a regime that is governed by a sive, both the pace and the depth of reforms strong central authority. Although this meant have been uneven. Whereas stabilization that the pace of reform had to be cautious and policies were implemented rather swiftly and deliberate, it also meant that there have been generally have been no policy reversals and that economic agents maintained, and broad The main attributes of could count on a basically predictable policy fiscal and financial Tunisia's success were environment; (ii) the maintenance of high sector reforms have ownership and broad investment levels in human resources, which moved forward rapidly, has led to a well-educated population and a progress with public political consensus, a well-trained and qualified labor force; and enterprise restructuring well-developed human (iii) the achievement and maintenance of and privatization has resource base, and a macroeconomic stability through a combina- been relatively modest, tion of sound fiscal, monetary, and foreign proceeding at a more stable macroeconomic exchange policies. cautious pace because environment. 3 1 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T the consensus behind them is not as firm. In broad a political consensus as possible in addition, labor mobility remains hampered by sensitive areas has led to some delays, from the rigidities in the labor market, whose removal standpoint of the Bank, and it entails some has experienced considerable resistance from risks, as the economy faces growing competi- the unions. Trade liberalization, on the other tive pressures. But on the other hand, the hand, was initially resisted and had moved gradual approach has allowed the government slowly, but eventually would accelerate under to build the necessary consensus and has the EUAA free trade agreement. The govern- served the overall objective of reform well, at ment has placed strong emphasis on education. least so far. Bank staff went along with this pace This investment has paid off impressively: rising in general, but by the late 1990s started encour- education standards were a major contribution aging Tunisia with more urgency to accelerate to the rise in total factor productivity. the implementation of its reforms and make According to some policymakers, the the private sector more open and transparent, 1986­93 period represented the first phase of in view of the significant increase in competi- reforms that were not fully developed at the tive pressures expected for the country. time and, sometimes, not fully owned by the Because of domestic opposition to the more country. This led to mixed and partial results difficult measures required, the Tunisians have and some slippage in implementing policies. To elected not to abandon the gradualist approach these practitioners, 1993 signaled the beginning that has served them well so far, in order to of the "post-adjustment" phase, in preparation avoid risking a major derailment of reforms. for the signing of the EUAA in 1995. During this period, the authorities took a couple of years to The World Bank's Performance develop their own program and build the The Bank provided significant assistance to requisite internal consensus for its support. support the country's development efforts. Its This served as the basis for the three Economic analytical work was timely; the topics covered Competitive Adjustment Loans (Tunisian were driven by socioeconomic developments in officials chose the name over a Structural the country. It was generally of high quality and Adjustment Loan [SAL], noting that adjustment important for the design of the Bank's strate- had already been completed and the country gies. It also underpinned the Bank's lending. had entered its post-adjustment phase). Policy-based and sector investment loans However, even when the authorities have were generally well conceived and designed.1 themselves been convinced of the reforms that They covered the right policy areas, starting with they owned, they have chosen to continue to a broad catch-all operation such as the Industrial move prudently and deliberately to ensure that Trade Policy and Adjustment Loans, which were all concerned were on board. In the words of an appropriate for the early days of reform, and official, "We wait until things ripen and then we became more focused and specific as the process move, step-by-step. This is why there have been matured. Successive operations covered the no reversals or slippages in this phase. For same set of areas, but each time building on example, after seven years of partial trade previous progress and adding new and deeper liberalization and five years of hesitant privatiza- dimensions. This reasonable approach worked tion, both have now accelerated." particularly well in financial reform, where Bank In the words of an Perhaps the most assistance supported the country first in controversial issue has introducing the basic rudiments of a modern official, "We wait until to do with the financial system in the early days, and then in things ripen and then we "appropriate" pace of adopting more specific measures appropriate for move, step-by-step. This is reform. The gradualist, a more advanced system by the turn of the cautious approach century. Similarly, early education and health why there have been no followed by the Tunisian projects placed more emphasis on improving reversals or slippages." authorities to ensure as access; the lending portfolio of the later 1990s 3 2 C O N T R I B U T O R S ' P E R F O R M A N C E was more focused on sectorwide policy issues who were not drought- As is to be expected, such as enhancing the quality of services. afflicted. where there was strong In general, Bank staff and management showed While turnover of concordance between the reasonable flexibility during implementation. For country directors for example, Bank staff showed flexibility during Tunisia has not been Bank and the ECAL I preparation, reaching an agreement with high (annex table A.9), government, there was the government to postpone the banking reforms staff rotation is relativelygreat progress, and vice initially envisaged in the operation in order to high at the project level. arrive subsequently at a fully agreed policy There have been 3 or versa. package for the sector loan (ECAL II). This flexibil- more task managers in 8 (24 percent) out of 33 ity entailed a reduction of the ECAL I amount by projects (annex table A.8). The turnover was the half. On the other hand, the Bank was not highest for the Hospital Restructuring Loan, comfortable with the telecommunication privati- which had five task managers, and the Private zation process, and decided to allow the floating Investment Credit, which had four. Ongoing tranche of ECAL III to lapse. In a few instances, a projects with a high turnover of task managers technical or partial waiver for a tranche-release include the Education Quality Improvement condition had to be given, or a loan covenant was Program (with three task managers). not honored, and the Bank still disbursed the loan. This was normally a negotiable approach, Other Development Partners since the agreed measures were subsequently implemented and the momentum of the overall The International Monetary Fund. Tunisia joined the reform effort maintained. Fund in April 1958. The IMF has played a signif- In particular, an explicit approach of icant role in supporting the country's success- "incremental progress" by all the parties involved ful stabilization and financial sector reform has proven very effective in Tunisia. This efforts. As with the Bank, the Fund provided approach involved the Bank staying the course valuable technical advice and considerable in a particular policy area and addressing the funding and played an important role in helping same or closely related issues in that policy area the government avert the threatening balance with successive analytical pieces or lending of payments crisis in the mid-1980s. A Standby operations, but each time incrementally and Arrangement in an amount of SDR 103.65 patiently introducing additional measures until million was approved in July 1988, and a more complete progress was achieved over time. drawing of SDR 207.30 from the Extended Fund This was particularly clear in the more difficult Facility was approved in July 1992. These areas in finance, agriculture, and investment amounts were very important in helping Tunisia incentives--areas where political resistance meet external financing requirements, and the initially slowed down the rate of progress, and underlying programs supported the govern- patience and persistence proved worthwhile. ment's efforts to maintain macroeconomic As is to be expected, where there was strong stability and implement structural reforms in a concordance between the Bank and the number of the areas also supported by Bank government (as in the case of the Natural adjustment lending. The Fund and the Bank Resource Management Project), there was jointly conducted a financial assessment. The great progress, and vice versa, as in the case of Fund also provided assessments of the rural finance. The Bank was not able to change country's macroeco- the government's traditional approach of re- nomic conditions under An explicit approach of scheduling and forgiving debts as a method of the three ECALs. The "incremental progress" by drought relief. This behavior undermined Fund and the Bank also all the parties involved incentives to repay the National Agricultural cooperated in a number has proven very effective Bank (Banque Nationale Agricole or BNA) of areas to provide loans, even among farmers in irrigated areas technical advice, most in Tunisia. 3 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T notably for the financial sector and debt The EU has co-financed all three Bank- management. supported ECALs, for a total of euro 260 million. The EU--along with the German The European Union. The partnership between Agency for Reconstruction (Kreditanstalt für Tunisia and the EU has been very strong, both Wiederaufbau, or KfW) and AFD--has been an with the Commission itself and with the important partner in the Bank's rural develop- European Investment Bank (EIB). Over the ment program. Staff of the EU delegation in 1977­96 period, four financial protocols were Tunis feel that the cooperation with the Bank implemented, for a total support from the has basically been very good, especially during European Union of euro 742 million; of this, euro loan preparation and appraisal, but that the 324 million is directly from the Commission's Bank could do a better job of actively engaging budget, and euro 418 million is from the EIB. EU staff during loan implementation and Priority was given during this period to support supervision. The EU noted the lack of Bank agriculture and rural development, environmen- representation in Tunis. At present, the Bank tal management, transport, industry, infrastruc- has only a liaison office in Tunis, staffed by one ture, and training. After Tunisia signed the Operations Officer; the Country Director is Association Agreement in 1995, the nature of the based in Washington, D.C. support shifted significantly under the MEDA I program (1996­99). In line with the Tunisian The African Development Bank. AfDB has enjoyed government's priorities at the time, 48 percent excellent cooperation with Tunisia and has of this program's euro 428.4 million support was contributed significantly to its development for structural adjustment, in conjunction with effort. Since the beginning of its operations in World Bank ECAL support. In addition, the EIB the country in 1968, it has committed about provided euro 620 million in loans, mainly in US$4,290 million equivalent in support of 84 support of infrastructure, environmental protec- operations. AfDB loan commitments have tion, and private sector development. MEDA II averaged about US$250 million equivalent (2000­06) was designed to support similar annually in recent years. These loans have priorities that were further emphasized in the given priority to electrification, roads, railways, Document de Strategie (2002­2006) and the water resources, agriculture, rural develop- accompanying Pro-gramme Indicatif National ment, and structural adjustment, in conjunc- (2002­2004). Under MEDA II, the Commission tion with the three ECALs (for a total of about provided euro 249 million for structural adjust- 330 million AfDB currency units), and small and ment; modernization of industry, the judiciary, medium-size enterprise (SME) development ports, and information technology; the media; through support of the mise á niveau program and greater participation of civil society in in conjunction with the EU. AfDB staff working socioeconomic development. The EU analyses on the ECALs commended the excellent of economic developments and prospects in working relationship with the Bank. Tunisia are similar to the Bank's. They give the country high marks on macroeconomic stabiliza- The Islamic Development Bank. Tunisia joined the tion and good overall performance on structural IDB in 1974, and since then has enjoyed an adjustment, but stress the need to accelerate the exemplary relationship with the IDB. The IDB implementation of policies that would increase supported Tunisia's development efforts by competitiveness, such as further export-orienta- providing trade financing (US$818 million), tion, private sector development, and dealing project financing (US$355 million), and special more decisively with the public enterprise sector assistance (US$4 million). Priorities for IDB through the mise á niveau (box 1.1) program. assistance have been public utilities, mainly Finally, the EU has also given Tunisia high marks water and sewerage (44 percent), agriculture for its efficient absorptive capacity of the EU and integrated rural development (17 percent), assistance program. and social sectors (15 percent). The IDB co- 3 4 C O N T R I B U T O R S ' P E R F O R M A N C E financed one World Bank project and the this means essentially the The amount of rainfall in working relationship between the two institu- rate of economic growth a particular year is a very tions has been excellent. in the EU. Because of important, unpredictable, increasing international Exogenous Factors competition in exports and ever-present The amount of rainfall in a particular year is a to the EU, this factor is exogenous factor for very important, unpredictable, and ever- likely to be quite signifi- Tunisia. present exogenous factor for Tunisia. It has an cant, particularly during immediate effect on agricultural production, years of low or negative EU growth. which, because of its significant share of GDP, Although Tunisia is not a direct participant greatly influences aggregate production. The in the Middle East conflict, its economy can still cyclical nature of GDP in Tunisia is the product feel any significant perturbations in the region, of rainfall cycles, and it is interesting to note in as happened during the Gulf War; the attack in this context that this cyclical relationship is Djerba, a tourist resort; and the current asymmetric. The influence of agricultural uncertain situation in Iraq. production on GDP is stronger in the contrac- By their nature, exogenous factors are not tion phase than in the expansion phase, since within the country's control. But Tunisia can try when agricultural output is higher than normal, to build up resilience against them by increasing its multiplier effect through its use by agro- the flexibility of its economic structure so it can industries takes place only if spare capacity is respond more rapidly to unpredictable changes available. There is also a household incomes in its environment. Its prudent macroeconomic effect that reinforces this asymmetry. stabilization measures and adjustment program Another important exogenous factor that to make the economy more open and competi- applies to most countries is the level of economic tive have enabled Tunisia to weather some of activity in trading countries. In the case of Tunisia, these factors over the past couple of decades. 