The European Investment Bank (EIB), the European Union's long-term financing institution, is providing ECU 15 million(1) from risk capital resources(2) for development of Tunisia's private sector.

The funds will be deployed towards strengthening the equity base of companies undergoing restructuring (upgrading), following the creation of the free trade area between the EU and Tunisia, to furnish them with a more solid investment base. The resources made available by the EIB will go primarily to the following financial intermediaries: the TUNINVEST Group, IMB, COTIF, SODIS, SODINO, SIDCO and CGI. The vehicles used will be modern financial instruments traded on the Tunisian market, such as ordinary shares, preference shares, investment certificates and convertible bonds. Part of this operation will be devoted to providing equity financing for new intermediaries (venture capital companies or investment funds).

This exercise is similar to the ECU 8 million operation which the EIB mounted in October 1995 and complementary to the ECU 15 million operation signed in October 1997 for the privatisation of public enterprises.

The EIB is a lead player in implementing the European Union's "Euro-Mediterranean Partnership" and its priority objectives. In this context, a new mandate has been adopted for the period 1997-2000 to provide up to ECU 2 310 million of funding for projects in the twelve non-EU Mediterranean countries that have signed co-operation and/or association agreements with the EU. The Framework Contract governing the EIB's operations in Tunisia under this mandate was signed in July 1997.The EIB has already lent an aggregate of ECU 661.5 million in Tunisia over the past 19 years to finance various industrial, agricultural-processing, transport and environmental projects. Within this total, ECU 55.5 million drawn from the EU's budgetary resources has been advanced in the form of loans on special conditions and operations from risk capital resources.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 September 1997, when ECU 1 = TND 1.24, GBP 0.69, IEP 0.76 and USD 1.113.

(2) In addition to loans from its own resources, the EIB also deploys risk capital assistance from EU budgetary funds. A long-term financing instrument (up to 25 years), risk capital is a means of tailoring remuneration and repayment clauses to the performance of the project financed, while at the same time consolidating the capital base of the promoter. To date, some ECU 40 million in risk capital (including 25 million which has gone to the Middle East) - principally in the form of global loans to local banks - has been directed towards establishing or underpinning some 180 joint ventures, serving to create around 13 000 jobs and mobilising over ECU 600 million in new investment.