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Speeches & Transcripts

World Bank Group President Zoellick Press Conference in Tunis - May 4, 2011

May 4, 2011

Robert B. Zoellick Press Conference Tunis, Tunisia

Transcript

Robert B. Zoellick 

President, World Bank Group

May 4, 2011


*updated with summaries of questions originally asked by journalists in French 


MR. ZOELLICK:  Well I want to thank all of you for joining.


This was a very important visit for me.  I came primarily to listen and to learn, because Tunisia is where it all began, with the tremendous move towards freedom and a new society that would have ripple effects all across the Middle East and North Africa.


I wanted to emphasize and to learn more about how the Bank could support Tunisia with its break from the past.  I had an opportunity to learn more about the overall process of political transition, including the electoral preparation process.


I met the Chair of the Commission for the Preservation of the Revolution as well as having an opportunity to meet the interim Prime Minister and some of the Ministers.  So, we had some chance to talk about the political process.  I also had a chance my first day to meet representatives of a number of civil society groups, some from Tunis but also from Kasserine and other parts of the country.

We talked a little bit about the process of what is to follow after the elections, the creation of the constituent assembly, and the critical importance about the role of the three commissions in the transition process.


This is connected with the overall governance reform agenda that we've been working on with the interim government, issues of voice and accountability, transparency, equity, rule of law.


The $500 million budget support loan, we call it development policy loan, that we are developing with the government over the next month or so actually is designed to support some of these legal changes, including areas such as the freedom of association, the access to information, transparency in procurement, regulatory reform in public services.  We've added to our staff someone who has had experience around the world and including beneficiary groups' health service delivery.

In addition to the governance and political issues, I wanted to get a better sense of the progress of the economy.  I am pleased to see that export numbers are increasing, but obviously with tourism revenues being down and some of the slip in foreign direct investment, there is an overall decline in the economy.


We talked about the supplementary 2011 budget and the critical need to send the appropriate signals to draw in private investors, both foreign and domestic.


A key piece of the economic reform is obviously creation of jobs.  We have a special team that is working with the Ministry of Employment about the effectiveness of these job creation programs.  There are some that are oriented towards university graduates, some public work fairs, and one issue that characterizes the Tunisian economy overall is the fact that the “offshore” sector, that which dealt with exports internationally, had greater productivity in foreign investment than the “on shore” and a lot of the problems relate to some of the regulatory limits and constraints and some of the corruption and privileges in the onshore sector.


A critical focus of the discussions was the lagging regions.  Yesterday, I had an opportunity to visit some of the community development projects we have done near Beja.  This gave you some chance to see some of the poorer areas in the northwest.  We have not had the opportunity to do those projects in the "center west," and this is another area of support in addition to the $500 million loan I mentioned, we would like to disburse quickly a $125 million loan that focuses on some of the community development projects such as the ones we've had outside Beja but also to design these to draw in community participation in some of the other regions of the country.


All of you know that that $500 million development policy loan will be complemented by an equal amount from our partners at the African Development Bank.  I had a chance yesterday to compare notes on developments with Donald Kaberuka, the President of the African Development Bank, and we also, in addition to the--to that, there was the--some support that is coming from the European Union and France on top of that amount.


In addition to the $125 million that I mentioned for community development projects, we are also looking with the African Development Bank on some projects to help with micro and small- and medium-sized enterprises.  We had launched an initiative to help such enterprises through the Arab World Initiative that we started at the Bank a couple of years ago, and we hope that we might be able to get some additional funds for Tunisia through that initiative.  And we're looking at other areas where we might start pilot projects again and focus on some of the particular social development aspects.


IFC, our private sector arm, had about $250 million of investments in Tunisia in the past, but we didn't have a representative here because we found the private sector to be one that had particular challenges to work with.  We hope with some of the openings now that we can increase private sector investment and this will follow up on some of the government's changes. 


This could also be perhaps with some of the financial sector, to not only help strengthen the banking system but to focus their attention on, say, the medium and small enterprise lending, maybe also [inaudible] trade finance to keep these exports going.  So, there are some other ideas that, as the transition process moves forward, we would like to strengthen the return of private capital and investment.

