Central Bank of Tunisia Circular No. 2018-05 to Banks dated 29 May 2018

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Tunis, on 29 May 2018 Circular to Banks No. 2018-05

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Subject: Credit line for supporting the financial restructuring of small and medium-sized enterprises (SMEs). The Governor of the Central Bank of Tunisia, Having examined Law No. 53 of 2016 dated 16 April 2016 on determining the basic system of the Central Bank of Tunisia, and Law No. 84 of 2016 dated 30 July 2016 on banks and financial institutions, and Law No. 22 of 2017 dated 04 December 2017 on the Finance Act for 2018, particularly Article 38 thereof, and Government Order No. 568 of 2014 dated 12 March 2014 on determining the organizational and management rules of the credit line for supporting the financial restructuring of SMEs, and its conditions and methods of intervention, and the opinion of the Compliance Committee No. 8 of 2017 dated 14 May 2017, as stipulated in Article 36 of Law No. 53 of 2016 on determining the basic system of the Central Bank of Tunisia,

Has decided as follows:

Article 1: A special account is opened in the books of the Central Bank of Tunisia, named "SME Financial Restructuring Support and Payment Credit Line Account" (hereinafter referred to as "the Account"), into which a credit line amount is credited from the State budget to support and pay SMEs, excluding the amount allocated to the guarantee mechanism.

Article 2: The resources of "the Account" are primarily used to finance the following operations:

• Financial and economic diagnosis studies, support operations at banks and financial institutions, and monitoring the implementation of financial restructuring programs carried out within the framework of interventions under the credit line, up to a maximum amount of 3 thousand dinars per single enterprise;
• Restructuring the capital of beneficiary enterprises and strengthening their equity by granting contribution loans to the project promoter or main shareholder in the form of a personal loan exclusively dedicated to increasing share capital;
• Refinancing rescheduling loans granted by banks and specified within the financial and economic diagnosis study. Various forms of credit line intervention can be combined for a single enterprise. A single enterprise cannot benefit from more than one credit line intervention.

Article 3: All small and medium-sized enterprises with gross fixed assets ranging between 1 thousand dinars and 3 million dinars, which meet the conditions stipulated in the aforementioned Government Order, particularly Articles Two and Three thereof, benefit from interventions under this credit line.

Article 4: Enterprises wishing to benefit from the credit line interventions must deposit a request with the General Administration for the Promotion of SMEs at the Ministry responsible for Industry, or at one of the regional branches of the Agency for Industrial Development and Renewal, or at one of the regional business centers. The General Administration for the Promotion of SMEs expresses its opinion on accepting the request to benefit from credit line interventions after taking the opinion of the lead bank of the banking group. The lead bank of the banking group must express its opinion on the enterprise's participation within a maximum period of 12 working days from the date of receipt of the request, by any means leaving a written record, including email. The refusal to participate must be justified. If this period is exceeded, the bank is deemed to have implicitly agreed to the enterprise's participation.

Article 5: The contribution loans granted and the rescheduling loans provided for refinancing must fall within a restructuring program proposed by an expert in the financial and economic diagnosis study and approved by the "SME Financial Restructuring Support and Payment Credit Line Management Committee".

Article 6: The Bank, on behalf of the State, performs all necessary operations to enable promoters and enterprises to obtain privileges granted from credit line resources, including signing contracts, endorsing bills of exchange, monitoring the use of funds, etc.

Title I: Financial and economic diagnosis studies, support operations at banks and financial institutions, and monitoring of financial restructuring programs Article 7: Study, support, and follow-up operations are guaranteed by experts from among the registered accountants on the Tunisian Order of Chartered Accountants' list, or by specialists in accounting registered on the consolidated accountants' list of Tunisia, or by specialized study offices that include at least one chartered accountant or accounting specialist from those mentioned above, according to the specifications prepared by the Management Committee.

Article 8: The credit line intervenes to finance financial and economic diagnosis studies, support operations at banks and financial institutions, as well as monitoring the implementation of the restructuring program within an amount determined according to specifications set by the specifications document, without exceeding 3 thousand dinars per single enterprise.

Article 9: The lead bank of the banking group coordinates between the expert and other banks and financial institutions to express an opinion on the financial and economic diagnosis before submitting it to the Management Committee. The expert presents the results of the financial and economic diagnosis, support operations, and the financial restructuring program during meetings of the credit line management committee.

Article 10: Follow-up operations for implementing the restructuring program approved by the Management Committee begin and last for a period of at least two years, starting from the date the beneficiary enterprise begins implementing the financial restructuring program.

Article 11: The expert's fees for financial and economic diagnosis, support, and follow-up operations are transferred to his account upon a decision signed by the Minister responsible for Industry, based on a conforming opinion from the Management Committee.