3 5 5 Recommendations T his evaluation finds that a combination of macroeconomic stability, at- tention to human resource development, and structural reform can yield dramatic improvements in the living standards of developing countries. Also, government ownership of reforms and the reform program are impor- tant ingredients of a successful Bank assistance program. It also shows that ESW can play an important role in formulating and supporting reform pro- grams that underline Bank lending, particularly adjustment lending. In this re- gard, omission of diagnostic work, such as sector work, public expenditure analysis, and core fiduciary work do have an impact on the Bank's programs in sectoral reform, the efficiency of public expenditures, and accountability. This evaluation has the following recommen- · Continue support for social sectors. While sup- dations: portive of the MDGs, the Bank's program needs to continue this emphasis and focus on im- · Follow through on supporting programs to proving the country's capacity to prioritize pub- improve the environment for private sector de- lic spending and address burgeoning demand velopment and enhance competitiveness, as for secondary and tertiary education--given Tunisia seeks to integrate within the world the demographic transition under way--while economy. Specifically, the Bank should help the preserving social gains. As expenditures on so- country (i) pursue trade openness with the cial services remain high, representing over 40 EU and the rest of the world; (ii) improve the percent of expenditures, education expansion enabling environment to attract private and at the post-basic level will necessitate efficiency foreign investment; (iii) strengthen the judicial improvements. A public expenditure review system to implement laws and regulations re- could help build capacity to prioritize social garding loans recovery, particularly nonper- spending and provide the basis for measures to forming loans and measures to facilitate exit of efficiently address education expansion. private firms; and (iv) continue progress on pri- · Focus on institutional development and safety vatizing public financial and enterprise firms. nets in the rural sector. Future Bank programs 3 7 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T should focus on institutional development to view, OED agrees with the government's sug- support efficient output and input markets gestion that it is time to undertake one. (for example, land and rural finance), while · Enhance a results-based monitoring and eval- maintaining social and political stability through uation approach. Strengthening monitoring better targeted rural safety nets. Good quality of output and outcome indicators embedded in economic and sector studies should inform an improved monitoring and evaluation function future Bank programs. After 21 years without would help to anchor the Bank's future assis- a comprehensive Bank agricultural sector re- tance program in a result-based approach. 3 8 ANNEXES ANNEX A: STATISTICAL ANNEXES Annex A.1 Tunisia at a Glance Annex A.2 Key Background Data Annex A.3 External Assistance to Tunisia Annex A.4 Selected ESW and CAS List for Tunisia Annex A.5 Evaluation Ratings Annex A.6 Cost of Bank Programs for Tunisia and Comparator Countries Annex A.7 Country Strategy Objectives and Key Indicators Annex A.8 Tunisia: Task Manager Turnover in Projects Approved in FY90­03 Annex A.9 Tunisia: Bank's Senior Management, 1991­03 4 1 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T A n n e x A . 1 T u n i s i a a t a G l a n c e M. East and Lower-middle- POVERTY and SOCIAL Tunisia North Africa income 2002 Development Diamond* Population, mid-year (millions) 9.8 306 2,411 GNI per capita (Atlas method, US$) 2,000 2,070 1,390 GNI (Atlas method, US$ billions) 19.6 670 3,352 Life expectancy Average annual growth, 1996­02 Population (%) 1.2 1.9 1.0 Labor force (%) 2.4 2.9 1.2 GNI Gross Most recent estimate (latest year available, 1996­02) per primary Poverty (% of population below capita enrollment national poverty line) .. .. .. Urban population (% of total population) 67 58 49 Life expectancy at birth (years) 73 69 69 Infant mortality (per 1,000 live births) 24 37 30 Child malnutrition (% of children under 5) 4 .. 11 Access to improved water source Access to an improved water source (% of population) 80 88 81 Illiteracy (% of population age 15+) 27 35 13 Tunisia Gross primary enrollment Lower-middle-income group (% of school-age population) 117 95 111 Male 120 98 111 Female 115 90 110 KEY ECONOMIC RATIOS and Economic ratios* LONG-TERM TRENDS 1982 1992 2001 2002 GDP (US$ billions) 8.1 15.5 20.0 21.2 Trade Gross domestic investment/GDP 31.7 34.3 27.9 25.8 Exports of goods and services/GDP 36.9 39.5 47.1 44.3 Gross domestic savings/GDP 21.2 27.4 23.4 21.4 Gross national savings/GDP 22.5 26.4 23.6 22.4 Domestic Investment Current account balance/GDP ­9.2 ­7.0 ­4.3 ­3.5 savings Interest payments/GDP 2.7 2.6 2.1 2.2 Total debt/GDP 46.4 56.1 54.5 57.2 Total debt service/exports 16.2 20.0 13.9 15.4 Present value of debt/GDP .. .. 54.2 .. Indebtedness Present value of debt/exports .. .. 102.7 .. 1982­92 1992­02 2001 2002 2002­06 Tunisia (average annual growth) Lower-middle-income group GDP 3.8 4.7 4.9 1.7 4.7 GDP per capita 1.3 3.2 3.7 0.5 3.7 Exports of goods and services 7.2 5.6 12.1 0.0 5.5 Growth of investment and GDP (%) STRUCTURE of the ECONOMY 1982 1992 2001 2002 20 10 (% of GDP) Agriculture 13.2 16.1 11.6 10.4 0 Industry 31.1 28.5 28.8 29.1 97 98 99 00 01 02 Manufacturing 11.1 16.5 18.5 18.6 ­10 Services 55.8 55.4 59.5 60.5 GDI GDP Private consumption 62.3 56.6 60.9 62.3 General government consumption 16.5 16.0 15.7 16.3 Imports of goods and services 47.4 46.5 51.7 48.7 Growth of exports and imports (%) 15 1982­92 1992­02 2001 2002 (average annual growth) 10 Agriculture 5.3 1.9 ­1.5 ­10.3 5 Industry 3.6 4.8 5.7 3.4 Manufacturing 2.0 5.6 6.9 2.2 0 Services 3.4 5.3 6.0 3.7 ­5 97 98 99 00 01 02 Private consumption 2.7 4.6 5.4 3.4 Exports Imports General government consumption 3.0 4.2 5.0 4.5 Gross domestic investment 0.8 3.7 6.4 ­6.2 Imports of goods and services 3.0 4.7 13.4 ­1.7 Note: 2002 data are preliminary estimates. This table was produced from the Development Economics central database. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 4 2 A N N E X A : S TAT I S T I C A L A N N E X E S PRICES and GOVERNMENT FINANCE 1982 1992 2001 2002 Domestic prices (% change) Inflation (%) Consumer prices .. 5.8 1.9 2.8 5 Implicit GDP deflator 16.0 5.7 2.7 2.8 4 3 Government finance 2 (% of GDP, includes current grants) 1 Current revenue 31.7 26.8 24.6 24.6 0 Current budget balance 6.7 4.1 5.2 4.7 97 98 99 00 01 02 Overall surplus/deficit ­2.2 ­3.0 ­3.5 ­3.1 GDP deflator CPI TRADE 1982 1992 2001 2002 (US$ millions) Total exports (fob) 1,980 4,014 6,606 6,857 Export and import levels (US$ mill.) n.a. 911 609 610 641 n.a. 63 416 541 489 10,000 Manufactures 965 2,432 4,981 5,272 7,500 Total imports (cif) 3,389 6,432 9,521 9,503 Food 356 430 654 653 5,000 Fuel and energy 377 449 888 886 Capital goods 1,032 1,578 2,240 2,236 2,500 Export price index (1995=100) .. 79 151 154 0 96 97 98 99 00 01 02 Import price index (1995=100) .. 89 107 109 Terms of trade (1995=100) .. 89 141 141 Exports Imports BALANCE of PAYMENTS 1982 1992 2001 2002 (US$ millions) Exports of goods and services 3,002 5,973 9,518 9,539 Current account balance to GDP (%) Imports of goods and services 3,859 6,978 10,423 10,431 Resource balance ­856 ­1,005 ­905 ­893 0 96 97 98 99 00 01 02 ­1 Net income ­294 ­654 ­941 ­984 Net current transfers 403 570 983 1,130 ­2 Current account balance ­748 ­1,089 ­863 ­746 ­3 Financing items (net) 776 1,171 1,118 895 ­4 Changes in net reserves ­27 ­82 ­255 ­149 ­5 Memo: Reserves including gold (US$ millions) 614 862 1,999 2,301 Conversion rate (DEC, local/US$) 0.6 0.9 1.4 1.4 EXTERNAL DEBT and RESOURCE FLOWS 1982 1992 2001 2002 (US$ millions) Total debt outstanding and disbursed 3,772 8,543 10,884 12,100 Composition of 2001 debt (US$ mill.) IBRD 376 1,470 1,297 1,464 IDA 68 56 37 35 G: 682 A: 1,297 Total debt service 563 1,342 1,465 1,641 IBRD 53 267 226 233 B: 37 IDA 1 2 2 2 Composition of net resource flows Official grants 29 140 .. .. F: 3,638 D: 2,701 Official creditors 279 278 365 ­90 Private creditors 29 74 229 556 Foreign direct investment 340 526 .. .. Portfolio equity 0 0 0 .. E: 2,529 World Bank program Commitments 0 210 328 112 A - IBRD E - Bilateral Disbursements 83 111 293 117 B - IDA D - Other multilateral F - Private Principal repayments 27 149 148 156 C - IMF G - Short-term Net flows 56 ­39 145 ­39 Interest payments 27 120 80 79 Net transfers 29 ­159 65 ­118 Note: This table was produced from the Development Economics central database. 4 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T ANNEX A.2: KEY BACKGROUND DATA T u n i s i a : K e y E c o n o m i c a n d S o c i a l I n d i c a t o r s , T a b l e A . 2 a 1 9 9 0 ­ 0 1 Indicator 1990 1991 1992 1993 1994 1995 1996 GDP growth (annual %) 8.0 3.9 7.8 2.2 3.3 2.3 7.1 GNI per capita, Atlas method (current US$) 1,430 1,490 1,700 1,690 1,740 1,820 2,000 GNI per capita, PPP (current international $) 3,770 3,940 4,310 4,400 4,540 4,720 5,030 GDP per capita growth (annual %) 5.4 1.9 5.6 0.2 1.4 0.7 5.5 Agriculture, value added (% of GDP) 15.7 16.7 16.1 14.7 12.6 11.4 13.7 Manufacturing, value added (% of GDP) 16.9 16.9 16.5 17.1 18.3 18.8 18.3 Services, etc., value added (% of GDP) 54.5 54.3 55.4 57.3 58.4 59.6 57.8 Exports of goods and services (% of GDP) 43.6 40.4 39.5 40.4 44.9 44.7 42.1 Imports of goods and services (% of GDP) 50.6 45.3 46.5 48.0 47.9 48.7 43.7 Current account balance (% of GDP) ­3.8 ­3.6 ­7.1 ­9.1 ­3.4 ­4.3 ­2.4 Total debt service (% of GNI) 26.7 26.0 21.9 22.9 20.8 18.4 17.8 External debt, total (% of GNI) 64.7 65.7 57.8 63.2 65.2 62.1 59.7 Gross foreign reserves in months of imports 1.6 1.6 1.4 1.4 2.2 2.5 3.1 Current revenue, excluding grants (% of GDP) 30.7 29.0 29.4 30.3 31.3 30.1 29.6 Expenditure, total (% of GDP) 34.6 34.0 32.1 33.1 32.3 32.8 32.6 Gross domestic savings (% of GDP) 25.5 27.1 27.4 21.7 21.5 20.7 23.5 Illiteracy rate, adult total (% of people ages 15 and above) 40.9 39.8 38.7 37.7 36.5 35.3 34.1 Immunization, DPT (% of children under 12 months) 93.0 93.0 95.0 94.0 93.0 94.0 95.0 Improved water source (% of population with access) 80.0 .. .. .. .. .. .. Improved sanitation facilities (% of population with access) 76.0 .. .. .. .. .. .. School enrollment, primary (% gross) 113.3 113.7 114.1 116.6 117.2 116.8 116.5 School enrollment, secondary (% gross) 44.9 45.9 48.6 53.2 56.8 60.4 64.6 Population, total (in millions) 8.2 8.3 8.5 8.7 8.8 9.0 9.1 Population growth (annual %) 2.4 2.0 2.0 2.0 1.8 1.6 1.5 Urban population (% of total) 57.9 58.7 59.5 60.3 61.1 61.9 62.6 Life expectancy at birth, total (years) 70.3 70.5 70.8 70.8 71.0 71.4 71.6 Fertility rate, total (births per woman) 3.5 .. 3.2 .. 2.9 2.7 2.5 Infant mortality rate (per 1,000 live births) 37.3 35.7 34.2 32.3 31.7 30.5 29.7 School enrollment, primary, male (% gross) 119.6 119.5 119.4 121.6 121.8 120.9 120.1 School enrollment, primary, female (% gross) 106.6 107.5 108.6 111.4 112.4 112.6 112.6 Illiteracy rate, adult male (% of males ages 15 and above) 28.4 27.6 26.7 26.0 25.0 24.0 23.0 Illiteracy rate, adult female (% of females ages 15 and above) 53.5 52.1 50.8 49.4 48.1 46.7 45.3 Source: World Bank database as of March 23, 2003. 4 4 A N N E X A : S TAT I S T I C A L A N N E X E S Average, 1990­2000 Lower- middle- income 1997 1998 1999 2000 2001 Tunisia Algeria Egypt Jordan Morocco MNA countries 5.4 4.8 6.1 4.7 5.4 4.7 2.0 4.6 4.8 4.8 3.0 3.7 2,080 2,050 2,090 2,100 2,070 1,855 1,741 1,086 1,513 1,162 1,876 1,100 5,220 5,350 5,730 6,070 6,450 4,961 4,591 3,039 3,628 3,188 4,595 3,824 4.0 3.4 4.7 3.5 4.2 3.1 0.1 2.6 0.9 0.9 0.9 2.5 13.2 12.5 12.9 12.3 11.8 13.6 11.1 17.3 4.7 16.5 14.0 15.3 18.5 18.4 17.9 18.2 18.1 17.8 10.8 17.8 14.7 17.6 13.1 25.9 58.2 59.2 59.2 58.9 59.4 57.7 35.9 50.5 68.8 51.6 46.2 45.3 43.8 43.0 42.2 44.0 44.2 42.7 28.8 21.2 49.5 27.4 31.8 27.2 46.2 46.3 44.4 47.6 47.8 46.9 24.7 27.8 74.2 32.7 31.6 26.6 ­3.1 ­3.4 ­2.2 ­4.2 ­4.7 ­4.3 3.7 1.3 ­4.7 ­1.3 .. .. 17.1 16.8 17.3 22.2 .. 20.7 49.4 18.9 22.8 37.3 16.8 15.2 60.7 56.7 60.1 59.7 60.2 61.5 63.9 55.7 142.3 71.6 41.3 36.6 3.1 2.6 3.2 2.6 2.5 2.1 6.8 8.9 4.7 4.6 7.3 6.3 28.7 29.3 28.8 28.6 .. 29.6 29.9 30.7 26.9 28.1 .. 14.8 31.9 31.7 31.6 32.0 .. 32.6 31.1 33.6 32.4 31.1 .. 18.0 24.0 23.6 24.6 23.9 24.5 24.0 32.5 14.6 2.9 17.3 23.3 29.3 32.8 31.5 30.2 29.0 27.9 34.5 39.5 48.4 13.8 55.6 40.2 17.9 96.0 97.0 96.0 .. .. 94.6 78.6 85.7 94.1 89.1 83.3 89.6 .. .. .. .. .. 80.0 94.0 94.5 96.5 78.5 87.0 77.0 .. .. .. .. .. 76.0 73.0 90.5 98.5 68.5 80.3 48.4 120.2 118.5 118.2 .. .. 116.5 106.5 96.8 81.8 80.2 95.6 112.1 68.4 72.9 74.6 .. .. 59.0 62.9 77.2 58.9 37.6 61.7 62.8 9.2 9.3 9.5 9.6 9.7 9.0 28.1 58.8 4.2 26.6 269.9 2043.0 1.4 1.3 1.3 1.1 1.2 1.6 1.9 2.0 3.8 1.8 2.1 1.1 63.4 64.1 64.8 65.5 66.1 62.2 54.6 43.1 76.9 52.3 55.6 42.0 71.9 72.1 72.1 72.1 .. 71.3 69.4 65.2 70.2 65.6 66.0 68.5 2.4 2.2 2.1 2.1 .. 2.6 3.8 3.6 4.4 3.4 4.0 2.3 27.6 26.6 26.2 25.8 .. 30.7 38.6 52.7 27.8 56.8 51.7 37.9 123.8 121.8 121.2 .. .. 121.0 112.9 102.9 81.2 91.2 102.3 113.9 116.5 115.0 115.0 .. .. 111.8 99.8 90.4 82.4 68.7 88.6 110.3 21.9 20.8 19.7 18.6 17.7 23.3 29.1 36.2 6.9 42.1 28.8 11.1 43.8 42.3 40.9 39.4 38.1 45.9 50.0 60.9 21.4 68.9 52.0 24.8 4 5 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T P o v e r t y a n d I n e q u a l i t y i n T u n i s i a , E g y p t , T a b l e A . 