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CONFORMED COPY
LOAN NUMBER 4461-TUN
Loan Agreement
(Second Economic Competitiveness Adjustment Loan)
between the
REPUBLIC OF TUNISIA
and
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
Dated April 29, 1999
LOAN NUMBER 4461-TUN 
LOAN AGREEMENT
AGREEMENT, dated April 29, 1999, between the REPUBLIC OF TUNISIA (the 
“Borrower”) and the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the 
“Bank”): 
WHEREAS (A) The Bank has received a letter dated January 21, 1999 from the 
Borrower describing a program of actions, objectives and policies designed to achieve 
structural adjustment of the financial sector of the Borrower’s economy (hereinafter 
called the “Program”), declaring the Borrower’s commitment to the execution of the 
Program, and requesting assistance from the Bank in support of the Program during the 
execution thereof; and
WHEREAS (B) On the basis, inter alia, of the foregoing, the Bank has decided in 
support of the Program to provide such assistance to the Borrower by making the Loan 
in two tranches as hereinafter provided.
NOW THEREFORE the parties hereto hereby agree as follows: 
ARTICLE I 
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Loan and Guarantee 
Agreements for Single Currency Loans” of the Bank, dated May 30, 1995 (as amended 
through December 2, 1997) with the modifications set forth below (the “General 
Conditions”) constitute an integral part of this Agreement:
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(a)
Section 2.01, paragraph 11, is modified to read:
“‘Project’ means the program, referred to in the Preamble to the Loan 
Agreement, in 
support of which the Loan is made.”;
(b)
Section 4.01 is modified to read: 
“Except as the Bank and the Borrower shall otherwise agree, withdrawals 
from the Loan 
Account shall be made in the currency of the deposit account 
specified in Section 2.02 of 
the Loan Agreement.”;
(c)
Section 5.01 is modified to read: 
“The Borrower shall be entitled to withdraw the proceeds of the Loan from 
the Loan 
Account in accordance with the provisions of the Loan Agreement and of 
these General 
Conditions”; 
(d)
The last sentence of Section 5.03 is deleted;
(e)
Section 9.07 (c) shall be modified to read:
“(c) Not later than six months after the Closing Date or such later date 
as may be 
agreed for this purpose between the Borrower and the Bank, the Borrower 
shall prepare and 
furnish to the Bank a report, of such scope and in such detail as 
the Bank shall reasonably  request, on the execution of the program referred to in the 
Preamble to the Loan Agreement, 
the performance by the Borrower and the Bank of their 
respective obligations under the Loan 
Agreement and the accomplishment of the 
purposes of the Loan.”; and 
(f)
Section 9.05 is deleted and Sections 9.06, 9.07 (as modified above), 9.08 
and 9.09 are renumbered, respectively, Sections 9.05, 9.06, 9.07 and 9.08.
Section 1.02. Unless the context otherwise requires, the several terms defined 
in the General Conditions, and in the Preamble to this Agreement, have the respective 
meanings therein set forth and the following additional terms have the following 
meanings: 
(a)
“Deposit Account” means the account referred to in Section 2.02 (b) of 
this Agreement; 
(b)
“Dinar” and “TD” mean the currency of the Borrower; 
(c)
“Euro” means the lawful currency of the member states of the European 
Union that adopt the single currency in accordance with the Treaty establishing the 
European Community, as amended by the Treaty on European Union; and 
(d)
“Public Enterprises” means administrative or commercial enterprises owned 
wholly or partially by the Borrower, and such term includes, inter alia, public and 
semi-public enterprises. 
ARTICLE II 
The Loan 
Section 2.01. The Bank agrees to lend to the Borrower, on the terms and 
conditions set forth or referred to in the Loan Agreement, an amount equal to one 
hundred thirty-eight million Euros (Euro 138,000,000).
Section 2.02. (a) Subject to the provisions of paragraphs (b), (c) and (d) of 
this Section, the Borrower shall be entitled to withdraw the proceeds of the Loan from 
the Loan Account in support of the Program. 