Overall, one of my key messages to all the people whom I have spoken to has been that these events are truly historic.  When one travels around Tunisia, one is constantly facing history of centuries or even millennia ago, but the people in Tunisia right now are making history, and this is something that I wanted to convey, that at the World Bank and in many other places around the world, there is a great respect and hope for what has been accomplished.  We know that this isn't easy.  We know that there are transition processes both politically and economically.  We know that events raise expectations, that this will be a challenge, but one reason I wanted to come was to be able to get a better sense myself about how we can support and try to learn what is happening on the ground and with the transition processes, whether inside government or outside government. 


And this will also be helpful in that, as was recently announced, France's chair of the G8" will be inviting Tunisia and Egypt to the meeting in Deauville later this month.  I will also be attending that session.  And so, I'd like to try to see how we can also build broader support for the G8 countries but also for some of the Gulf countries to increase the success and the chance of rapid improvement for the people of Tunisia.


So, with that, I would be happy to take your questions.


MODERATOR:  [Inaudible.]


QUESTION:  Yeah, Matthew Tomsalit [ph] from Reuters.


MODERATOR:  Okay.


QUESTION:  Okay.  We--


MODERATOR:  Could you please stand up?  Sorry.


QUESTION:  [Inaudible]—  You mentioned that you gave--[inaudible]--do you expect Tunisia's economy to actually decline this year now? 


Can I also ask how much you actually envisage Tunisia might need in additional funding help from the World Bank, whether it’s likely to get the 4 billion which it needs in terms of loans from foreign countries.


And also in terms of added pressures on Tunisia, do you see Libya as being a big problem in that?  In particular do you see any active, sort of, meddling from Moahmar Ghadaffi’s administration there?


MR. ZOELLICK:  Okay.  Well, the first question, in terms of growth, I saw some estimates this morning from other institutions that would suggest a decline.  We believe that if the government's fiscal stimulation program, that I believe they are going to be presenting in a week or so, goes forward that the negative growth should be avoided and I'm always hesitant about forecasts but we're looking it one, one-and-a-half percent for growth.


Your second question with additional amounts, you mentioned one of the sums that the government has used.  The way that we're approaching this is first to try to make sure that there's money available quickly, which is why we and the African Development Bank have put forward this $1 billion budget support related to these reforms.  We would like to try to get this done before the end of our fiscal year, which is June 30th, so, this is moving fast.  Then, there are the other sums that I talked about on top of that.


We've also started to--and I think the EU has put in about a €90 million euros and France has €70 million euros.  So there's--on top of our amounts there's some additional sums.  We started to discuss with the interim government the financial needs for the following years.  And here we want to try to support an active return to the financial markets as soon as possible.  So, we're discussing different tools that we've used with other countries in this situation.  So, there could be the prospect of additional budget support lending from the Bank.  There could also be some longer-term investment lending on projects.  Sometimes, what we did once with Indonesia was, during the financial crisis when they weren't sure they could get back to market, we provided an extensive "backstop" loan for coverage which allowed them to have easier access to the market.


So, I frankly have been very pleased that the logic of the interim authorities is how to combine our support and that of the African Development Bank getting back to private markets, and so the amounts of money that we and others will provide for and the form that we provide will depend on those events.  So, we're trying to prepare for a variety of scenarios.


Then, you also asked about Libya.  This is a high concern of mine.  When Donald Kameruka came to our Spring Meetings a couple of weeks ago, since the African Development Bank is located in Tunis, he highlighted the concerns.  Since I've been here, what I'm taking away is that the first "movement" of people that came across the border were often people from third countries and we and others helped get them back.


So, for example, we had a special program with Bangladesh to get some of the people out and get them some financial support.


There were people who were better off who are now interconnecting or integrating either in Tunis or other places.  That still poses issues, for example, schools and other services, but those people, by and large, have some assets and means.


What one now faces are the movement of poor people across the border.  One of the civil society groups represented some of the Tunisians that are helping people in camps, and they were estimating the number they were helping were about 5- to 8,000 as I recall, but I've heard numbers now of 30-, 35-, 40,000 of poor people crossing the border, and as the situation in Libya continues to deteriorate, I can only expect that some of those numbers might increase.


And so, one of the items that I've asked our team to look at working with the UN and working with the government is, what else might the G8 consider given the uncertainty of the situation in Libya so as not to add to the stress and strain on what is already a challenging transition in Tunisia.