2 b M o r o c c o , a n d J o r d a n Urban Rural Overall Country and Headcount Poverty Headcount Poverty Headcount Poverty Gini survey year index (%) gap (%) index (%) gap (%) index (%) gap (%) coefficient Tunisia 1985 4.6 NA 19.1 NA 11.2 NA 0.406 1990 3.5 0.7 13.1 3.2 7.4 1.7 NA 1995 3.6 0.7 13.9 3.1 7.6 1.6 0.400 2000 1.7 8.3 4.1 0.4 Egypt 1981/82 18.2 3.5 16.1 3.1 17.2 NA 0.394 1990/91 20.3 4.3 28.6 4.5 25.0 NA NA 1995/96 22.5 4.9 23.3 4.3 22.9 NA 0.320 1997 22.5 5.6 24.3 6.4 23.5 6.7 0.320 1999/00 3.7 18.3 16.7 Morocco 1984/85 17.3 NA 32.6 NA 26.0 NA 0.446 1990/91 7.6 1.5 18.0 3.8 13.1 2.7 NA 1998/99 12.0 2.5 27.2 6.7 19.0 4.4 0.395 Jordan 1986/87 2.6 NA 4.4 NA 3.0 0.3 0.36 1992 12.4 3.1 21.1 5.1 14.4 3.6 0.40 1997 10.0 2.1 18.2 4.0 11.7 2.5 0.36 1999a 12.0 3.03 0.36 2001a 11.6 3.01 0.36 a. World Bank, 2002, p. 11. Sources: Adams and Page 2003. 4 6 A N N E X A : S TAT I S T I C A L A N N E X E S C o m p a r i n g N a t i o n a l a n d I n t e r n a t i o n a l T a b l e A . 2 c P o v e r t y L i n e s f o r S e l e c t e d C o u n t r i e s i n t h e M N A R e g i o n National poverty International lines poverty lines Population Population Population Survey below the Survey below $1.00/ below $2.00/ Country year poverty line (%) year person/day (%) person/day (%) Algeria 1995 22.6 1995 < 2 15.1 Egypt 1997 23.5 1995 3.1 52.7 Jordan 1997 11.7 1997 < 2 7.4 Morocco 1998/99 19.0 1990/91 < 2 7.5 Tunisia 1995 7.6 1995 < 2 10.0 West Bank & Gaza 1998 23.2 NA NA NA Yemen 1991/92 19.1 1998 15.7 45.2 Source: World Bank 2003b. 4 7 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T S o c i a l I n d i c a t o r s i n T u n i s i a a n d C o m p a r a t o r T a b l e A . 2 d C o u n t r i e s , 1 9 7 5 ­ 8 0 Tunisia Algeria Indicator 1975 1978 1979 1980 1975 1978 1979 1980 1975 Life expectancy at birth, total (years) 58.6 .. .. 62.4 56.3 .. .. 59 53 Life expectancy at birth, female (years) 59.3 .. .. 63.5 57.3 .. .. 60 55 Life expectancy at birth, male (years) 57.8 .. .. 61.4 55.3 .. .. 58 52 Infant mortality rate (per 1,000 live births) 94.4 .. .. 69.2 120 .. .. 98 139 Birth rate, crude (per 1,000 people) 36.7 .. .. 34.8 46.2 .. .. 42 39 Death rate, crude (per 1,000 people) 10.9 .. .. 9 14.2 .. .. 12 15 Fertility rate, total (births per woman) 5.9 .. .. 5.2 7.3 .. .. 6.7 5.4 Improved water source (% of population with access) .. .. .. .. .. .. .. .. .. Improved water source, urban (% of urban population with access) .. .. .. .. .. .. .. .. .. Improved water source, rural (% of rural population with access) .. .. .. .. .. .. .. .. .. Immunization, DPT (% of children under 12 months) .. .. .. 36 .. .. .. .. .. Immunization, measles (% of children under 12 months) .. .. .. 65 .. .. .. .. .. Sanitation (% of population with access) .. .. .. .. .. .. .. .. .. Illiteracy rate, adult total (% of people ages 15 and above) 63.8 58.6 56.8 55.1 69.2 65 63 61 65 Illiteracy rate, adult female (% of females ages 15 and above) 77.1 72.3 70.5 68.8 83.2 79 78 76 79 Illiteracy rate, adult male (% of males ages 15 and above) 50.6 45 43.3 41.7 53.9 49 47 46 50 Sanitation, rural (% of rural population with access) .. .. .. .. .. .. .. .. .. Sanitation, urban (% of urban population with access) .. .. .. .. .. .. .. .. .. School enrollment, primary (% net) .. .. .. 82.2 76.6 .. .. 81 .. School enrollment, primary, female (% net) .. .. .. 71.8 63.9 .. .. 71 .. School enrollment, primary, male (% net) .. .. .. 92.1 88.9 .. .. 91 .. School enrollment, secondary (% net) 16.3 .. .. 22.9 .. .. .. 31 .. School enrollment, secondary, female (% net) 12.2 .. .. 17.3 .. .. .. 24 .. School enrollment, secondary, male (% net) 20.3 .. .. 28.2 .. .. .. 37 .. School enrollment, secondary (% gross) 21.1 .. .. 27 20 .. .. 33 40 Pupil-teacher ratio, primary 40 .. .. 38.5 40.9 .. .. 35 35 Land use, arable land (% of land area) 22.1 22 21.9 20.5 2.9 2.9 2.9 2.9 2.7 Labor force, total (millions) 1.8 2.0 2.1 2.2 4.1 4.5 4.7 4.9 12.7 Labor force, female (% of total labor force) 26.3 27.9 28.4 28.9 20.9 21.2 21.3 21.4 26.2 Source: World Bank, World Development Indicators (various issues). 4 8 A N N E X A : S TAT I S T I C A L A N N E X E S Egypt Morocco Jordan MNA 1978 1979 1980 1975 1978 1979 1980 1975 1978 1979 1980 1975 1978 1979 1980 .. .. 56 55 .. .. 58 .. .. .. .. 46 .. .. 47.6 .. .. 57 56 .. .. 59.8 .. .. .. .. 47.8 .. .. 49.4 .. .. 54 53 .. .. 56.3 .. .. .. .. 44.4 .. .. 46 .. .. 120 115 .. .. 99.2 48.8 .. .. 40.8 125 .. .. 115 .. .. 39 42 .. .. 38.1 .. .. .. .. 47.6 0 0 46.8 .. .. 13 14 .. .. 12 .. .. .. .. 18.9 0 0 17.5 .. .. 5.1 6.3 .. .. 5.4 7.5 .. .. 6.8 6.6 .. .. 6.6 .. .. .. .. .. .. .. .. .. .. ... .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 82 84 .. .. .. .. .. .. .. 30 .. .. .. .. .. 62 78 .. .. .. .. .. .. .. 29 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 62 62 61 76 73 72 71.5 38.6 35.7 56.8 31.6 66.9 63.8 62.8 61.7 77 76 75 88 86 85 84.6 56.2 51.9 70.5 46.1 77.3 74.4 73.3 72.2 48 47 47 62 60 59 58 22.1 20.3 43.3 17.9 56.1 52.8 51.7 50.6 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 47 .. .. 61.6 78.6 .. .. 73 .. .. .. .. .. .. .. 35 .. .. 47.4 73.4 .. .. 72.6 .. .. .. .. .. .. .. 58 .. .. 75.1 83.6 .. .. 73.4 .. .. .. .. .. .. .. 14 .. .. 20.3 44.2 .. .. 52.8 .. .. .. .. .. .. .. 10 .. .. 15.7 37.2 .. .. 50.8 .. .. .. .. .. .. .. 17 .. .. 24.8 50.9 .. .. 54.6 .. .. .. .. .. .. 51 17 .. .. 26 47.5 .. .. 59.1 9.9 .. .. 15 .. .. .. 42 .. .. 38.2 34.7 .. .. 31.8 .. .. .. .. 2.4 2.3 2.3 16 17 17 16.9 3.3 3.3 21.9 3.4 5.3 5.4 5.4 5.5 13.6 13.9 14.3 6.0 6.6 6.8 7.0 0.5 0.5 0.5 0.5 149.5 161.4 165.7 170.3 26.4 26.4 26.5 32.5 33.1 33.3 33.5 14.1 14.5 14.6 14.7 23.2 23.6 23.7 23.8 4 9 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T S o c i a l I n d i c a t o r s f o r T u n i s i a a n d T a b l e A . 2 e C o m p a r a t o r C o u n t r i e s , 1 9 9 6 ­ 0 1 Tunisia Algeria Indicator 1996 1997 1998 1999 2000 2001 1996 1997 1998 1999 2000 2001 1996 Life expectancy at birth, total (years) .. 72 72 72 .. 72 .. 70 .. 71 .. .. Life expectancy at birth, female (years) .. 74 74 74 .. .. 72 .. 73 .. .. Life expectancy at birth, male (years) .. 70 71 71 .. .. 69 .. 69 .. .. Infant mortality rate (per 1,000 live births) 30 28 25 24 .. 37 35 .. 34 .. .. Birth rate, crude (per 1,000 people) 20 19 18 17 .. .. 27 .. 25 .. .. Death rate, crude (per 1,000 people) 5.5 5.6 5.6 5.6 .. 6 6.1 .. 5.6 .. .. Fertility rate, total (births per woman) 2.5 2.4 2.2 2.2 .. .. 3.6 .. 3.4 .. .. Improved water source (% of population with access) .. .. .. .. .. .. .. .. .. 94 .. Improved water source, urban (% of urban population with access) .. .. .. .. .. .. .. .. .. 98 .. Improved water source, rural (% of rural population with access) .. .. .. .. .. .. .. .. .. 88 .. Immunization, DPT (% of children under 12 months) 91 96 96 100 .. 77 79 80 83 .. 91 Immunization, measles (% of children under 12 months) 86 92 94 93 .. 75 74 75 78 .. 92 Sanitation (% of population with access) .. .. .. .. .. .. .. .. .. 73 .. Illiteracy rate, adult total (% of people ages 15 and above) 34 33 31 30 29 28 37 36 35 33 32 32 48 Illiteracy rate, adult female (% of females ages 15 and above) 45 44 42 41 39 49 47 46 44 43 60 Illiteracy rate, adult male (% of males ages 15 and above) 23 22 21 20 19 18 26 25 24 23 22 23 36 Sanitation, rural (% of rural population with access) .. .. .. .. .. .. .. .. .. 47 .. Sanitation, urban (% of urban population with access) .. .. .. .. .. .. .. .. .. 90 .. School enrollment, primary (% net) 98 .. 98 .. .. 94 .. 94 .. .. 93 School enrollment, primary, female (% net) 96 .. 96 .. .. 91 .. 92 .. .. 88 School enrollment, primary, male (% net) 99 .. 99 .. .. 97 .. 96 .. .. 98 School enrollment, secondary (% net) .. .. .. .. .. 56 .. 58 .. .. 68 School enrollment, secondary, female (% net) .. .. .. .. .. 55 .. 59 .. .. 64 School enrollment, secondary, male (% net) .. .. .. .. .. 58 .. 58 .. .. 71 School enrollment, secondary (% gross) 65 64 73 .. .. 63 .. 66 .. .. 75 Pupil-teacher ratio, primary 25 24 25 .. .. 27 27 .. .. .. 27 Land use, arable land (% of land area) 19 19 19 .. .. 3.2 3.2 3.2 .. .. 2.8 Labor force, total (millions) 3.4 3.5 3.6 3.7 3.8 3.9 9 9.3 9.6 9.9 10 11 22 Labor force, female (% of total labor force) 30.7 30.9 31.2 31.4 31.7 31.9 25.1 25.7 26.4 27.0 27.6 28.3 29.0 Source: World Bank, World Development Indicators (various issues). 5 0 A N N E X A : S TAT I S T I C A L A N N E X E S Egypt Jordan Morocco MNA 1997 1998 1999 2000 2001 1996 1997 1998 1999 2000 2001 1996 1997 1998 1999 2000 2001 1996 1997 1998 1999 2000 2001 66 .. 67 .. .. 71 .. 71 .. .. 67 .. 67 .. .. 49 .. 68 .. 68 .. 68 .. .. 73 .. 73 .. .. 69 .. 69 .. .. 50 .. 48 .. 65 .. 65 .. .. 69 .. 70 .. .. 65 .. 65 .. .. 47 .. 46 .. 51 .. 47 .. .. 28 .. 26 .. .. 51 .. 48 .. .. 93 .. 43 .. 26 .. 26 .. .. 31 .. 30 .. .. 26 .. 25 .. 0 41 0.1 40 .. 7 .. 6.9 .. .. 4.4 .. 4.2 .. .. 6.8 .. 6.6 .. 0 16 0 16 .. 3.4 .. 3.3 .. .. 3.9 3.8 3.7 .. 3.3 3.1 .. 2.9 .. .. 5.5 .. 3 .. .. .. .. 95 .. .. .. .. 96 .. .. .. .. 82 .. .. .. .. 89 .. .. .. 96 .. .. .. .. 100 .. .. .. .. 100 .. .. .. .. 82 .. .. .. 94 .. .. .. .. 84 .. .. .. .. 58 .. .. .. .. 41 94 96 95 .. 100 93 91 85 .. 95 95 93 94 .. 53 53 48 59 .. 92 98 96 .. 98 95 86 83 .. 93 92 91 93 .. 54 58 50 57 .. .. .. .. 94 .. .. .. .. 99 .. .. .. .. 75 .. .. .. .. 55 47 46 45 45 44 13 12 11 11 10 9.8 55 54 53 52 51 50 43 42 41 39 38 34 59 58 57 56 19 18 17 17 16 68 67 66 65 64 52 50 49 47 46 35 35 34 33 33 6.6 6.2 5.8 5.5 5.2 4.6 41 41 40 39 38 37 34 33 32 31 30 24 .. .. .. 91 .. .. .. .. 98 .. .. .. .. 42 .. .. .. .. 41 .. .. .. 98 .. .. .. .. 100 .. .. .. .. 100 .. .. .. .. 81 .. 92 .. .. .. .. 83 .. .. 74 .. 79 .. .. .. .. .. .. .. .. 89 .. .. .. .. 83 .. .. 65 .. .. .. .. .. .. .. .. .. .. 95 .. .. .. .. 82 .. .. 83 .. 85 .. .. .. .. .. .. .. .. .. .. .. .. .. 72 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 75 .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 70 .. .. .. .. .. .. .. .. .. .. .. .. 78 81 .. .. 56 57 80 .. .. 39 .. 40 .. .. .. .. .. .. .. 23 24 .. .. 21 21 25 .. .. 28 28 28 .. .. .. .. .. .. .. 2.8 2.8 .. .. 2.8 2.9 2.9 .. .. 20 20 20 .. .. 6.5 6.5 6.5 .. .. 22 23 24 24 25 1.2 1.3 1.3 1.4 1.5 1.5 10 11 11 11 12 12 260 268 275 282 289 290 29.4 29.7 30.1 30.4 30.7 22 23 23 24 25 25 34.6 34.6 34.7 34.7 34.7 34.8 26.2 26.6 26.9 27.3 27.7 28.1 5 1 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T T u n i s i a : P r i v a t i z a t i o n a n d R e s t r u c t u r i n g T a b l e A . 2 f b y S e c t o r ( 1 9 8 7 t o A u g u s t 2 0 0 3 ) Volume Nunber of enterprises Sector Million TD % Number % Agriculture, fisheries, and agro-industry 72.0 3.2 18.0 10.7 Industry 952.0 40.6 56.0 33.3 Construction materials 825.0 35.1 18.0 10.7 Mechanical, electrical, and chemical industries 108.0 4.6 30.0 17.9 Textiles 19.0 0.8 8.0 4.8 Services 1,318.0 56.2 94.0 56.0 Tourism and handicrafts 277.0 11.8 37.0 22.0 Commerce 137.0 5.8 21.0 12.5 Transport 69.0 3.0 16.0 9.5 Others 835.0 35.6 20.0 11.9 Total 2,346.0 100.0 168.0 100.0 Source: Directorate of Privatization, Government of Tunisia. T u n i s i a : F o r e i g n I n v e s t m e n t i n T a b l e A . 2 g P r i v a t i z a t i o n ( 1 9 8 7 t o A u g u s t 3 1 , 2 0 0 3 ) Sector Receipts from foreign investors Percentage of total Agriculture, fishing, and food 0 0 Industries 782 44.6 Construction materials 771 43.9 Chemical and mechanical industries 6 0.3 Textiles 5 0.3 Services 974 55.5 Tourism and handicrafts 93 5.3 Transport 17 1.0 Trade 76 4.3 Others 788 44.9 Total 1,755 100.0 Source: Ministry of Economic Development, Government of Tunisia. 5 2 A N N E X A : S TAT I S T I C A L A N N E X E S T u n i s i a : P r i v a t i z a t i o n a n d R e s t r u c t u r i n g T a b l e A . 2 h b y S e c t o r ( O c t o b e r 1 9 9 8 t o A u g u s t 2 0 0 3 ) Sector Receipts, million TD Percentage of total Agriculture, fishing, and food 24 1 Industries 855 45 Construction materials 798 42 Chemical and mechanical industries 51 3 Textiles 6 0 Services 205 11 Tourism and handicrafts 143 8 Transport 0 0 Trade 62 3 Others 806 43 Total 1,891 100 Source: Ministry of Economic Development, Government of Tunisia. T u n i s i a : P r i v a t i z a t i o n T y p e s T a b l e A . 2 i ( b e t w e e n 1 9 8 2 a n d A u g u s t 3 1 , 2 0 0 3 ) Type Number of enterprises Percentage of total Full privatization 87 52 Partial privatization 31 18 Liquidation 38 23 Others 10 6 Concession 2 1 Total 168 100 Note: Total receipts amounted to 2,346 MDT. Source: Privatization Directorate, Government of Tunisia. T u n i s i a : M o d e o f P r i v a t i z a t i o n T a b l e A . 2 j ( b e t w e e n 1 9 8 2 a n d A u g u s t 3 1 , 2 0 0 3 ) Mode Privatization proceeds in MDT Percentage of total Sales of shares 1,239 53 Sales of asset/capital (Vente d'éléments d'actif) 352 15 Concession 756 32 Total 2,346 100 Source: Privatization Directorate, Government of Tunisia. 5 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T T r a d e a n d O p e n n e s s : T u n i s i a a n d T a b l e A . 2 k C o m p a r a t o r C o u n t r i e s Country/Region 1985 2000 Algeria 50 64 Egypt, Arab Rep. of 52 39 Jordan 113 110 Morocco 60 69 Tunisia 70 92 MNA 45 59 Source: Adams and Page 2003b; World Bank, World Development Indicators. A v e r a g e T a r i f f R a t e s i n S e l e c t e d C o u n t r i e s T a b l e A . 2 l ( w e i g h t e d , % ) Country 1992­95 2001­02 Algeria 16.1 7.6 Egypt, Arab Rep. of 17.1 9.7 Jordan n.a. 11.1 Morocco 47.0 27.9 Tunisia 30.0 27.4 Chile 10.98 7 Korea, Rep. of 6.94 5.68 Mauritius 22.64 15.76 Malaysia 4.7 5.17 Thailand 13.18 9.33 Source: World Bank, World Integrated Trade Solutions (WITS) as of October 2003. T u n i s i a : S u m m a r y T a r i f f S t a t i s t i c s , T a b l e A . 2 m 2 0 0 0 ­ 0 2 MFN tariffs EU-preferential tariffs 2000 2001 2002 2000 2001 2002 Average 35.9 35.9 34.5 28.5 25.6 24.3 Agricultural 77.1 77.1 71.6 77.2 76.7 76.6 Nonagricultural 25 25 22.8 16 12.5 10.9 Maximum 220 220 215 n.a. n.a. n.a. Source: IMF 2003, table 2, p. 20. 5 4 A N N E X A : S TAT I S T I C A L A N N E X E S T u n i s i a : I n v e s t m e n t , C o m p e t i t i o n , a n d T a b l e A . 2 n B a n k i n g L a w s A new unified Investment Code, adopted in December 1993 under EFRSL, represented an important improvement over the previous system. A revised Banking Law and a new regulatory framework for mutual funds were submitted to the Chamber of Deputies in the context of ECAL II. Overall, the law complied with international standards and represented good progress in ensuring an adequate legal framework for the sector. An amended Civil and Commercial Procedures Code in 2003 to facilitate the judicial process for recovering loans under ECAL II. A law prohibiting noncompetitive pricing was passed under EFRSL in the early 1990. C a t e g o r i e s o f I n v e s t m e n t i n F i v e M o s t T a b l e A . 