(b)
The Borrower shall open, prior to furnishing to the Bank, the first 
request for withdrawal from the Loan Account, and thereafter maintain in its central 
bank, a deposit account in Euro on terms and conditions satisfactory to the Bank. All 
withdrawals from the Loan Account shall be deposited by the Bank into the Deposit 
Account. 
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(c)
The Borrower undertakes that the proceeds of the Loan shall not be used 
to finance expenditures excluded pursuant to the provisions of Schedule 1 to this 
Agreement. If the Bank shall have determined at any time that any proceeds of the Loan 
shall have been used to make a payment for an expenditure so excluded, the Borrower 
shall, promptly upon notice from the Bank, (i) deposit into the Deposit Account an 
amount equal to the amount of said payment, or (ii) if the Bank shall so request, 
refund such amount to the Bank. Amounts refunded to the Bank upon such request shall 
be credited to the Loan Account for cancellation.
(d)
No withdrawals shall be made from the Loan Account after the aggregate of 
the proceeds of the Loan withdrawn from the Loan Account shall have reached the 
equivalent of sixty-nine million Euros (Euro 69,000,000), unless the Bank shall be 
satisfied, after an exchange of views as described in Section 3.01 of this Agreement 
based on evidence satisfactory to the Bank: (i) with the progress achieved by the 
Borrower in the carrying out of Program; and (ii) that the actions described in 
Schedule 3 to this Agreement have been taken. If, after said exchange of views, the 
Bank shall have given notice to the Borrower that the progress achieved and actions 
taken are not satisfactory and, within ninety (90) days after such notice, the 
Borrower shall not have achieved progress and taken actions satisfactory to the Bank, 
then the Bank may, by notice to the Borrower, cancel the unwithdrawn amount of the 
Loan or any part thereof. 
Section 2.03. The Closing Date shall be June 30, 2001, or such later date as the 
Bank shall establish. The Bank shall promptly notify the Borrower of such later date.
Section 2.04. The Borrower shall pay to the Bank a fee in an amount equal to one 
percent of the principal amount of the Loan prior to the effectiveness of the Loan. 
Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate 
of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the 
Loan not withdrawn from time to time. 
Section 2.06. The Borrower shall pay interest on the principal amount of the 
Loan withdrawn and outstanding from time to time in accordance with the provisions of 
Schedule 2 to this Agreement. 
Section 2.07. Interest and other charges shall be payable semiannually on April 
15 and October 15 in each year. 
Section 2.08. The Borrower shall repay the principal amount of the Loan in 
accordance with the provisions of Schedule 2 to this Agreement. 
ARTICLE III 
Particular Covenants
Section 3.01. (a) The Borrower and the Bank shall from time to time, at the 
request of either party, exchange views on the progress achieved in carrying out the 
Program and the actions specified in Schedule 3 to this Agreement. 
(b)
Prior to each such exchange of views, the Borrower shall furnish to the 
Bank for its review and comment a report on the progress achieved in carrying out the 
Program, in such detail as the Bank shall reasonably request. 
(c)
Without limitation upon the provisions of paragraph (a) of this Section, 
the Borrower shall exchange views with the Bank on any proposed action to be taken 
after the disbursement of the Loan which would have the effect of materially reversing 
the objectives of the Program, or any action taken under the Program, including any 
action specified in Schedule 3 to this Agreement.
Section 3.02. Upon the Bank’s request, the Borrower shall: 
(a)
have the Deposit Account audited in accordance with appropriate auditing 
principles consistently applied, by independent auditors acceptable to the Bank; 
(b)
furnish to the Bank as soon as available, but in any case not later than 
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four (4) months after the date of the Bank’s request for such audit, a certified copy 
of the report of such audit by said auditors, of such scope and in such detail as the 
Bank shall have reasonably requested; and 
(c)
furnish to the Bank such other information concerning the Deposit Account 
and the audit thereof as the Bank shall have reasonably requested. 