Title II: Personal contribution loan for project promoter or main shareholder Article 12: The personal contribution loan is granted to the project promoter or main shareholder of the enterprise for a maximum duration of seven years, including one grace year without interest or profit margin, exclusively dedicated to increasing share capital. The beneficiary bank prepares an amortization schedule for the principal amount drawn from "the Account" as a contribution loan and submits it to the Central Bank of Tunisia.

Article 13: To benefit from the contribution loan, self-financing provided by the promoter must be at least 10% of the total amount for strengthening equity. The contribution loan cannot be allocated to net bank debts, interest, or bank fees.

Article 14: The personal loan is disbursed only after proving the release of other approved equity strengthening amounts, particularly the minimum amount required by the promoter.

Article 15: The bank undertakes to collect amounts due regarding principal and late interest, and takes necessary legal follow-ups when required. The bank charges beneficiaries an annual interest rate of 8% on unpaid amounts due.

Article 16: A grace period of thirty days is granted from the due date for payments to beneficiaries who have not paid amounts due without calculating late interest. If unpaid amounts are not paid within this period, late interest is calculated from the due payment date.

Article 17: The bank transfers on May 1st and November 1st of each year, within the six months preceding these dates, the amounts collected regarding principal and late interest to "the Account". The bank is allowed, for amounts collected in April and October, to transfer them within one month after the previously specified deadline for transferring collected amounts.

Article 18: On amounts not transferred by banks according to the aforementioned conditions, a market interest rate applicable on May 1st or November 1st is applied, plus 6%, as late interest charges withdrawn from the bank's account opened in the books of the Central Bank of Tunisia, after notifying the concerned bank and granting it a one-month period to pay the due amounts and inform the Ministry of Finance thereof.

Article 19: The bank must claim collateral (real or personal) as it deems necessary to ensure the collection of the personal loan, particularly:

• Life insurance for the loan amount and its collection period;
• Mortgage on bonds issued by the enterprise representing the personal loan granted from credit line resources.

Article 21: The bank bears a risk percentage of 36% for non-collection of the personal loan, while "the Account" bears the remainder. The bank, after obtaining approval from the Ministry of Finance, pays the due installment to "the Account" upon proving that it has fulfilled all legal procedures for recovering the personal loan, indicating such final default of its client.

Article 20: The bank receives the following administrative fees for managing the personal contribution loan mechanism:

• A fee of 1% determined based on amounts granted during the year as contribution loans;
• A fee of 5% determined based on collection amounts regarding principal and late interest that the bank performs and transfers during the year to "the Account". The aforementioned fees are transferred annually by the Central Bank of Tunisia through withdrawals from "the Account" resources after the bank submits a request specifying funds disbursed to beneficiaries and collections completed for the year.

Title III: Refinancing of rescheduling loans Article 22: The credit line is used to refinance rescheduling loans related to:

• Debtors regarding short, medium, and long-term loans;
• And installments of medium and long-term loans that have not yet matured, within a maximum of 5 future years. Banks may reschedule installments with a net maturity exceeding three years on their own resources if they wish.

Article 23: Banks' refinancing is carried out under the following conditions:

• A fixed annual interest rate equal to the prevailing Central Bank of Tunisia main interest rate;
• Repayment period not exceeding ten (10) years, including a maximum grace period of two years.

Article 24: Beneficiary institutions are loaned under the following conditions:

• A fixed annual interest rate not exceeding the prevailing Central Bank of Tunisia main interest rate plus 2.5%;
• Repayment period not exceeding ten (10) years, including a maximum grace period of two years.

Article 25: Installments mature on April 30th and October 30th of each year. The Central Bank of Tunisia prepares an amortization schedule for principal and interest for the amount drawn from "the Account" as refinancing of rescheduling loans and submits it to the beneficiary bank.

Article 26: The Central Bank of Tunisia deducts the installment amount from the bank's account upon maturity. The bank cannot in any case claim that final beneficiaries fail to meet their obligations.

Title IV: General provisions Article 27: The lead bank of the banking group must appoint a single contact for the Ministry responsible for Industry and the Central Bank of Tunisia, notifying them with its name, title, and email address.

Article 28: The bank is committed to providing the Ministry of Finance, the Central Bank of Tunisia, and the Ministry of Industry at the end of every three months with a statement of funds granted under the credit line and collected and uncollected amounts, for each beneficiary.

Article 29: Except for fees due to concerned banks regarding management of the personal contribution loan, amounts are disbursed from "the Account" resources only upon a decision by the Minister responsible for Industry and SMEs, based on a conforming opinion from the credit line management committee.

Article 30: This circular enters into force from the date of its publication. The Governor, Marouan Abassi