2 o R e c e n t l y C l o s e d E d u c a t i o n P r o j e c t s a n d i n t h e O n g o i n g Q u a l i t y P r o j e c t ( E Q I P ) Project/actual costs ($ million except for EQIP) Sec. ed. Higher ed. Employment & Education & Fifth ed. EQIP 1 support restructuring training fund training sector project Category (2000­05) (1995­02) (1992­02) (1990­97) loan (1989­97) (1983­90) School infrastructure 122 150 59 - 114 8.7 Equipment/information and communications technology 49 - - - 54.7 18 Training/technical assistance/ innovation 11 7.3 15 18.5 2.8 0.5 Management/administration/ systemic improvements 0.3 - 3 2.2 - - Total 182 157.3 77 20.7 172 27 Note: Costs are projected costs for the EQIP project and actual for the other project. Source: Internal World Bank data. 5 5 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T ANNEX A.3: EXTERNAL ASSISTANCE TO TUNISIA T u n i s i a : N e t R e c e i p t s o f E x t e r n a l T a b l e A . 3 a F i n a n c i a l R e s o u r c e s ( U S $ m i l l i o n ) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 All donors 619.9 333.5 696.5 717.9 694.5 1,510.9 650.7 522.6 499.3 622.1 665.5 729.6 World Bank 103.2 172.8 ­35.4 108.6 14.6 ­68.4 ­3.1 ­48.9 ­39.3 41.0 ­16.9 144.7 IBRD 102.0 172.0 ­36.9 101.2 15.3 ­64.7 14.6 ­45.8 ­36.5 43.8 ­14.5 146.9 IDA ­1.0 ­2.0 ­1.9 ­2.0 ­2.1 ­2.1 ­2.1 ­2.1 ­2.1 ­2.1 ­2.1 ­2.1 IFC 2.2 2.8 3.4 9.4 1.4 ­1.6 ­15.6 ­0.9 ­0.6 ­0.6 ­0.3 ­ World Food Program 13.6 3.4 2.6 3.7 3.7 3.9 2.5 4.0 ­0.1 ­ ­ ­ France 11.0 ­101.8 142.6 105.9 105.3 118.8 103.9 65.3 192.1 257.2 35.7 139.5 Germany 23.4 21.6 52.7 50.2 22.8 ­16.0 3.5 180.3 ­15.0 ­69.2 28.9 24.2 Japan 14.8 ­263.1 ­70.8 10.2 380.2 530.9 284.4 14.8 15.1 45.8 119.5 117.8 Sweden 28.4 32.9 12.6 20.7 9.7 0.2 ­7.3 ­6.4 0.7 ­0.9 4.4 1.5 United Kingdom 15.0 13.8 103.4 1.2 8.4 ­1.4 4.3 4.1 43.9 ­3.3 50.8 ­26.8 United States 24.0 8.0 ­1.0 ­14.0 ­13.0 766.0 2.0 51.0 ­5.4 ­48.0 4.0 ­30.0 Arab countries 105.0 ­3.0 ­4.4 ­4.5 ­15.1 ­22.6 ­38.3 ­20.5 ­32.0 ­18.4 ­11.5 ­1.5 Arab agencies 32.0 28.5 46.8 34.1 3.0 ­0.8 0.7 0.1 0.5 0.4 ­0.4 ­1.1 EC/EU 205.4 166.3 582.8 393.1 171.0 164.0 307.8 467.0 424.0 329.6 619.1 333.0 Others 44.4 254.1 ­135.4 8.8 4.1 36.4 ­9.7 ­188.2 ­85.2 88.0 ­168.1 28.4 Net receipts Algeria 641 1,968 ­1,062 ­15 661 548 1876 ­391 203 ­934 ­384 552 Egypt, Rep. of 3,311 4,237 1,661 2,677 3,228 2,441 2,737 2,916 4,119 1,771 3,242 2,800 Jordan 1,087 747 404 118 465 944 846 503 611 511 573 490 Morocco 1,620 1,888 1,182 746 811 617 812 549 895 587 586 377 Source: OECD 2003. T u n i s i a : W o r l d B a n k F l o w s , 1 9 9 0 ­ 0 3 T a b l e A . 3 b ( U S $ m i l l i o n ) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Commitments 147 68 385 144 268 273 99 242 222 194 202 76 253 112 Net disbursements 140 109 58 27 14 10 ­57 28 ­48 33 ­16 28 77 ­19 Net transfers 47 ­1 ­56 ­92 ­106 ­118 ­182 ­80 ­145 ­62 ­99 ­48 ­3 ­79 Net disbursements per capita (US$) 17.2 13.1 6.8 3.1 1.6 1.1 ­6.3 3.0 ­5.2 3.5 ­1.7 2.9 7.9 ­1.9 5 6 A N N E X A : S TAT I S T I C A L A N N E X E S A l g e r i a : W o r l d B a n k F l o w s , 1 9 9 0 ­ 0 3 T a b l e A . 3 c ( U S $ m i l l i o n ) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Commitments 458 431 215 240 140 331 428 89 150 0 98 42 31 89 Net disbursements 171 95 236 36 9 203 256 ­131 ­4 ­147 ­119 ­105 ­104 ­114 Net transfers 95 11 127 ­80 ­104 77 112 ­260 ­118 ­276 ­248 ­229 ­217 ­188 Net disbursements per capita (US$) a 6.8 3.7 9.0 1.3 0.3 7.2 9.0 ­4.5 ­0.1 ­4.9 ­3.9 ­3.4 ­3.3 ­3.6 E g y p t : W o r l d B a n k F l o w s , 1 9 9 0 ­ 0 3 T a b l e A . 3 d ( U S $ m i l l i o n ) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Commitments 62 524 376 338 121 80 172 75 142 550 50 0 50 12 Net disbursements ­70 ­98 ­60 33 ­16 ­84 ­67 ­55 29 ­51 ­38 ­57 ­48 ­26 Net transfers ­207 ­249 ­184 ­92 ­136 ­207 ­180 ­146 ­41 ­114 ­94 ­105 ­87 ­53 Net disbursements per capita (US$) ­1.3 ­1.8 ­1.1 0.6 ­0.3 ­1.5 ­1.1 ­0.9 0.5 ­0.8 ­0.6 ­0.9 ­0.7 ­0.4 M o r o c c o : W o r l d B a n k F l o w s , 1 9 9 0 ­ 0 3 T a b l e A . 3 e ( U S $ m i l l i o n ) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Commitments 483 626 325 549 412 58 540 108 200 440 8 98 5 4 Net disbursements 189 135 263 58 19 ­102 141 ­24 ­31 113 ­227 ­130 ­218 ­197 Net transfers ­20 ­103 22 ­201 ­245 ­381 ­134 ­274 ­249 ­103 ­427 ­310 ­375 ­305 Net disbursements per capita (US$) 7.9 5.5 10.5 2.3 0.7 ­3.9 5.3 ­0.9 ­1.1 4.0 ­7.9 ­4.5 ­7.3 ­6.5 J o r d a n : W o r l d B a n k F l o w s , 1 9 9 0 ­ 0 3 T a b l e A . 3 f ( U S $ m i l l i o n ) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Commitments 175 25 0 55 100 147 120 140 67 210 35 120 5 120 Net disbursements 78 ­17 21 38 22 31 40 109 ­7 89 ­24 103 ­10 99 Net transfers 43 ­61 ­20 ­4 ­22 ­17 ­9 63 ­56 41 ­75 50 ­53 70 Net disbursements per capita (US$) 24.7 ­4.7 5.5 9.8 5.4 7.3 9.2 24.5 ­1.5 18.7 ­4.9 20.6 ­1.9 18.5 Note: Until April 29, 2003. a. 2002 and 2003 population figures extrapolated using 2001 population growth rate. Source: World Bank data as of April 29, 2003. 5 7 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T A n n e x A . 4 S e l e c t e d E S W a n d C A S L i s t f o r T u n i s i a Report title Report type* Date Report # Year 1. Tunisia ­ Country Assistance Strategy CAS 03/28/00 20161 2000 Agriculture 1. From Universal Food Subsidies to a Self-Targeted Program: A Case Study in Tunisian Reform Pub 12/31/96 WDP351 1996 Economic Policy 1. Morocco, Tunisia ­ Export Growth: Determinants and Prospects SR 10/31/94 12947 1994 2. Tunisia ­ Poverty Alleviation: Preserving Progress while Preparing for the Future (Vol. 1-2) SR 08/31/95 13993 1995 3. Tunisia ­ Towards the 21st Century (Vol. 1-2) ER 10/31/95 14375 1995 4. Logistical Constraints on International Trade in the Maghreb PRWP 05/31/96 WPS1598 1996 5. From Universal Food Subsidies to a Self-Targeted Program SR 06/30/96 15878 1996 6. Tunisia's Global Integration and Sustainable Development: Strategic Choices for 21st Century Pub 08/31/96 15966 1996 7. Implementation of Uruguay Round Commitments: The Development Challenges PRWP 10/31/99 WPS2215 1999 8. Trade Policy Developments in the Middle East and North Africa Pub 02/29/00 20322 2000 9. Exports and Information Spillovers PRWP 11/30/00 WPS2474 2000 Education 1. Tunisia ­ Higher Education: Challenges and Opportunities SR 05/08/97 16522 1997 2. Education in the Middle East and North Africa: A Strategy towards Learning for Development WP 04/30/99 21589 1999 3. L'Enseignement Superieur Tunisien: Enjeux et Avenir Pub 03/31/98 17493 1998 Energy 1. Tunisia ­ Inter-fuel Substitution Study: A Joint Report ESMAP 05/31/90 ESM114 1990 2. Tunisia ­ Power Efficiency Study ESMAP 02/29/92 ESM136 1992 3. Tunisia ­ Energy Management Strategy in Residential and Tertiary Sectors ESMAP 04/30/92 ESM146 1992 4. Increasing the Efficiency of Gas Distribution ­ Phase 1: Case Studies and Thematic Data Sheets ESMAP 07/31/99 ESM218 1999 Environment 1. The Greening of the Economic Policy Reform (Vol. 1-2) EWP 02/28/97 16339 1997 Finance 1. External Finance in the Middle East ­ Trends and Prospects DWP 12/31/93 20956 1993 2. Making Micro Finance Work in the Middle East and North Africa WP 12/31/98 23076 1998 Health 1. How Access to Contraception Affects Fertility and Contraceptive Use in Tunisia PRWP 01/31/92 WPS841 1992 2. Towards a Virtuous Circle: Nutrition Review of MNA DWP 08/31/99 20960 1999 3. Risks and Macroeconomic Impact of HIV/AIDS in the Middle East and North Africa: Why Waiting to Intervene Can Be Costly PRWP 08/31/02 WPS2874 2002 5 8 A N N E X A : S TAT I S T I C A L A N N E X E S Report title Report type* Date Report # Year Multisector 1. The World Bank Research Observer Pub 02/28/98 17258 1998 Others 1. Strengthening Tunisian Municipalities to Foster Local Urban Development OEDRP 01/01/01 24568 2001 3. The World Bank in Action: Stories of Development WP 01/01/02 24928 2002 3. Initiative in Legal and Judicial Reform WP 03/31/02 25082 2002 Social Protection and Poverty Analysis 1. Options for Pension Reforms in Tunisia PRWP 07/31/93 WPS1154 1993 2. Tunisia's Insurance Sector PRWP 05/31/95 WPS1451 1995 3. Tunisia ­ Social Structure Review 2000: Integrating into the World Economy and Sustaining Economic and Social Progress WP 06/30/00 20976 2000 Private Sector Development 1. Privatization in Tunisia DWP 01/31/93 11645 1993 2. Tunisia ­ Private Sector Assessment SR 11/30/94 12945 1994 3. Tunisia ­ Private Sector Assessment Update - Meeting the Challenge of Globalization (Vol.1-3) SR 12/14/00 20173 2000 4. Is Inequality Bad for Business: A Non-Linear Microeconomic Model of Wealth Effects on Self-Employment PRWP 01/31/01 WPS2527 2001 Public Sector Management 1. Partners for Development: New Roles for Government and the Private Sector in the Middle East and North Africa Pub 09/30/99 19807 1999 Transportation 1. Optimal User Charges and Cost Recovery for Roads in Developing Countries PRWP 10/31/91 WPS780 1991 Urban Development 1. The Urban Age ­ Innovations in Urban Management 3 (4) Newsletter 01/31/96 17449 1996 Water Supply and Sanitation 1. Water Pricing Experiences: An International Perspective Pub 10/31/97 WTP386 1997 Abbreviations: CAS: Country Assistance Strategy DWP: Departmental Working Paper ER : Economic Report ESMAP: Working Paper, Economic & Social Council for Asia & Pacific EWP: Environmental Working Paper OEDAR: OED Annual Report/Review PRWP: Policy Research Working Paper Pub: Publication SR: Sector Report Source: Imagebank, Word Bank. These documents can be accessed at World Development Sources at www-wds.worldbank.org. 5 9 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T ANNEX A.5: EVALUATION RATINGS R a t i n g s f o r T u n i s i a a n d T a b l e A . 5 a C o m p a r a t o r C o u n t r i e s Inst. development o/w: Outcome (%) Sustainability (%)a impact (%)a Total Adjustment Sub- Country evaluated ($m) Satisf Satisf. adj. Likely Likely adj. Substan. stan. adj Before 1990 Tunisia 2,180 533 91 100 73 72 20 29 MNA 14,282 1,897 76 87 48 45 30 59 Algeria 2,056 .. 48 .. 7 .. 1 .. Egypt, Rep. of 3,130 70 83 0 56 0 19 0 Jordan 753 .. 77 0 51 .. 31 .. Morocco 4,177 1,256 81 88 52 38 51 76 Bankwide 186,355 29,568 71 68 53 55 33 34 a. The institutional development impact and sustainability ratings have been in use only since FY98. Hence, the data for these two ratings for the period before FY91 apply for smaller levels of total net commitment than shown in columns 2 and 3 of the table. Source: OED internal database as of May 1, 2003. O E D E v a l u a t i o n F i n d i n g s o f E v a l u a t e d P r o j e c t s ( E x i t s F Y 9 0 ­ 0 3 ) Satisfactory Likely sustainability Substantial ID Net outcome (%) (%) (%) commit- O/w Net O/w Net O/w Net O/w ment Adjustment commit- Adjust- commit- Adjust- commit- Adjust- Country (US$M) (US$M) ment ment ment ment ment ment Tunisia 2,367 967 81.8 86.5 83.8 100 41 17 MNA 15,974 5,276 71.1 72.1 52.1 56.5 35 41 Algeria 3,253 1,099 45.8 41 7.2 0 21 27 Egypt, Rep. of 2,025 150 83.2 100 39.5 0 34 100 Jordan 1,534 870 93.6 100 79.5 90.8 49 63 Morocco 4,736 1984 67.2 67.6 38 46 58.9 51.4 Bankwide 251,234 87,978 75.9 76.9 65.5 71.9 43 44 Note: Sustainability and institutional development impact ratings have been in use only since FY98. Source: OED internal data. 6 0 A N N E X A : S TAT I S T I C A L A N N E X E S R a t i n g s f o r t h e A c t i v e P o r t f o l i o f o r T a b l e A . 5 b T u n i s i a a n d C o m p a r a t o r C o u n t r i e s Country No. of projects Net commit. ($m) Projects at risk (%) Commitments at risk (%) Tunisia 18 1,168 11 6 MNA 110 4,801 25 28 Algeria 13 566 38 52 Egypt, Rep. of 16 905 25 40 Jordan 6 192 17 18 Morocco 15 418 13 25 Bankwide 1,376 95,489 18 18 Source: World Bank data as of May 2003. 6 1 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T A l l A p p r o v e d T u n i s i a P r o j e c t s , E v a l u a t e d T a b l e A . 5 c a n d O n g o i n g , a s o f D e c e m b e r 1 8 , 2 0 0 2 Approval Exit Lending FY FY Project ID Project name instrument type Agriculture 1967 1974 P005595 Cooperative farm project Investment 1972 1977 P005607 Agricultural credit project Investment 1972 1980 P005608 Fisheries project Investment 1975 1983 P005616 Irrigation rehabilitation project Investment 1977 1982 P005622 Second agricultural credit project Investment 1977 1984 P005623 Sidi Salem multipurpose project Investment 1979 1987 P005629 Second fisheries project Investment 1980 1987 P005633 Third agricultural credit project Investment 1980 1987 P005633 Southern irrigation project Investment 1997 2004 P005736 TN- Natural Resource Management Investment 2000 2006 P035707 TN- Water Sector Investment Project Investment 2001 2007 P005750 TN- Agriculture Support Services Investment Economic Policy 1987 FY90 P005688 Industry & Trade Policy Adj. Adjustment 1988 FY91 P005718 SAL I Adjustment 1992 FY95 P005742 Econ. & Fin. Reform SU Adjustment Education 1967 1976 P005596 Second education project Investment 1976 1983 P005620 Third education project Investment 1981 1989 P005640 Fourth education project Investment 1983 FY90 P005650 Education V Investment 1989 FY97 P005715 Edu. & Training Sector Investment 1992 FY02 P005726 Higher Education Restructuring Investment 1995 FY02 P005743 Secondary Education Investment 1998 12/31/2003 P005741 TN-Higher Education Reform Support I Investment 2000 6/30/2005 P050945 TN- Education PAQSET 1 Investment Electric Power & Other Energy 1972 1977 P005610 Power project Investment 1977 1981 P005625 Second power project Investment 1981 1986 P005643 Third power project Investment Energy and Mining 1984 FY91 P005656 Mining Technical Assistance Investment 1984 FY91 P005657 Power IV Investment 1985 FY93 P005662 Elec. & Mec. Ind. II Investment 1987 FY94 P005701 Energy Conservation Demonstr Investment 1988 FY95 P005667 SMI - II Investment 1989 FY94 P005729 Petroleum Explor. Pr. Investment 1992 FY97 P005735 Gas Infrastructure Investment 6 2 A N N E X A : S TAT I S T I C A L A N N E X E S Commitment Eval Latest Latest Latest risk ($m) Outcome ID Sustainability APPI type DO IP rating 18 Unsat NR NR PAR 8 Sat NR NR PAR 2 Sat NR NR PAR 12.2 Sat NR NR PCR 12 Sat NR NR PAR 42 Sat NR NR PAR 28.5 Sat Sub Likely PCR 30 Sat Modest Likely PAR 25 Sat NR NR PCR 26.5 Sat Sat Modest 103.3 Sat Sat Modest 21.3 Sat Sat Sub 150 Sat Modest Likely 7.25 PAR 150 Sat Sub Likely 8.25 PAR 250 Sat Modest Likely 7.25 PAR Sat Sat Sub 13 Sat NR NR PAR 8.9 Sat NR NR PAR 26 Sat Modest Likely PAR 27 Unsat Neg Uncertain 4 PCR 95 Sat Modest Likely 7.25 PAR 68.7 Sat Subs Likely 8.25 ES Sat Sat Modest 91.3 Sat Sub Likely 8.25 ES Sat Sat Neg 80.0 Sat Sat Modest 99.0 Sat Sat Sub 12 Sat NR NR PAR 14.5 Sat NR NR PCR 41.5 Sat NR NR PCR 13.4 Sat Sub Likely 8.25 PCR 38.7 Mod. Sat Neg Likely 6 PCR 54 Unsat Modest Unlikely 4.25 PAR 4 Unsat Modest Likely 5 PAR 28 Unsat Neg Unlikely 3.75 EVM 5.5 Sat Modest Uncertain 6.75 EVM 60 Sat Modest Likely 7.25 ES Sat Sat Modest (Table continues on the following page.) 6 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T A l l A p p r o v e d T u n i s i a P r o j e c t s , E v a l u a t e d T a b l e A . 