ARTICLE IV 
Additional Event of Suspension
Section 4.01. Pursuant to Section 6.02 (l) of the General Conditions, the 
following additional event is specified, namely, that a situation has arisen which 
shall make it improbable that the Program, or a significant part thereof, will be 
carried out. 
ARTICLE V 
Termination 
Section 5.01. The date ninety (90) days after the date of this Agreement is 
hereby specified for the purposes of Section 12.04 of the General Conditions. 
ARTICLE VI 
Representative of the Borrower; Addresses 
Section 6.01. The Minister of International Cooperation and Foreign Investment 
of the Borrower is designated as representative of the Borrower for the purposes of 
Section 11.03 of the General Conditions.
Section 6.02. The following addresses are specified for the purposes of Section 
11.01 of the General Conditions:
For the Borrower:
Ministry of International Cooperation
  and Foreign Investment
98, Avenue Mohamed V 1002 Tunis-Belvédère
Republic of Tunisia
Cable address: 
Telex:
MCIIE
18060
For the Bank:
International Bank for
 Reconstruction and Development
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
INTBAFRAD
248423 (MCI) or
Washington, D.C.
 64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
the District of Columbia, United States of America, as of the day and year first above 
written.
REPUBLIC OF TUNISIA
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By /s/ Noureddine Mejdoub
Authorized Representative
INTERNATIONAL BANK FOR
  RECONSTRUCTION AND DEVELOPMENT
By /s/ Christian Delvoie 
Acting Regional Vice President 
Middle East and North Africa
SCHEDULE 1
Excluded Expenditures
For purposes of Section 2.02 (c) of this Agreement, the proceeds of the Loan 
shall not be used to finance any of the following expenditures: 
1.
Expenditures in the currency of the Borrower or for goods or services supplied 
from the territory of the Borrower; 
2.
Expenditures for goods or services supplied under a contract which any national 
or international financing institution or agency other than the Bank or the 
Association shall have financed or agreed to finance, or which the Bank or the 
Association shall have financed or agreed to finance under another loan or a credit;
3.
Expenditures for goods included in the following groups or subgroups of the 
Standard International Trade Classification, Revision 3 (SITC, Rev.3), published by 
the United Nations in Statistical Papers, Series M, No. 34/Rev.3 (1986) (the SITC), or 
any successor groups or subgroups under future revisions to the SITC, as designated by 
the Bank by notice to the Borrower:
Group
Subgroup
Description of Items
112
   -
Alcoholic beverages
121
   -
Tobacco, unmanufactured, tobacco
refuse
122
   -
Tobacco, manufactured (whether or not
containing tobacco substitutes)
525
   -
Radioactive and associated materials
667
   -
Pearls, precious and semiprecious
stones, unworked or worked
718
718.7
Nuclear reactors, and parts thereof; 
fuel 
elements (cartridges), non-irradiated, 
for
nuclear reactors
728
728.43
Tobacco processing machinery
897
897.3
Jewelry of gold, silver or platinum
group metals (except watches and watch
cases) and goldsmiths’ or silversmiths’
wares (including set gems)
971
   -
Gold, non-monetary (excluding gold
ores and concentrates)
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4.
Expenditures for goods intended for a military or paramilitary purpose or for 
luxury consumption; 
5.
Expenditures for environmentally hazardous goods (for purposes of this paragraph 
the term "environmentally hazardous goods” means goods, the manufacture, use or import 
of which is prohibited under the laws of the Borrower or international agreements to 
which the Borrower is a party; 
6.
Expenditures (a) in the territories of any country which is not a member of the 
Bank or for goods procured in, or services supplied from, such territories or (b) on 
account of any payment to persons or entities, or any import of goods, if such payment 
or import is prohibited by a decision of the United Nations Security Council taken 
under Chapter VII of the Charter of the United Nations; and
7.
Expenditures under a contract in respect of which the Bank determines that 
corrupt or fraudulent practices were engaged in by representatives of the Borrower or 
of a beneficiary of the Loan during the procurement or execution of such contract, 
without the Borrower having taken timely and appropriate action satisfactory to the 
Bank to remedy the situation.
