Report No. PIN39
Report No. PIN39
Tunisia CAS: Public Information Notice
World Bank Board Discusses
Tunisia Country Assistance Strategy Report
1. On April 25, 2000, The World Bank's Board of Executive Directors discussed
the Bank Group's Country Assistance Strategy (CAS) for Tunisia covering the
period 2000-2002.
Country Context
2. Stressing equitable development and macroeconomic prudence over a long
period, Tunisia has progressed remarkably to lower middle-income country status.
Since independence, real per capita incomes have grown over two and a half times
while social and economic well-being have improved significantly: poverty
incidence has dropped from 40t to 79; almost all children enroll in primary
school; life expectancy has grown from 50 to 70 years; and the status of women
has improved steadily, with women now comprising a third of the labor force.
Tunisia has also built up the strongest policy and institutional framework for
sustainable development in the region. With a liberalized offshore sector in
place since the 1970s, Tunisia opened its economy further when, in 1995, it
signed a partnership agreement, including free trade provision, with the EU.
3. Given Tunisia's limited markets, the EU agreement and, more generally,
outward-looking economic policies, are critical to stimulating higher growth and
employment, which is paramount among the country's development objectives for
the medium term. At the same time, the agreement poses challenges for Tunisia
well beyond trade measures. The heightened international competition will
require it to develop a more dynamic private sector; strengthen further its
human capital base; and consolidate its sound management of natural resources.
This, in turn, will need a new framework for economic governance, so far
substantially led by the public sector, towards more neutral and predictable
policies for the private sector, coupled with increased participation of the
civil society in the development process.
Bank Strategy
4. In line with the country's stage of development and emerging challenges, the
Bank's assistance strategy takes a broad approach to poverty reduction; it
focuses on labor-intensive growth, employment and vulnerability issues in the
wake of increased competition, and refinement and greater coverage of the
social protection system, while promoting decentralized and community-based
approaches in poverty pockets.
5. Given Tunisia's access to external finance, the government of Tunisia places
greater weight on policy dialogue with the Bank than on the level of financing.
To that end, the Bank's assistance strategy emphasizes non-lending services,
analytical work and seminars, with a view to broadening policy dialogue and
increasing the role of civil society in the development process.
Priorities for Bank Assistance
6. To team up with Tunisia in this endeavor, and in line with Government
requests, the strategy includes the following priorities for Bank Group support:



* Consolidating long-term development through activities in sectors of
traditional Bank involvement, mainly human resources development, natural
resources management, transport, and rural and urban development;
* Supporting economic reforms to enhance competitiveness and increase
employment, with safeguards against transitional costs of adjustments;
* New initiatives of catalytic nature to strengthen local institutions, launch
new development niches (e.g., information technology), and mobilize external
finance.
7. The proposed priorities ensure continuity with the last CAS (1997-99), the
implementation of which proceeded closely as planned. The main objectives of the
last CAS were met, with the exception that the pace of private investment
remained gradual. Hence, the IFC and Bank will work together closely to foster
private sector development, especially in promoting private investment in
infrastructure and supporting small and medium enterprises.
8. The lending program for 2000-2002 maintains the level of commitments of
previous years, averaging about US$200 million per year. It will sustain the
change in the mix of instruments begun with the last CAS, with fewer traditional
projects and more sector investment loans and adaptable programs loans. The
lending program will be applied flexibly, especially regarding the share of
policy-based operations, depending on the speed of reforms and the possible
impact of fluctuations in the external environment.
Partnerships
9. The government has long-established mechanisms for coordinated consultations
within the country and with external agencies. Against this backdrop, the
participatory process followed in developing the CAS included extended
consultations and discussion of the draft CAS document with the government. The
CAS was also prepared after consultation with civil society groups in Tunisia,
including discussions with representatives of the trade unions and employers, a
workshop in Tunis involving local NGOs and focus group discussions concerning
the impact and the priorities for reforms.
10. The Bank's proposed strategy ties in closely with other donor programs in
the country. Besides the traditional coordination between the Bank Group and the
IMF, the Bank's program has been closely coordinated with the EU, which has
provided parallel financing along each of the Bank's two competitiveness
adjustment policy loans to-date. The Bank Group has also developed joint
approaches with other donors in almost all sectors where it is involved. The
move towards program loans has served as a framework for other financing. The
Bank's program is also closely coordinated with the EIB, the AfDB and the UN
Agencies and key bilateral donors, among them France, Italy, Japan, Germany,
Kuwait and Switzerland. These coordination experiences have been encouraging and
have promoted stronger dialogue with the government, and the arrangement is
being used as a prototype for other countries in the region. Under the Bank's
assistance strategy, the use of sector approaches, dialogue on the reform
program, and innovative projects in new areas would also serve as catalyst for
bilateral funding and private investments, thus complementing external finance
available to the country.
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