5 c a n d O n g o i n g , a s o f D e c e m b e r 1 8 , 2 0 0 2 (continued) Approval Exit Lending FY FY Project ID Project name instrument type Environment 1994 FY00 P005588 Mediterranean Pollution Control Investment 1994 FY01 P005733 Mountainous Areas Dev. Investment 1994 2003 P005591 Ozone Depleting Subs Investment 2003 2003 P072317 TN- NW Mountainous & Forest Areas Dev. Investment Finance 1968 1972 P005597 Second Societe Nationale d'Investissement project Investment 1970 1975 P005602 Third Societe Nationale d'Investissement project Investment 1972 1978 P005609 Fourth Societe Nationale d'Investissement project Investment 1973 1978 P005612 Fifth Societe Nationale d'Investissement project Investment 1976 1981 P005619 Sixth Societe Nationale d'Investissement project Investment 1978 1983 P005627 Industrial finance project - BDET component Investment 2002 6/30/2003 P055815 TN- ECAL III Adjustment Financial Sector 1985 FY92 P005663 Export Industries Investment 1994 FY01 P005748 Private Investment Credit Investment 1997 FY98 P042287 ECAL I Adjustment 1999 FY01 P053255 TN- ECAL II Adjustment Health, Nutrition & Population 1991 FY98 P005717 Population and Family Investment 1991 FY00 P005738 Hospital Mgmt. & Fin. Investment 1971 1979 P005604 Population Project Investment 1981 1989 P005642 Health and Population Investment 1998 12/31/2003 P005746 TN- Health Sector Loan Investment Industry 1981 1989 P005639 Small-scale industry development Investment 1981 1984 P005641 SOGITEX textile rehabilitation project Investment 1996 12/31/2003 P040208 TN- Industry Support Institution Investment Mining 1975 1979 P005617 Phosphate project Investment Oil & Gas 1971 1974 P005606 El Borma - Gades gas pipeline project Investment 1980 1974 P005635 Second natural gas pipeline project Investment 1995 6/30/2004 P005589 Solar Water Heating Investment Public Sector Governance 1990 FY93 P005710 Public Enterprise I Adjustment Rural Sector 1981 FY90 P005638 Northwest Reg. Proj. Investment 1983 FY91 P005649 Central Tunisia Irrigation Investment 6 4 A N N E X A : S TAT I S T I C A L A N N E X E S Commitment Eval Latest Latest Latest risk ($m) Outcome ID Sustainability APPI type DO IP rating 0 Sat Sub Likely 8.25 ES H Sat. H Sat. Neg 26.4 Mod Sat Subs Likely 7.5 ES Sat Sat Modest 3.8 Sat Sat Low or Neg. 34 Sat Sat Sub 10 Sat NR NR PAR 10 Sat NR NR PAR 10 Sat NR NR PAR 14 Sat NR NR PAR 20 Sat NR NR PAR 30 Sat NR NR PAR 252.5 Sat Sat Sub 50 Mod. Sat Modest Likely 5.75 PAR 118.8 Sat Sub Likely 8.25 ES Sat Sat Neg 69.9 Sat NR Likely ES Sat Sat Modest 134 Sat Modest Likely 7.25 ES Sat Sat Neg 26 Highly Sat Sub Likely 10 ES H Sat. H. Sat Neg 29.7 Sat Sub Likely 8.25 ES 9.6 Unsat NR NR PAR 12.5 Sat Sub Likely PAR 50.0 Sat Sat Modest 30 Sat Modest Likely PCR 18.6 Sat NR NR PAR 38.7 Sat Sat Modest 23.3 Sat NR NR PCR 7.5 Sat NR NR PAR 37 Sat Modest Likely PAR 7.4 Sat Sat Modest 130 Mod Unsat Modest Likely 5.75 PAR 24 Unsat Sub Unlikely 5.25 PAR 16.5 Sat Sub Likely 8.25 PCR (Table continues on the following page.) 6 5 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T A l l A p p r o v e d T u n i s i a P r o j e c t s , E v a l u a t e d T a b l e A . 5 c a n d O n g o i n g , a s o f D e c e m b e r 1 8 , 2 0 0 2 (continued) Approval Exit Lending FY FY Project ID Project name instrument type Rural Sector (continued) 1985 FY92 P005660 NW Agri. Production Investment 1985 FY95 P005661 NATL. IRR. MGMT. IMP Investment 1986 FY94 P005665 Gabes Irrigation Investment 1988 FY96 P005683 Forestry Investment 1988 FY92 P005703 AG.CR.BNT IV Investment 1989 FY95 P005692 ASAL II Adjustment 1990 FY97 P005727 Research and Extension Investment 1993 FY01 P005725 Second Forestry Deve. Investment 1994 FY01 P005721 Agriculture Sec. Inv. Investment 1995 FY01 P005720 Rural Finance Investment Transport 1982 FY92 P005647 Highways V Investment 1984 FY93 P005658 Urban Transport II Investment 1988 FY95 P005672 Highway Maint. & Re. Investment 1969 1975 P005599 Second port project Investment 1969 1976 P005600 Railway project Investment 1971 1977 P005605 Highway project Investment 1974 1980 P005614 Tunis district urban planning and public transport proj Investment 1976 1983 P005621 Second highway project Investment 1978 1986 P005628 Rural roads project Investment 1980 1988 P005636 Fourth highway project Investment 1980 1989 P005637 Third ports project Investment 1998 12/31/2004 P043700 TN- Transport Sector Investment Investment 2001 6/30/2006 P064082 TN- Transport Sector Investment Investment Urban Development 1972 1981 P005611 Tourism infrastructure project Investment 1974 1981 P005613 Hotel training project Investment 1979 1986 P005630 Second urban development project Investment 1983 FY93 P005652 Urban Dev. III Investment 1987 FY95 P005668 Urban IV Investment 1989 FY97 P005691 Fifth Urban Investment 1993 FY99 P005687 Municipal Sec. Inv. Investment 1997 6/30/2003 P046832 TN- Municipal Development II Investment 2001 6/30/2007 P048825 TN- Cultural Heritage Investment 2003 2/28/2003 P074398 TN- Municipal Development III Project Investment Water Supply and Sanitation 1969 1977 P005601 National water supply project Investment 1970 1977 P005603 Second water supply project Investment 6 6 A N N E X A : S TAT I S T I C A L A N N E X E S Commitment Eval Latest Latest Latest risk ($m) Outcome ID Sustainability APPI type DO IP rating 15 Unsat Negl Unlikely 3.75 PCR 22 Mod. Sat Modest Likely 5.75 EVM 27.7 Sat Sub Likely 8.25 PCR 20 Sat Modest Uncertain 6.75 EVM 30 Sat Sub Uncertain 7.75 PAR 84 Sat Modest Likely 7.25 EVM 17 Mod. Sat Modest Uncertain 6 ES 61.7 Sat High Likely 8.25 ES 118.5 Sat Sub Highly Likely 8.25 ES 65 Unsat Modest Unlikely 4.25 ES 35.5 Sat Modest Likely 7.25 PAR 33 Sat Modest Likely 7.25 PCR 63 Sat Modest Likely 7.25 EVM 8.5 Sat NR NR PAR 17 Sat NR NR PAR 24 Sat NR NR PAR 18 Unsat NR NR PCR 28 Sat NR NR PCR 32 Sat NR NR PAR 36.5 Sat Sub Likely PCR 42.5 Sat Modest Likely PCR 50.0 Sat Sat Modest 37.6 Sat Sat Modest 24 Sat NR NR PCR 5.6 Sat NR NR PCR 19 Sat NR NR PAR 25 Sat Modest Uncertain 6.75 PAR 30.2 Unsat Neg Uncertain 4 EVM 58 Mod. Sat Modest Likely 5.75 EVM 75 Sat Sub Likely 8.25 PAR 80 Sat Sat Modest 17 Sat Sat Modest 78.4 Sat Sat Sub 15 Sat NR NR PAR 10.5 Sat NR NR PAR (Table continues on the following page.) 6 7 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T A l l A p p r o v e d T u n i s i a P r o j e c t s , E v a l u a t e d T a b l e A . 5 c a n d O n g o i n g , a s o f D e c e m b e r 1 8 , 2 0 0 2 (continued) Approval Exit Lending FY FY Project ID Project name instrument type Water Supply and Sanitation (continued) 1974 1980 P005615 Third water supply project Investment 1975 1983 P005618 Urban sewerage project Investment 1977 1984 P005626 Fourth water supply project Investment 1979 1988 P005631 Second urban sewerage project Investment 1979 1984 P005632 Fifth water supply project Investment 1983 FY93 P005653 Urban Sewerage III Investment 1984 FY93 P005659 Rural Water Supply Investment 1995 6/30/2003 P005680 TN-Water Supply and Sewerage Investment 1997 12/31/2004 P005731 TN- Greater Tunis Sewerage Investment Social Protection 1991 FY95 P005734 Employment & Training Investment 1996 6/30/2003 P005745 TN- 2nd Employment and Training Investment 2002 8/31/2008 P048315 TN- Protected Areas Management Project Investment Multisector 1999 3/31/2004 P055814 TN- Export Development Investment Source: OED internal database. 6 8 A N N E X A : S TAT I S T I C A L A N N E X E S Commitment Eval Latest Latest Latest risk ($m) Outcome ID Sustainability APPI type DO IP rating 23 Sat NR NR PAR 28 Sat NR NR PCR 21 Sati NR NR PCR 26.5 Sat NR Likely PAR 25 Sat NR NR PCR 34 Sat Sub Likely 8.25 PCR 50 Sat Sub Likely 8.25 PCR 58.0 Sat Sat Modest 60.0 Unsat. Unsat. Sub 12 Sat Sub Uncertain 7.75 PAR 60.0 5.6 35.0 Sat Sat Modes 6 9 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T ANNEX A.6: COST OF BANK PROGRAMS FOR TUNISIA AND COMPARATOR COUNTRIES T a b l e A . 6 a C o s t s Lending completion Supervision ESW completion Regions/countries costs, $m costs, $m costs, $m Total costs, $m Bankwide 757.7 897.9 415 2,292 MNA 58.2 64.6 38 178 Tunisia 9.8 9.3 4 24 Algeria 5.8 8.1 3 21 Egypt, Rep. of 9.3 10.1 5 29 Jordan 7.8 6.2 3 19 Morocco 13.5 13.3 8 39 Percentages Bankwide 33% 39% 18% 90% MNA 33% 36% 21% 91% Tunisia 40% 38% 16% 95% Algeria 28% 40% 17% 84% Egypt, Rep. of 33% 35% 16% 100% Jordan 42% 34% 15% 91% Morocco 35% 34% 20% 89% 7 0 T a b l e A . 6 b E f f i c i e n c y Net Net commitment Average costs commit- for satisfactory Average Average costs ($s per $1,000 of net Total Number ments, & non-risky Average costs ($s per $1,000 commitment for costs, of ($ projects project size per project of net satisfactory & Regions/countries $m projects million) ($ million) ($ million) ($1,000) commitment) non-risky projects) Bankwide 2,292 2,229 197,103 144,120 88 1,028 12 16 MNA 178 169 11,773 8,490 70 1,050 15 21 Tunisia 24 27 1,888 1,810 70 900 13 13 Algeria 21 19 1,967 1,218 104 1,079 10 17 Egypt, Rep. of 29 26 1,945 1,483 75 1,100 15 19 Jordan 19 19 864 724 45 974 21 26 Morocco 39 34 2,699 1,570 79 1,138 14 25 Note: The amount of total costs includes lending completion costs, supervision, scheduled and unscheduled ESW, and dropped project costs. The amount of lending completion costs includes lending completion costs and dropped project costs. The amount of ESW preparation costs includes unscheduled and scheduled ESW preparation costs. ANNEX Source: World bank database. A: ST A TISTICAL ANNEXES 71 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T ANNEX A.7: COUNTRY STRATEGY OBJECTIVES AND KEY INDICATORS 1 9 9 6 a n d 2 0 0 0 C o u n t r y S t r a t e g y O b j e c t i v e s T a b l e A . 7 a a n d K e y M a c r o e c o n o m i c a n d S t r u c t u r a l R e f o r m P e r f o r m a n c e I n d i c a t o r s Instruments Objectives AAA Lending · Keep inflation under control Private Sector Assessment Update (FY01); ECAL I, II, III ($486m); Export Development Social and Structural Review (FY00); ($35m); Transport Sector Investment I and II · Maintain viable financial balances Strategy for Public Debt Management ($87.6m and $50m); Private Investment Credit (FY02); Export Growth: Determinants and Project ($120m); Industry Support Institutions · Increase international reserves Prospects (FY95); Private Sector Assessment Upgrading Project ($38.7m); ($60m) Economic (FY95); Towards the 21st Century (FY96) and Financial Reforms Support Loan Project · Sustained growth of real GDP ($130m); Public Enterprise Reform Loan Project ($130m) · Strengthening private investment · Improve financial sector · Promote trade and openness Note: The early 1990s country strategy was not a stand-alone document as it was embedded in a loan document; it did not develop quantitative performance indicators for monitoring results. a. The ratio for Algeria is 21%, Egypt 17%, and Morocco 23%.. b. World Development Indicators (Nov. 3, 2003), the ratio for Algeria is 0.3%, Egypt 0.5%, and Morocco 0.2%. Source: Internal Bank data. 7 2 A N N E X A : S TAT I S T I C A L A N N E X E S Proposed performance indicators for 1996­02 Actual progress · Keep annual inflation at 3% during 1996-02, compared · Annual inflation averaged about 3% during 1996-02 to 6% in 1995 · Fiscal deficit hovered around 3% of GDP during 1996-02 · Maintain fiscal deficit around 2% of GDP during 1996-02, · Gross foreign reserves rose to nearly 3 months of down from 4% in 1995 imports during 1996-02 · Increase reserves to 3 months of imports, up from 2 months · GDP growth accelerated to 5.6% over 1996-02 in 1995 · Private investment/GDP averaged 13.5% over 1997-02a · Sustain an annual GDP growth averaging 5-6% during 1996-02, · Private investment/total investment accounted for 56% up from 4% during 1991-95 in 2002 · Increase private investment to 15.4% of GDP by 2002, · Privatization proceeds/GDP accumulated to 9% compared to 12% over 1990-96 · Private bank assets/ total bank assets accounted for only 55% · Increase private investment to 56 percent of total investment by in 2002 2002, compared to 46 percent in 1995 · Trade (% of PPP GDP) reached 25.7 · Increase privatization proceeds (% of GDP) to 6% by 1999, · Gross FDI (% of PPP GDP) amounted to 1.3%b compared to 1-2% in 1995 · Private sector banks as percentage of bank assets >50 percent in 1999, >60 percent in 2002, up from 30% in 1995 · Increase ratio of Trade/PPP GDP >26 by 2002 · Increase FDI/ PPP GDP > 0.7 by 2002 7 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T 1 9 9 6 a n d 2 0 0 0 C o u n t r y S t r a t e g y O b j e c t i v e s T a b l e A . 7 b a n d K e y H u m a n D e v e l o p m e n t P e r f o r m a n c e I n d i c a t o r s Instruments Objectives AAA Lending · Achieve near universal primary Social and Structural Review (FY00); Higher Training and Employment Project II ($60m); education Education: Challenges and Secondary Education Support Project ($98.3m); · Improve completion rates Opportunities (FY97) Higher Education Restructuring Project I ($75m); in education Higher Education Restructuring Project II ($50m); · Increase insertion rate of vocational Employment and Training Fund Project ($12m); graduates into workforce Education Quality Improvement Program Project · Improvements in teacher training ($99m); Health Sector Loan ($50m); Hospital and qualifications Restructuring Support Project ($30m); Education · Reduce unemployment and Training Sector Loan ($95m); Population · Enhance financial sustainability of and Family Health Project ($12m) higher education · Reduce infant mortality · Lower fertility · Reduction in subsidized health care provision · Enhance the quality of health services · Improve the efficiency of health services · Ensure the sustainability of the health system a. Government data "Statistiques de l' Enseignement Scolaire et de la Formation Professionnelle 2002-2003.'' b. Internal Bank data. 7 4 A N N E X A : S TAT I S T I C A L A N N E X E S Proposed performance indicators Actual progress · Net primary enrollment ratio of 100% · 98.2% in 2000 · Raise persistence rate to grade 9 from 42% to 73% · Completion rates for grades 6 and 7 were 87% and 63.5%, by 2004 respectively, in 2001/2002a · Placement rate of 60% for vocational graduates in 1999 · Monitoring system of placement of graduates into labor · Reduce unemployment rate to 15% by 2002 market set up and operational in 1998 · Lower maternal mortality ratios · Unemployment at 14.9% in 2002 · Reduce infant mortality rate to 20 per thousand live births by 2002 · Infant mortality at 26 per thousand in 2002 · Lower subsidized health care availability to roughly 25% of · 8% of population have fully subsidized access and another the population in 1999 22% pay only 20% of the cost · Improve health service quality through improved case · MMR at 69 per 100,000 in 2002 management and staff training · Hospital stay lowered from 8 to 7 days · Policy measures for cost control · At the regional health level, expenses recovered from Social Insurance program improved to 62.5% in 2003 from 2.2% in 1998; central government subsidy to recurrent budget of tertiary hospitals decreased to 35% (1998) from 69% (1991)b 7 5 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T T u n i s i a : T a s k M a n a g e r T u r n o v e r i n A n n e x A . 