SCHEDULE 2 
Interest and Principal Repayment Provisions 
A.
General Definitions
For purposes of this Schedule, the following terms have the following meanings: 
(a)
“Disbursed Amount” means, in respect of each Interest Period, the 
aggregate principal amount of the Loan withdrawn from the Loan Account in such 
Interest Period. 
(b)
“Interest Period” means the initial period from and including the date of 
this Agreement to, but excluding, the first Interest Payment Date occurring 
thereafter, and after the initial period, each period from and including an Interest 
Payment date to, but excluding, the next following Interest Payment Date. 
(c)
“Interest Payment Date” means any date specified in Section 2.07 of this 
Agreement. 
(d)
“Rate Fixing Date” means, for each Disbursed Amount, the first day of the 
Interest Period next following the Interest Period in which such Disbursed Amount is 
withdrawn. 
B.
Interest 
1.
The principal amount of the Loan shall be divided into Disbursed Amounts.  
Interest shall accrue on each Disbursed Amount outstanding from time to time at a rate 
based on a floating rate index prior to its Rate Fixing Date and at a fixed rate from 
its Rate Fixing Date, as described in paragraph 2 of this Part B.
2.
(a)
From the date of withdrawal of each amount of each Disbursed Amount 
withdrawn and outstanding, to but not including the Rate Fixing Date for such 
Disbursed Amount, interest on each such amount shall accrue, at a rate equal to the 
applicable: 
(i)
Euro LIBOR Base Rate; plus 
(ii)
Euro LIBOR Total Spread.
(b)
From the Rate Fixing Date for each Disbursed Amount until final repayment 
thereof, interest on such Disbursed Amount shall accrue, at a rate equal to the 
applicable: 
(i)
Fixed Base Rate; plus 
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(ii)
Fixed Total Spread.
3.
For purposes of paragraph 2 of this Part B, the following terms have the 
following meanings: 
(a)
“Euro LIBOR Base Rate” means, for the Interest Period in which a 
Disbursed Amount is withdrawn, the London interbank offered rate for six-month 
deposits in Euro for value the first day of such Interest Period (or, in the case of 
the initial Interest Period, for value the day occurring on the Interest Payment Date 
preceding the first day of such Interest Period), as reasonably determined by the Bank 
and expressed as a percentage per annum.
(b)
“Euro LIBOR Total Spread” means, for the Interest Period in which each 
Disbursed Amount is withdrawn: 
(i)
three-fourths of one percent (3/4 of 1%); 
(ii)
minus (or plus) the weighted average margin, for such Interest 
Period, below 
(or above) the London interbank offered rates, or 
other reference rates, for 
six-month deposits, in respect of the 
Bank's outstanding borrowings or 
portions thereof allocated by the 
Bank to fund single currency loans or 
portions thereof made by 
it that include such Disbursed Amount for such 
Interest 
Period; as reasonably determined by the Bank and expressed as a 
percentage per annum. 
(c)
“Fixed Base Rate” means, for each Disbursed Amount, the equivalent of the 
London interbank offered rate for six-month deposits in Euro for value on the Rate 
Fixing Date for such Disbursed Amount, expressed as a single fixed interest rate based 
on the fixed interest rates corresponding to the repayment installments of such 
Disbursed Amount, as reasonably determined by the Bank and expressed as a percentage 
per annum.
(d)
“Fixed Total Spread” means, for each Disbursed Amount: 
(i)
three-fourths of one percent (3/4 of 1%); 
(ii)
minus (or plus) the cost margin, applicable on the Rate Fixing 
Date for such 
Disbursed Amount, below (or above) the London 
interbank offered rates, or 
other reference rates, for 
six-month deposits, in respect of the Bank's 
outstanding 
borrowings or portions thereof allocated to fund single currency 
loans 
or portions thereof made by it that include such Disbursed Amount; plus 
(iii)
the Bank's risk spread applicable on the Rate Fixing Date for such 
Disbursed 
Amount; as reasonably determined by the Bank and expressed 
as a percentage per 
annum. 