And I might, in the accounts that I've seen have shown that, even though people in Tunisia have their own challenges, they've been incredibly generous to the people coming across the border, but one can only expect that generosity to last for a certain period of time, because it is a country that is getting its own outside financial support and special stimulus programs.


So, I hope that this is a topic that others in the international community focus on because the after effects of what's going on in Libya pose--pose problems for their neighbors, both Tunisia and Egypt.


MODERATOR:  Thank you.  [Inaudible].


QUESTION:  [Speaking in French, question on Tunisia seeking debt relief]


MR. ZOELLICK:  The issue of debt relief is one that the Tunisian authorities will have to determine for themselves, but I would point out that, when other countries in similarly situated situations have looked at it, they sought to avoid it, for--in part, it goes back to the question from your colleagues from Reuters.  If a country wants to go back and access financial markets, seeking debt relief is not going to help that.  And so, if a country wants to be able to access investment in a financial future for private sector investment and support for government financing, those steps tend to interfere.


And so, countries such as Iraq, for example, are--that actually went through a war might have done some rescheduling but they didn't try to have a debt relief.


So, there are different patterns of this--and Nigeria is another case that went through something in a similar pattern [of getting debt relief and then having challenges in the market], but--and one of the other issues, of course, is, as I heard the discussion in Tunisia, some of this is talked about, debt as related to prior regimes.  Under "international law," that is not a distinction that is fundamental and it is hard to separate whether financing went for one purpose or another purpose.


There's one other aspect, though, that we would have working, and that is, a couple of years, when I started at the Bank, we launched something called the Stolen Asset Recovery Initiative, and we worked with governments in Peru, Nigeria, others, to try to recover some of the stolen assets.  So, this is where we, through the mutual legal assistance arrangements and others--and that is something that we offered to the interim government.  They have expressed interest in it and they put together a team that involves different ministries to try to focus on that topic.


MODERATOR:  [Inaudible.]


QUESTION:  [Speaking French, question was about a plan announced the day before by the Tunisian government, the role of international organizations in that plan and the World Bank’s response to it]


MR. ZOELLICK:  Well, I think it's a very interesting idea.


Let me start by saying that I have the highest respect for the interim Minister of Finance.  He obviously was a successful banker working out of Morocco.  I think it is a wonderful sign of the changes in Tunisia that he was willing to give up that position and come and help his country.


In our discussions, I found him very well informed about both public and private markets.  And then, with the types of things that you're specifically talking about, these are the types of ideas that we would like to have further discussions and this also relates to I mentioned it, with IFC, our private sector arm.


We can--it just depends on the nature of it but we, for example, have created investment funds.  One that--and we have about a billion-dollar fund that focuses on Sub-Saharan Africa and Latin America and the Caribbean.  We have some banking capitalization funds, so these put in equity, not [inaudible] debt and some of those might be useful to help with the strengthening of the banking sector as well as expanding their ability to lend, for example, to the medium and small enterprises.


There are some other very appealing business possibilities.  We had launched an effort with a number of countries in North Africa about solar development.  We had some concessional financing from the Clean Technology Fund that could provide assistance to the development of the solar industry here and then help with the electricity transmission to Europe where this would be part of an overall clean energy development.


So, I think there are a multitude of possibilities, and practically anything that the Minister of Finance brings to us we will certainly consider seriously.


The key--there are two key points, though, and that is this really goes to, in an open press, part of this is a [inaudible] a different society about learning from a discussion like this is that--what he's really trying to do is he's trying to send a signal about bringing private investment in and creating growth opportunities which really go to create those jobs, and I think that probably we should encourage.


The second is, I'm glad he's taking time to talk with you and other journalists because I think one of the other issues here that I learned is that, you know, there's a tremendous burden on the transition government in terms of time, but there's also a real hunger for communication and information, and I think it's wonderful that he's taking time to start to begin that dialogue with those who communicating with the public through the press.


MODERATOR:  [Inaudible.]


QUESTION:  [Speaking French, question was about the political transition process and how that will proceed]


MR. ZOELLICK:  Well, I think, that's what we used to call the $1 million question but with inflation we may have to call it the $100 million, and what I mean by that is, obviously, it is--the revolution has created the whole opportunity for an open society, change the political system, a move to democracy.