8 P r o j e c t s A p p r o v e d i n F Y 9 0 ­ 0 3 No. of changes Project name (FY90-03) FY98 FY99 FY00 FY01 FY02 Economic and Financial Export Development Project 0 a a a a a Industry Support Institutions Upgrading 3 a a a b b Private Investment Credit 4 a a b b b Education Education Quality Improvement Program 2 a a a b b Higher Education Reform Support II 1 a a a b b Training and Employment II 1 a a a a b Education Support II 1 a a b b b Higher Education Restructuring 2 a a a b b Environment, Energy, and Mining Gas Infrastructure Development Project 0 a a a a a Health, Nutrition and Population Health Sector Loan 1 a a a b b Hospital Restructuring Support 5 a a b b b Population and Family Health 1 a a a a a Rural Sector Northwest Mount. and Forestry Areas Dev. 1 a a a a a Agricultural Support Services 1 a a a a b Water Sector Investment Loan 2 a a a b,c c Second Agricultural Sector Investment 1 a a b b b Natural Resources Management 2 a a b b c National Rural Finance 2 a a b,c c c Agricultural Sector Investment Loan 1 a b b b b Northwest Mountainous Areas Dev. 2 a b b b b Second Forestry Development 2 a a b b b Transport Transport Sector Investment I 0 a a a a a Rural Roads 2 b c c c c Urban Development and Water Supply and Sanitation Municipal Development III 1 a a a a a Cultural Heritage 0 a a a a a Municipal Development II 3 a b,c c d d Municipal Sector Investment 4 a b,c,d d d d Greater Tunis Sewerage Project 3 a a b b c,d Water Supply and Sewerage 3 a a b b c,d Adjustment ECAL III 0 a a a a a ECAL II 1 a a a a b ECAL I 2 a a a a a Economic and Financial Ref. Supp. Loan 1 a a a a a Note: a = no change since FY98; b = one change since FY98; c = two changes since FY98; d = three changes since FY98. Source: World Bank project data. 7 6 A N N E X A : S TAT I S T I C A L A N N E X E S T u n i s i a : B a n k ' s S e n i o r M a n a g e m e n t , A n n e x A . 9 1 9 9 1 ­ 0 3 Year Vice president Country director Resident representative 1991 Willi A. Wapenhans Kemal Dervis - 1992 Caio Koch-Weser Pieter P. Bottelier - 1993 Caio Koch-Weser Harinder S. Kohli - 1994 Caio Koch-Weser Daniel Ritchie - 1995 Caio Koch-Weser Daniel Ritchie - 1996 Kemal Dervis Daniel Ritchie - 1997 Kemal Dervis Christian Delvoie - 1998 Kemal Dervis Christian Delvoie - 1999 Kemal Dervis Christian Delvoie - 2000 Jean-Louis Sarbib Christian Delvoie - 2001 Jean-Louis Sarbib Christian Delvoie - 2002 Jean-Louis Sarbib Theodore O. Ahlers - 2003 Christiaan J. Poortman Theodore O. Ahlers - Source: World Bank Group Directory. 7 7 ANNEX B: LIST OF PEOPLE MET ON MISSION IN TUNISIA (AND WORLD BANK AND IMF STAFF INTERVIEWED) Government Officials, Donors, and Ibrahim Eltoumi, Director Private Sector Representatives Lutfi Blzabis, Director Hofia El-Bahri, Director Ministry of Development & International Cooperation Ministry of Health Kamel Ben Rejeb, Director General Dr. Khaled Kheireddine, Director of Planning Monir Boumessouer, Director General, Slaheddine Kalat, Director of Equipments Infrastructure Nacer Kamel, Director of Studies Fouad El Shrafi, Director Lutfi Frad, Director National Statistical Institute Mohamed Naceur Braham, Counselor of Khalifa Ben Faqih, Director General Public Services, Director of Agriculture and Abdel Majd El-Wislati Agro-Industries Foued Charfi, Director General, Productive Tunisia Central Bank Sectors Habib El Montacer, Managing Director Borgi Kacem, Director General of Regional Badreddine Barkia, Director General, Development Supervision Abel Hamid Triki, Director Samir Brahimi, Director General, Services Moncef Youzbachi & Audit Ministry of Finance Ministry of Transport Belhadji Jameleddine, Director General Salem Miladi, Director General Ministry of Higher Education Ministry of Industry and Energy Abdallah Riahi, Director, Studies and Planning Hamdi Guezguez, Principal Engineer Mohamed El Hedi Zaiem, Consultant Ridha Ben Mosbah, Director General, De mise à niveaù Ministry of Education and Formation Mohamed El Kamel, Project Manager, ISIUP and Institute of Training H. E. Mohamed El-Monsif Ben Saad, Private Sector Government Secretary General Noureddine Ferchiou, Advocat, Ferchio (Deputy Minister) Assoices Abdelkader Lgoulli, Director General, Services Ahmed Benghazi, Associe-Gérant, Axis Abdelmalik Elsallami, Advisor to the Minister Ahmed Smaoui Ahmed Midamia, Director General, NVC Prof. Marouanne El Abassi Mohamed Nazar El-Aish, Director General Faycal Lakhoua, Counsellor, IACE Farahat El-Nasiri, Director Jurgen Blanken, Water Sector Economist, Mohamed El-Nasir, Director Private Consultant 7 9 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T National Agricultural Bank the Northwest, Institute of Research and Berraies Mohamed, Directeur Higher Learning Mohamed Mounir Hedri, Director of Research Exports Promotion Agency (FAMEX) Institute of Research and Higher Learning Slim Chaker, Director for Coordination Said Helal, Chief Engineer, Water and Forests, Director of Socio-Economic Development Trade Union of the Forest Population Mohamed Trabelsi, Secretaire Abdelkadar Hamdane, Director General of Rural Works and of Hydraulics AfDB Abdallah Mallek, Director General of Finance, O. Ojo, Chief Evaluation Officer Investment and Professional Organisations K. Diallo, Principal Economist Bellakhal Moktar, Director of Agriculture Extension EU Kachouri Mondher, Deputy Director of Moni- Bernard Brunet, Premier Secrètaire toring & Evaluation of Research Programs, Manfredo Fanti, Premier Secrètaire Institute of Research and Higher Learning Paul Mathieu, Economist Sahla Mezghani, Agro-economist, Section Philippe Massin, Rural Development Expert Chief, Finance, Investment, and Profes- Amparo Gonzalez Diez, Section Chief, Rural sional Organizations Development and the Environment Ben Mohamed Mongi, Chief, General Labora- Jose-Maria Bellostas, Rural Development tory, Director of Tuniso Japanese Project Expert Abdelaziz Mougou, President, Institute of Research and Higher Learning Tunisia Leasing Hamda Zeramdini, Agriculture Extension and Fethi Mestri, Director General Training Agency, Coordinator of the Agricul- ture Support Services Project Ministry of Agriculture, Environment and Water Resources World Bank, IMF, and Islamic Ahmed El Achek, President Director General, Development Bank Staff Office of Sylvo-Pastoral Development of Theodore O. Ahlers (Country Director) the North West Christian Delvoie (then Country Director) Badr Ben Ammar, General Rural Economist, Dimmitri Vittas (Senior Adviser, OPD) Director General of Studies and Agricultural Daniel Ritchie (then COD Division Chief) Development John Page (Director, PRMPR) Abderraman Chaffai, Director, Studies and Aristomene Varoudakis (Country Economist) Agricultural Development Cecile Fruman (Country Officer) Ahmed Ridha Fekih Salem, General Engineer, Pedro Alba (Sector Manager, MNSED) Director General of Forests Mustapha Nabli (Chief Economist and Mohamed Gharbi, Director General, Agricul- Director, MNSED) tural Land Agency Setareh Razmara (Senior Economist, Abdellatif Ghedira, Chief of Mission, Cabinet MNSHD) of the Minister, Director of the Bureau of Sara Johansson (Economist, MNSED) Planning and Hydraulics Hamid Alavi (Senior Private Sector Develop- Lamine Ben Hamadi, Deputy Director of ment Specialist, MNSIF) Planning and Budget, Institute of Research Jeffery Waite (Senior Education Specialist, and Higher Learning MNSHD) Mohamed Ben Hamouda, Teacher-Researcher, Meskerem Mulatu (Senior Education Special- Coordinator of Regional Research Pole of ist, AFTH2) 8 0 A N N E X B : L I S T O F P E O P L E M E T O N M I S S I O N I N T U N I S I A Anwar Bach-Baouab (Lead Operations Officer, AFTH3) Gillian Perkins (Consultant OEDST) Domenico Fanizza (Deputy Division Chief, IMF) Bader Elddine Nouioua, Advisor, Operations Evaluation Office, Islamic Development Bank Djelloula Saci, Head, Operations Evaluation Office, Islamic Development Bank Abdel Ouahab Ghazala, Operations Evaluation Office, Islamic Development Bank 8 1 ANNEX C: GUIDE TO OED'S COUNTRY ASSISTANCE EVALUATION METHODOLOGY This methodological note describes the key el- Bank performance was also unsatisfactory, and ements of OED's Country Assistance Evaluation vice-versa. This becomes clearer once we con- (CAE) methodology.1 sider that the Bank's contribution to the outcome of its assistance program is only part of the story. CAEs rate the outcomes of Bank assistance programs, The assistance program's outcome is determined not clients' overall development progress. by the joint impact of four agents: (a) the client, An assistance program needs to be assessed on how (b) the Bank, (c) partners and other stakehold- well it met its particular objectives, which are typ- ers, and (d) exogenous forces (such as events of ically a sub-set of the client's development objec- nature, international economic shocks, and so tives. If an assistance program is large in relation on). Under the right circumstances, a negative to the client's total development effort, the program contribution from any one agent might over- outcome will be similar to the client's overall de- whelm the positive contributions from the other velopment progress. However, most Bank assis- three, and lead to an unsatisfactory outcome. tance programs provide only a fraction of the total OED measures Bank performance primarily resources devoted to a client's development by on the basis of contributory actions the Bank di- donors, stakeholders, and the government itself. rectly controlled. Judgments regarding Bank In CAEs, OED rates only the outcome of the Bank's performance typically consider the relevance program, not the client's overall development out- and implementation of the strategy; the design come, although the latter is clearly relevant for and supervision of the Bank's lending interven- judging the program's outcome. tions; the scope, quality, and follow-up of diag- The experience gained in CAEs confirms that nostic work and other analytical and advisory program outcomes sometimes diverge signifi- activities; the consistency of the Bank's lending cantly from the client's overall development with its nonlending work and with its safeguard progress. CAEs have identified assistance pro- policies; and the Bank's partnership activities. grams that had: Evaluation in Three Dimensions · Satisfactory outcomes matched by good client As a check on the inherent subjectivity of ratings, development OED examines a number of elements that con- · Unsatisfactory outcomes with clients that tribute to assistance program outcomes. The achieved good overall development results, consistency of ratings is further tested by ex- notwithstanding the weak Bank program amining the country assistance program across · Satisfactory outcomes with clients that did not three dimensions: achieve satisfactory overall results during the period of program implementation. (a) A Products and Services Dimension, in- volving a "bottom-up" analysis of major pro- Assessments of assistance program outcome and gram inputs--loans, analytical and advisory Bank performance are not the same. activities, and aid coordination By the same token, an unsatisfactory assistance (b) A Development Impact Dimension, involv- program outcome does not always mean that ing a "top-down" analysis of the principal 8 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T program objectives for relevance, efficacy, out- Highly Satisfactory: The assistance program come, sustainability, and institutional impact achieved at least acceptable progress toward all (c) An Attribution Dimension, in which the eval- major relevant objectives, and had best practice uator assigns responsibility for the program development impact on one or more of them. outcome to the four categories of actors. No major shortcomings were identified. Satisfactory: The assistance program achieved Rating Assistance Program Outcome acceptable progress toward all major relevant In rating the outcome (expected development objectives. No best practice achievements or impact) of an assistance program, OED gauges major shortcomings were identified. the extent to which major strategic objectives Moderately Satisfactory: The assistance pro- were relevant and achieved, without any short- gram achieved acceptable progress toward most comings. Programs typically express their goals in of its major relevant objectives. No major short- terms of higher-order objectives, such as poverty comings were identified. reduction. The Country Assistance Strategy (CAS) Moderately Unsatisfactory: The assistance may also establish intermediate goals, such as im- program did not make acceptable progress to- proved targeting of social services or promotion ward most of its major relevant objectives, or of integrated rural development, and specify how made acceptable progress on all of them, but ei- they are expected to contribute toward achieving ther (a) did not take into adequate account a key the higher-order objective. OED's task is then to development constraint or (b) produced a major validate whether the intermediate objectives pro- shortcoming, such as a safeguard violation. duced satisfactory net benefits and whether the re- Unsatisfactory: The assistance program did sults chain specified in the CAS was valid. Where not make acceptable progress toward most of its causal linkages were not fully specified in the CAS, major relevant objectives, and either (a) did not it is the evaluator's task to reconstruct this causal take into adequate account a key development chain from the available evidence and assess rel- constraint or (b) produced a major shortcoming, evance, efficacy, and outcome with reference to the such as a safeguard violation. intermediate and higher-order objectives. Highly Unsatisfactory: The assistance pro- Evaluators also assess the degree of client gram did not make acceptable progress toward ownership of international development prior- any of its major relevant objectives and did not ities, such as the Millennium Development Goals, take into adequate account a key development and Bank corporate advocacy priorities, such as constraint, while also producing at least one safeguards. Ideally, any differences in dealing major shortcoming, such as a safeguard