PBL Financial Sector - Investment Partnership

completed

The project is part of the package of measures for the reform partnership with Tunisia. It is intended to support the Tunisian government in (1) overcoming liquidity bottlenecks in the short term, (2) stabilizing public finances in the medium term and (3) implementing short- to medium-term reform efforts in the financial and banking sector as well as in capital market development. The central reform and modernization measures required for this are structured in a policy matrix in close coordination with the BMZ and GIZ based on objectives and indicators agreed between the Tunisian government and various bilateral and multilateral donors (including the IMF) as part of the CwA, as well as with reference to the current FC portfolio in the financial sector. The policy matrix for the project focuses on selected measures that are based on Tunisia's central reform program (ownership) and are supported by the donor community (donor coordination). Additional measures in the financial sector/capital market are also intended to help improve the framework conditions for private investment and micro, small and medium-sized enterprises (MSMEs) and to leverage synergies with the current and planned development cooperation portfolio in the country in this strategically important area of German-Tunisian development cooperation (DC) (added value). The project represents the first phase of an initially three-year funding program (2018-2020). This includes a total funding amount of EUR 300 million, which is to be implemented in three budget support tranches (policy-based loan - PBL) on the basis of three annual development loans with a federal guarantee framework (80%) of EUR 100 million each. With an initial commitment and payment in 2018, a visible political signal can be sent regarding the implementation of the reform partnership. The indicators for measuring the reform goals are critically reviewed annually and adjusted if necessary in preparation for the subsequent phases. By providing targeted support to the Tunisian government in the further design and implementation of reforms in the financial sector and in the development of capital markets, the project contributes to improving economic sustainability and the investment climate as well as to reducing the high level of unemployment in the country.