4.
The Bank shall notify the Borrower of Euro LIBOR Base Rate, Euro LIBOR Total 
Spread, Fixed Base Rate and Fixed Total Spread applicable to each Disbursed Amount, 
promptly upon the determination thereof. 
5.
Whenever, in light of changes in market practice affecting the determination of 
the interest rates referred to in this Schedule, the Bank determines that it is in the 
interest of its borrowers as a whole and of the Bank to apply a basis for determining 
the interest rates applicable to the Loan other than as provided in this Schedule, the 
Bank may modify the basis for determining the interest rates applicable to amounts of 
the Loan not yet withdrawn upon not less than six (6) months' notice to the Borrower 
of the new basis. The new basis shall become effective on the expiry of the notice 
period unless the Borrower notifies the Bank during said period of its objection 
thereto, in which case said modification shall not apply to the Loan.
C.
Repayment 
1.
Subject to the provisions of paragraph 2 of this Part C, the Borrower shall 
repay each Disbursed Amount of the Loan in semiannual installments payable on each 
April 15 and October 15, the first such installment to be payable on the seventh (7th) 
Interest Payment Date following the Rate Fixing Date for such Disbursed Amount and the 
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last such installment to be payable on the twenty-fourth (24th) Interest Payment Date 
following the Rate Fixing Date for such Disbursed Amount. Each installment shall be 
one-eighteenth (1/18) of such Disbursed Amount. 
2.
Notwithstanding the provisions of paragraph 1 of this Part C, if any installment 
of principal of each Disbursed Amount would, pursuant to the provisions of said 
paragraph 1, be payable after October 15, 2014, the Borrower shall also pay on said 
date the aggregate amount of all such installments. 
3.
After each Disbursed Amount shall have been withdrawn, the Bank shall promptly 
notify the Borrower of the amortization schedule for such Disbursed Amount.
SCHEDULE 3 
Actions Referred to in Section 2.02 (d) of this Agreement 
1.
The Borrower shall have continued to maintain a macroeconomic framework 
consistent with the Program, as determined on the basis of indicators and targets 
satisfactory to the Bank. 
2.
The Borrower shall have converted into current loans or otherwise cancelled the 
non-performing public indebtedness of at least twenty (20) Public Enterprises 
amounting in aggregate to at least four hundred million Dinars (TD 400,000,000) 
excluding late interest charges and equity investments, all in accordance with a 
methodology and procedures satisfactory to the Bank. 
3.
The Borrower shall have resolved to liquidate or privatize or offer for sale or 
restructure financially with divestiture of public ownership the Public Enterprises 
whose indebtedness shall have been converted or cancelled pursuant to the provisions 
of the immediately preceding measure, all in accordance with a methodology and 
procedures satisfactory to the Bank. 
4.
The Borrower shall have solicited international competitive bids with terms of 
reference providing for the complete divestiture of state ownership in the banking 
entity formed pursuant to the merger of UIB and BTEI, all in accordance with a 
methodology and procedures satisfactory to the Bank.
5.
The Borrower shall have reformed the institutional and regulatory framework 
governing its government securities market, all in accordance with a methodology and 
procedures satisfactory to the Bank.
6.
The Borrower shall have presented for adoption by its Chamber of Deputies each 
of the following in form and substance satisfactory to the Bank: (i) draft amendments 
to the banking law; (ii) a draft law regulating mutual funds; (iii) draft amendments 
to the Code of Civil and Commercial Procedure to facilitate the judicial recovery of 
bank loans and credits; and (iv) draft amendments to the Public Enterprise Law No. 
89-9 annulling the public ownership threshold of thirty-four percent (34%) that 
confers the legal character of public enterprises upon banks and insurance companies. 
7.
The Borrower shall have restructured financially the Tunisian Lloyds Company 
pursuant to internationally recognized standards and requirements of financial 
solvency, capital adequacy, loan provisioning and risk exposure.