violation. with these issues would be identified and re- solved by the CAS, enabling the evaluator to The institutional development impact focus on whether the tradeoffs adopted were ap- (IDI) can be rated as: high, substantial, modest, propriate. However, in other instances, the strat- or negligible. IDI measures the extent to which egy may be found to have glossed over certain the program bolstered the client's ability to make conflicts or avoided addressing key client de- more efficient, equitable, and sustainable use of velopment constraints. In either case, the con- its human, financial, and natural resources. Ex- sequences could include a diminution of amples of areas included in judging the institu- program relevance, a loss of client ownership, tional development impact of the program are: and/or unwelcome side-effects, such as safe- guard violations, all of which must be taken into · The soundness of economic management account in judging program outcome. · The structure of the public sector and, in par- ticular, the civil service Ratings Scale · The institutional soundness of the financial OED utilizes six rating categories for outcome, sector ranging from highly satisfactory to highly un- · The soundness of legal, regulatory, and judicial satisfactory: systems 8 4 A N N E X C : G U I D E T O O E D ' S C O U N T RY A S S I S TA N C E E VA L U AT I O N M E T H O D O L O G Y · The extent of monitoring and evaluation sys- · Economic resilience tems · Social support (including conditions subject to · The effectiveness of aid coordination safeguard policies) · The degree of financial accountability · Environmental resilience · The extent of building NGO capacity · Ownership by governments and other key · The level of social and environmental stakeholders capital. · Institutional support (including a supportive legal/regulatory framework, and organizational Sustainability can be rated as highly likely, and management effectiveness) likely, unlikely, highly unlikely, or, if available · Resilience to exogenous effects, such as in- information is insufficient, non-evaluable. Sus- ternational economic shocks or changes in tainability measures the resilience to risk of the the political and security environments. development benefits of the country assistance program over time, taking into account eight factors: · Technical resilience · Financial resilience (including policies on cost recovery) 8 5 ANNEX D: MANAGEMENT ACTION RECORD Major Monitorable OED Recommendations Requiring a Response Management Response · Follow through on supporting programs to improve the environment The proposed CAS for FY05-08 addresses these issues squarely. The for private sector development and enhance competitiveness as first pillar of the CAS focuses on improving the business environment Tunisia seeks to integrate within the world economy. Specifically, the and enhancing competitiveness, while the second pillar supports Bank should help the country (i) pursue trade openness with the EU greater quality and efficiency of the education system to address the and the rest of the world; (ii) improve the enabling environment needs of the market place. The CAS supports greater competition in through regulatory and judicial reforms to attract private and foreign infrastructure through the PPI (private participation in infrastructure) investment; and (iii) progress on privatizing public financial and en- agenda. terprise firms. · Continue support for social sectors. While supportive of the MDGs, This is also addressed in the new CAS though the second pillar (edu- the Bank's program needs to continue this emphasis and focus on im- cation), and the third pillar, which supports greater efficiency of so- proving the country's capacity to prioritize social spending and address cial programs (pension, health, and social protection). A PER is proposed education expansion at the post-basic level, given the demographic and the country team agrees that emphasis should be given to transition under way. The Bank should undertake a public expendi- reviewing expenditures in social sectors. ture review in partnership with the government. This should help build capacity to prioritize social spending and provide the basis for meas- ures to efficiently address growing demand for secondary and terti- ary education. · Focus on institutional development and safety nets in the rural sec- The Country Team has taken the CAE's recommendation and proposes tor. Future Bank programs should focus on rural institutional devel- to conduct a comprehensive agricultural sector review. This will inform opment to support efficient output and input markets, including land, policy dialogue and future lending to this sector. rural finance, and research and extension, while maintaining social cohesion through better targeted safety nets. After 21 years without a comprehensive agricultural sector review, the Bank should under- take one to inform its future programs. · Enhance a results-based monitoring and evaluation approach. En- The proposed FY05-08 CAS is a results-based CAS and will lead to reg- hancing a results-based approach with agreed and monitorable out- ular monitoring of CAS outcomes and results (yearly reports and a CAS put and outcome indicators embedded in an improved monitoring and progress report in 2006). In addition, the country team has already evaluation framework would help to anchor the Bank's assistance pro- started reinforcing capacity of project implementation staff in Tunisia gram in the future. in regular M&E of projects. CB will also be strengthened for Bank teams. 8 7 ATTACHMENT 1: ISLAMIC DEVELOPMENT BANK--TUNISIA COUNTRY ASSISTANCE EVALUATION Executive Summary During the 1970s and 1980s, IDB's strategy for The Operations Evaluation Office (OEO) of the development assistance to Tunisia was mainly tar- Islamic Development Bank (IDB) has recently geted to developing the industrial sector (mainly embarked on new areas of operations evaluation, through equity participation), the public utilities such as country assistance evaluation, sector or sector (potable water supply and sanitation), to- thematic studies, and impact evaluation. The gether with development in agriculture (in- second Country Assistance Evaluation (CAE) was cluding integrated rural development) in line conducted by OEO for Tunisia in September with priorities of the government. In the 1990s, 2003 in collaboration with the World Bank's Op- the IDB assistance programmes were mainly erations Evaluation Department (OED)--the guided by the Country Assistance Strategy Study first being the CAE conducted for Jordan in Oc- (CASS) prepared in 1996 for the period 1997­99 tober 2002. The main objective of the CAE is to and the subsequent finalisation of a 3-year rolling assess the relevance and effectiveness of IDB's work programme for the period 1420-1422H. interventions in Tunisia since the start of IDB op- The Bank's operations had sharply declined over erations in 1976. The scope of the present CAE the 3 years preceding the preparation of the report is limited to the Bank's project financing CASS for Tunisia. The main reason was the avail- activities. ability of more competitive alternative financing Regarding its economy in general, the deter- sources, particularly from the EU and various mined structural reforms in Tunisia led to bilateral donors. This really was a threat for more markedly improving economic and social per- IDB involvement in Tunisia, especially since it has formance. Real GDP growth increased from 2.8 been categorized as a mid-high-income country percent during 1982­86 to 4.8 percent during and could not benefit any more from blending 1991­2001. Meanwhile, both inflation and the of concessional and non-concessional modes of current account deficit decreased significantly. financing. The 2002 GPD growth was reported to have de- By and large, IDB assistance to Tunisia has celerated sharply due to the combined effect of been diverse. The Bank assistance focused on the aftermath of September 11, 2001, and a se- public utilities; agriculture and rural develop- vere 4-year drought. The growth outlook for ment; industry; financial sector; and, more re- 2003 appears to be highly imperiled by several cently, on social sectors (education and health). risky parameters. It is estimated to stand at As of June 2003, the IDB has approved a total around 4 percent, owing to the sluggish recov- amount of US$1.18 billion for Tunisia, 70 percent ery of traditional export markets to the European of which is for trade operations. Out of 44 ordi- Union (EU) and the slight recovery from the nary project financing operations, 20 operations drought. However, the main factor of challenge are currently active while 24 operations have al- for the Tunisian economy in the near future, es- ready been completed. The total amount actu- pecially for its industry, is definitely whether it ally disbursed by the Bank for projects and can stand up to the expected competition when technical assistance operations up to mid-2003 the free trade agreement with the European was ID 94.48 million, or around one-third of the Union will come into force in 2008. net approved amount. This low figure implies 8 9 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T partially that there has been under-utilisation of The Bank's intervention in the Integrated the extended financings as there were many cost Rural Development (IRD) sector related to 5 savings that stemmed from both the depreciation projects that entailed activities that were spread of the Tunisian dinar and a tendency to overes- all over Tunisia, and whose scope encompassed timate the project costs at appraisal time. a multitude of components of both agricultural With regard to the performance of the 11 and nonagricultural nature. All the 5 IRD projects post-evaluated projects, 10 projects were con- have been post evaluated, and their performance sidered as successful or partly successful, and one was assessed as satisfactory since the targeted ob- project not successful. Currently, a 3-year work jectives were attained in terms of regional de- programme for 1423-1425H is being imple- velopment and improvement of the living mented as planned. conditions of the most disfavoured populations. During two decades (1980s and 1990s), IDB involvement in the social sectors has Tunisia's commitments in trade were almost con- been rather modest and tardy. Although the stant and in line with earmarked allocations, human resources development was a top prior- thanks to annual operations entered into with tra- ity for Tunisia, IDB was involved neither in pri- ditional clients in that member country. mary and secondary education nor in vocational However, it is felt that Tunisia has not been en- training. IDB involvement in higher education gaging with the IDB on trade financing opera- and the health sector is relatively recent, and it tions at a level that is commensurate with the is premature to assess its performance. high creditworthiness that the country enjoys. With regard to education, many stakeholders The main reason Tunisia does not take advantage interviewed by the mission expressed high con- of the IDB's trade financing operations, at a sim- cern about the lagging improvements in the ilar pace to other member countries of compa- quality of education at all levels. For higher ed- rable economic development, is that IDB's ucation in particular, the Tunisian officials in- mark-up is perceived--particularly by the private formed the mission that their country is putting sector--not to be competitive enough com- more emphasis on vocational and technical ed- pared with the rates available. ucation, especially computers and information Water supply and sanitation has been the pri- technology, to combat unemployment among mary beneficiary sector of IDB project financing the youth, which now stands at around 16 per- (45 percent), with particular emphasis on the cent. In this connection, the Ministry in charge construction of sewerage infrastructure in favour of higher education is preparing a project to of the Sewerage Authority (ONAS). Under IDB create technological poles, and IDB may envis- financing, ONAS procured new technology of age its contribution to this project. sludge mechanical dewatering and handling. On the other hand, IDB extended several Regarding the water supply, two projects are lines of financing to Tunisia, but most of them currently being implemented by the Water Au- have remained dormant. The main reason for the thority (SONEDE). In view of the relatively low non-utilization of these lines of financing is the rate of access to potable water of northern foreign exchange risk which the local investors zones, IDB may envisage in the future to fi- and businessmen are unwilling to bear. In this re- nance projects in these regions. It was proposed spect, a new global line was approved in 2003. also that IDB might contribute to the SONEDE It has been devised to overcome all the short- programme of renewal of transmission lines in comings related to previous lines of financing ex- urban areas. tended to local banks in Tunisia, especially IDB assistance to the industrial sector was through the introduction of a mechanism for primarily provided in the early 1980s through eq- the exchange risk coverage, involving local banks uity participation in three companies. The CAE and insurance companies. mission recommends to undertake a review of In conclusion, the Tunisian authorities affirmed the equity portfolio performance in Tunisia, in the importance and the timeliness of the current light of the difficulties faced by these companies. evaluation of IDB's activities in Tunisia. The IDB's 9 0 AT TA C H M E N T 1 : I S L A M I C D E V E L O P M E N T B A N K -- T U N I S I A C O U N T RY A S S I S TA N C E E VA L U AT I O N assistance to Tunisia has been appreciated and ac- and experienced technical and administrative knowledged by them. There was a general agree- staff. However, there were a number of criticisms ment that this assistance was relevant. As a matter of bank assistance. The complaints concern mainly of fact, IDB's experience in dealing with the dif- operational aspects such as time-consuming dis- ferent executing agencies is considered very suc- bursement procedures and IDB financing cost, cessful, because Tunisia possesses a very efficient which is viewed to be rather high. 9 1 ATTACHMENT 2: REPORT FROM THE COMMITTEE ON DEVELOPMENT EFFECTIVENESS (CODE) The Informal Subcommittee (SC) of the Com- system and its link to the labor market; and (iii) mittee on Development Effectiveness (CODE) improving public services through a focus on ef- met on April 21, 2004, to discuss the Tunisia ficiency and sustainability of public expenditures. Country Assistance Evaluation prepared jointly The Chair