This can help make sure that all the energies and creativity of the people of Tunisia are linked to the development.  So, when we move from an economy where you had had two Tunisias, one that was outwardly oriented, often in the coastal regions, was able to provide a better life for people, but leaving other people in Tunisia behind, particularly in the lagging regions in the center, the northwest, or the south, and the frustrations that this created.  So, that is also the good, but the transition obviously poses challenges, as well.


Now, the one is expectation.  Expectations are raised of change and it's always a challenge to meet them quickly, and that's one reason why we talked with the government about some of the projects that I described today, whether of an employment nature or a community development nature.


Second, any revolution creates a sense of uncertainty of what will follow, and therefore the importance of following through on the elections and the constituent assembly will also send an important signal to foreign investors we just talked about.  So, there, the politics connects with the economics.


Anytime you have a revolution, there's some concern about security, whether the police forces will feel they need to step back, whether there are elements from the past, and so, insecurity frightens Tunisians but it also creates uncertainty for people who might come to Tunisia, tourists or foreign investors.  The problems in Libya then add to that challenge.


So, the challenge is, in an environment after a political upheaval, is trying to create an upward spiral:  to have the elections, to have the consensus in the process, to have the follow-through on the laws, the freedom of information, the rule of law development.  At the same time, you start to create some opportunity for economic hope and the international community sees that things are changing for the better in Tunisia and they see it as something they both want to help, which is what we and the African Development Bank are starting to do, and the G8 will follow with and then hopefully private investors will also join that process.


Now, as you posed the question and as I started at the beginning, this could be very inconvenient.  So, one of the things that can hold this North African Region back is the lack of regional integration among neighbors.  Well, maybe that could change with some of the events that are occurring.  So, it can strengthen the overall regional trading ties.


So, the question you're asking is the fundamental question about the connection of politics and economics.  We are trying to support it by not only moving promptly but by offering expertise in areas such as the open information laws, the connection of beneficiaries and the social development, as I mentioned, health, trying to bring in the private sector, trying to strengthen the rule of law which will create a better environment for private investors, both Tunisian and outsiders.  And at the same time, we're trying to signal to the rest of the world that this is important and we're trying to engage them on issues such as Libya or regional integration.


So, your question really goes to the heart of everything we do.


MODERATOR:  [Inaudible.]


MR. ZOELLICK:  Take one more.


MODERATOR:  One more?  Yes, Sir. [Inaudible] in the back, [inaudible].


QUESTION:  [Speaking French, questions asked for details about the $1 billion loan from the World Bank and African Development Bank]


MR. ZOELLICK:  Well, let me take your last question first.


The $500 million loan that we are providing, which is going to be complemented by another $500 million from the African Development Bank, so that's how you reach the billion, goes directly to the budget of the Tunisian Government.  But we are working with them to--as part of that budget support--to make a number of the legal changes that you asked about.


So, for example, the freedom of association law, the access to information law, the transparency in procurement, and various regulatory reforms in the public services sector such as the one I mentioned that draws beneficiaries more to the health services, and there are some other aspects which we can provide you in an open system.


Then, the--your first question on the billion and the terms of it, again, we can follow up with some of the details, but our--this is called our--IBRD, International Bank for Reconstruction Development, lending, these tend to be very long-term credits.  That's why developing countries tend to like them--usually, about 30 years, as I recall. 


And the--there are choices of interest rate, and I don't know what Tunisia has chosen.  There's normally--they choose a floating rate which is connected to our "borrowing rates" and in the present environment it's probably around 3 percent or something like that.  They can also choose fixed rate, if they want, but that--then, there are different choices, but most developing countries choose the floating rate, and the rates are quite low, and the main benefit of such a loan is that it's a very long-term loan so you can--as the economy grows, it makes it easier to pay back.


Then, you also asked about the survey and changes.  This is something that, while we worked in the Tunisian economy and, you know, we have a sense of it, we are constantly trying to upgrade, and I think this is one of the areas that the interim government is also trying to do in trying to strengthen the overall statistical base of the country to not only know its current conditions but how they will change.


And in general, however, we certainly know enough that we can see that one of the major problems are high unemployment, high unemployment among the young people including university graduates, and that there are particular challenges in some of the lagging regions.


So, we have done a series of analyses we would be happy to share with you that give you lots of data about the country, but we need to keep updating it as conditions change.


MODERATOR:  Thank you, Sir.

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