representing Tunisia thanked OED by the Operations Evaluation Department (OED) for preparing a very balanced and insightful re- and the Islamic Development Bank (IDB). port, and reiterated the Tunisian authorities' general agreement with the main conclusions Background and recommendations of the evaluation. He OED's evaluation commended Tunisia's re- concurred with the OED assessment of the Bank markable socioeconomic progress and reduc- assistance as satisfactory, and highlighted the tion in poverty rates and underlined the important role of the Bank's lending, policy ad- important role of country ownership, a broad po- vice and analytical work in the country's so- litical consensus, a well-developed human re- cioeconomic development. At the same time, source base, and a stable macroeconomic he stressed that the authorities have employed environment. The report noted that the Bank a cautious approach to structural reforms in program in Tunisia succeeded in promoting re- order to ensure a broad consensus. He also ex- forms in the financial, rural, and private sectors pressed concerns about the increasing pressure by providing assistance in terms of policy advice, of the cost of doing business with the Bank and lending, and resource mobilization. It also noted noted that the report could have benefited from some shortfalls that may pose risks for sustain- drawing comparisons with other MDBs, as well ing high performance in the more competitive as specific proposals to improve flexibility of the environment that Tunisia is likely to face in the country strategy program and IFC's involvement near future, such as low levels of private invest- in the country. ment, the significant role of government in eco- nomic activities, the large number of Main Conclusions and Next Steps nonperforming loans at public banks, and high The Subcommittee welcomed the CAE and tariffs. The evaluation concluded that the Bank agreed with the OED rating of Bank assistance should concentrate its efforts on helping the as satisfactory. Members endorsed the main con- authorities to improve the business environ- clusions and recommendations of the report. ment through regulatory reform, to continue They commended management for including support for the rural sector and social institu- the CAE's recommendations in the new country tions, and on high-quality analytical studies. strategy, and stressed the importance of drawing Management broadly agreed with the CAE lessons from Tunisia's impressive performance. conclusions and noted that they will be largely re- Among other major issues discussed at the meet- flected in the new Tunisia country strategy. In ing were the pace of future reforms, challenges particular, the new country strategy will focus of sustaining the development progress and re- on three strategic objectives: (i) strengthening the lated vulnerabilities of the Tunisian economy, environment for private investment; (ii) im- the cost of doing business in Tunisia in the con- proving the quality of output from the education text of Bank lending to the middle-income coun- 9 3 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T tries, and the lessons to be drawn from the joint the same time, management confirmed that IFC evaluations with other development partners. is interested in exploring new opportunities in The following points were raised: Tunisia. Members praised the country's success in achieving the MDGs, but had questions about Lessons Learned the consistently high levels of unemployment. Many members were interested in the positive Management agreed that, despite meeting the lessons from the Tunisian experience, and target on unemployment, job creation and pri- whether they could be replicated in other coun- vate investment remain issues of concern for tries. Management noted that Tunisian experi- the Tunisian authorities, given the rapid growth ence is very relevant, especially for the MNA and of the labor force. Management noted that those Africa Regions, and that it is being currently uti- issues are discussed extensively in the country lized through a series of Regional seminars and strategy through the prism of creating more flex- workshops. Some members asked for more de- ibility in public financial management and im- tails on the impact of and the differences in proving the investment climate. Some members views on the mise à niveau program of enter- asked management to elaborate on the absence prise restructuring and upgrading. Management of a full-fledged Bank office in the country. Man- noted that in its view the main factor in sup- agement replied that given the presence of very porting enterprise restructuring should be the strong and competent public administration, investment climate rather than providing a small the Tunisian authorities at this point do not see amount of subsidy, which is the essence of the the need for the same kind of implementation mise à niveau program assistance as in other countries. Looking Forward Cost of Doing Business Members concurred with the report's conclusion Some members echoed the concern expressed that the Bank should continue to support im- by the Tunisian chair about the cost of doing busi- proving the investment climate and enhancing ness with the Bank vis-à-vis other MDBs, and competitiveness. They stressed the importance stressed the importance of that issue in the over- of developing a results-based approach in the all context of lending to the middle-income areas of trade openness, the business environ- countries. OED noted that these issues will be ment, enterprise and financial sector privatiza- addressed in the OED study on lending to mid- tion, and land and rural finance. Members dle-income countries. Management added that expressed concern about the size of the public Tunisia could clearly be a case where the Bank banks' portfolio and potentially heavy burden of can quickly adopt national systems in order to nonperforming loans on the economy. Some drive down the costs, and that the future work members concurred with OED's observation on core ESW (CFAA, CPAR) is designed to address that further structural reforms are needed in fiduciary issues so as to move toward using na- light of an increasingly more competitive re- tional systems. gional and global trade environment, but noted the importance of simultaneously sustaining full Donor Coordination ownership of the reform process and broad po- Members welcomed OED's cooperation with IDB, litical consensus. Management noted that there consistent with the Bank's broader agenda of har- is interest on behalf of the authorities to take ad- monization and reducing the cost of assistance to vantage of the Bank's assistance on debt man- the clients, and urged OED to continue that prac- agement and doing an investment climate tice in future. Some members were interested to assessment. Some members asked about the know whether joint work was an important fac- reasons of IFC's lack of activity in the country. tor in the overall success of the evaluation, and Management replied that IFC's limited involve- what were the lessons learned. OED replied that ment is due to the availability of alternative and the partnership arrangement with IDB led to sig- cheaper financing for Tunisian companies. At nificant capacity development, laying the ground- 9 4 AT TA C H M E N T 2 : R E P O RT F R O M T H E C O M M I T T E E O N D E V E L O P M E N T E F F E C T I V E N E S S ( C O D E ) work for further collaboration. This was the sec- that the high level of competence of the Tunisian ond joint report with IDB, and OED had found authorities allows for a sufficient level of dialogue those exercises very useful in terms of raising the with donors to be maintained bilaterally, but en- efficiency of the evaluation function, capacity couraged the authorities to do it in a more coor- building, and sharing of ideas. Management noted dinated manner in the future. Chander Mohan Vasudev, Chairman 9 5 ENDNOTES Chapter 1 Bank, but are governed by bilateral protocols. These 1. The GDI ranks Jordan 75th, Tunisia 76th, Alge- are now being commercialized and the intention is to ria 88th, Egypt 99th, and Morocco 102nd out of 175 bring them under the umbrella of the Central Bank. countries (UNDP 2003). Three foreign banks operate in Tunisia today, BNP, 2. Deeper integration into EU markets will make Citibank, and Société Générale, and the Arab Banking Tunisia more vulnerable to economic swings in the EU. Group has recently been authorized to open up a Anemic growth in the EU is swiftly felt in Tunisia, as branch as well. However, the presence of foreign in the sharp GDP slowdown seen in 2002. banks in Tunisia remains below that seen in other de- veloping countries, especially in EU accession coun- Chapter 2 tries that have modernized their banking systems 1. Most of the World Bank's closed projects in with a significant involvement of foreign banks. Tunisia do not have an operationalized M&E mecha- 3. The reduction in NPLs was largely the result of nism. the government taking over or guaranteeing bad 2. The Region notes, "It is important to indicate that debts rather than evidence of better lending. it was not the Bank's choice not to conduct a PER but 4. In 2002, average (unweighted) Tunisian most fa- the Government's reluctance to let the Bank do one." vored nation (MFN) tariffs were 34.5 percent, mar- 3. By way of comparison, only the Bank's West ginally down from 35.9 in 2000, compared with 24.3 Bank and Gaza program mobilized more resources percent for imports originating in the EU. than Tunisia. During FY94­01, the West Bank and 5. FDI flows also account for only a small per- Gaza program secured $541 million in co-financ- centage of gross capital formation in the region, about ing/parallel funding against $326 million in Bank com- 5 percent in 2000. In comparison, FDI flows accounted mitments--a ratio of $1.66 on every dollar. The Bank's for 26 percent in Singapore (World Bank data, 2003). Jordan program mobilized a co-financing ratio simi- 6. Tunisia's unemployment rate is similar to the lar to its program in Tunisia. MNA average of 15 percent in 2000 (Finance and De- 4. For example, Municipal Development Project was velopment, March 2003, p. 19). Based on its ESW, the postponed and Cultural Heritage and Agricultural Bank has proposed measures to improve the unem- Support Services projects were reduced in size by 40 ployment situation. percent. 7. The Bank's first education project in Tunisia was in 1962. Chapter 3 8. Government data, Statistiques de l'enseigne- 1. The authorities noted that when these private ment scolaire, 2002­03. leasing companies are combined with the private 9. Third International Mathematics and Science banks, the share of assets of all private credit institu- Study measured student performance in mathemat- tions out of the total is about 62 percent. ics and science achievements and collected relevant 2. Excludes five "development" banks that are joint information on instruction, curriculum, schools, and ventures with other Arab countries (which account for policies. about 5 percent of the banking assets) and are not sub- 10. The ongoing Education Quality Improvement ject to the authority and supervision of the Central Program Phase 1 (EQIP 1). See Annex table A-2o. 9 7 T U N I S I A : U N D E R S TA N D I N G S U C C E S S F U L S O C I O E C O N O M I C D E V E L O P M E N T 11. Hospital Restructuring Support Project of 1991. January 2001 presented new opportunities for Tunisian 12. The Region notes that there has been sub- exports, which would boost the country's position in stantial progress on the reforms concerning the Re- the European market, especially for products such as gional health bodies, although it was slow until about olive oil, double-concentrate tomato paste, and table two years ago. OED notes that the Region, in its eval- grapes. uation of the health structuring project, mentioned 19. The center west is the poorest, according to the that requiring a legal framework for hospital autonomy Bank data. In the Natural Resources Management as a condition for project effectiveness is important project (1997­03) operating in the north (Jendouba), to ensure political commitment. center west (Kasserine), and south (Medenine), there 13. According to the Ministry of Education projec- have been substantial physical achievements, but tions covering the period 2000­20, secondary educa- since there is no M&E, there is no systematic evi- tion student numbers will increase by 80 percent and dence on the income-increasing impact, which is pre- basic education students will decrease by 40 percent. sumed to be positive. 14. Tunisia's expenditure per student rises sharply 20. World Bank. Tunisia Northwest Mountainous with the level of education. For example, per capita Ares Development project report. tertiary spending is five times higher than primary level 21. A proposed policy note on land issues (men- and three times higher than secondary spending. tioned in the 2000 CAS) was dropped. These ratios do not compare favorably with com- 22. Tunisia has successfully diversified its exports parator countries (World Bank data, 2003). toward new manufactured products, including elec- 15. Economic and fiscal analyses are light in the con- trical machinery, tobacco, footwear, explosives, and py- text of this program. rotechnics (World Bank 2000b), p. 14. 16. This section draws heavily on World Bank (2003) and Tsakok (2004). Chapter 4 17. These objectives addressed all issues the Bank 1. One exception is the 1993 PERL. The project raised in its analytical work except the high risks of a seems to have been too ambitious and unrealistic in drought-vulnerable agriculture and the weaknesses of its design from the onset. It was the first operation to marketing. The Bank addressed the growth, sustain- try to help a reluctant country deal with the difficult ability, and poverty reduction objectives of the govern- area of public enterprise reform, employing an ex- ment, but did not pay sufficient attention in its program perimental instrument embodied in the performance to the government's other major objectives of achieving contracts, and resorting to imprecise conditionalities food self-sufficiency and increasing rural employment. that started weak and got weaker during implemen- 18. The 1995 EUAA excludes agricultural goods. tation. It was also poorly supervised, except for its However, an agricultural agreement with the EU in transport component. 9 8 REFERENCES Adams, Richard, and John Page. 2003. "Poverty, de vie des ménages­2000. Volume A. Resul- Inequality and Growth in Selected Middle tats de l'Enquete sur le Budget des ménages, East and North Africa Countries, 1980­2003." p. 33. World Development 13 (12): 2027­48. 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